WASHINGTON – The for-profit college industry is struggling under the weight of declining enrollment, stiff competition from traditional universities and an image battered by past misdeeds, even as the Trump administration tries to offer a helping hand.
Education Secretary Betsy DeVos has hired several industry insiders and frozen Obama-era regulations that would have increased protections for students. She has reduced loan forgiveness relief for some former students defrauded by their schools, meaning that the for-profit industry could be on the hook for less. And she is considering reinstating an ousted oversight agency for many for-profit colleges.
“There is a serious attempt by this department to find that appropriate fair balance for both students and schools,” said Steve Gunderson, president of Career Education Colleges and Universities, the industry lobbying group.
But Timothy Lutts, president of the Cabot Wealth Network in Salem, Massachusetts, sees an industry in decline. An improving economy has led to lagging enrollment as adult students return to the workplace instead of seeking a degree to burnish their resumes, he said. For-profit colleges now also compete with nonprofit schools that offer online degree programs without the stigma that still haunts money-making schools.
“It was a great sector a decade ago,” Lutts said. “For for-profit schools, the tide is still going out.”
Student enrollment at most four-year for-profit colleges fell in 2017 to just over 901,000, down nearly 69,000 from the year before, according to data compiled by the National Student Clearinghouse Research Center. It’s a downward trend that began in the fall of 2010.
After the boom
For-profits had experienced a boom over the past two decades, buoyed by federal student funding and the global financial crisis that left many Americans without jobs and eager to go back to school to gain new skills and credentials. Enrollment rose from around 230,000 in the early 1990s to a record 2 million in 2010.
The schools recruited aggressively, often targeting nontraditional students – usually older people who had jobs and could only study part time. Schools focused heavily on women and people of color. They also pursued veterans with their millions in GI Bill tuition assistance. A 2017 federal study found that veterans represent a larger share of students at for-profit colleges compared with other schools.
But after graduating, many students struggled to find promised jobs or to transfer credits to other schools, leading to massive student loan defaults.
Erika Colon, a 35-year old mother of three in Boston, said the federal government should increase oversight and tighten controls of for-profit schools.
Colon, 35, took out about $15,000 in loans to get a certificate as a medical administrative assistant at one of the Corinthian Colleges schools. She said she received a low-quality education, could not get a job and ended up retraining in a related field at a different school – only then getting hired by a hospital.
“They are just giving students high hopes for nothing and just taking people’s money,” Colon said.
Donald Trump’s election as president held the promise of heady times for the industry. After all, he was the founder of Trump University.
Education Department press secretary Liz Hill said DeVos was focused on expanding education options for students and that the schools’ tax status was irrelevant to the quality of their education.
“The one question we should be asking is whether or not an education institution is serving students well, not how it filed paperwork with the IRS,” Hill said.
And yet, with the future uncertain, a growing number of schools are seeking to abandon the for-profit world by converting to nonprofit status. These transformations, which require approvals from state and federal regulators, mean less oversight and relief from a law that bars for-profits from receiving more than 90 percent of their revenue through federal student aid programs.
Consumers should be wary of these proposed conversions, according to Bob Shireman, a former Education Department official during President Barack Obama’s first term and a frequent critic of for-profit colleges. Shireman, a senior fellow at the Century Foundation, a progressive Washington think tank, published a report in 2015 that warned of “covert nonprofits” that are free of regulatory burdens but continue to operate as for-profit schools.
A group of Democratic senators has asked the Government Accountability Office to look into the conversions.