The US Department of Education has recently entered into a discussion about a radical change to student lending that could affect for-profit schools. The resulting action could eliminate federal funding from those for-profit schools whose graduates spend more than five percent of their monthly income on repaying their student loans.
For-Profit schools have always come under a lot of scrutiny. Even though most for-profit schools are approved by similar accrediting organizations and can offer credits, clock hours, degrees, and certificates; student complaints abound, and many involve deception. Is it really that surprising, though, that not all for-profit schools share the same legitimacy within themselves? Depending on the accrediting body, one school could have different hiring requirements than another, i.e., degreed instructors rather than non-degreed instructors. For the most part, the cost of educating oneself through a for-profit school can vary greatly even within the same discipline. Certainly, the quality of one’s education deserves consideration, but one should be wary when one school charges its students twice what another on the other side of town charges when both offer the same set of studies.
Before we look at the issues of this current regulation in discussion, you should know that I am a graduate of a for-profit university – http://campus.capella.edu and a current student of the same school. And, my past work experiences have been at both a quality for-profit school and a for-profit school that was closed due to a department of education federal investigation. My views may be biased, but they are tempered by reality. I know there are both good and bad for-profit schools. And now… on to the arguments.
The first obvious one is that more students complain about their education than compliment it. Ignoring the fact that it is an industry-wide understanding that more will complain about a product that compliment it, it is important to identify these complaints. One common complaint is deception: prospective students are promised a quality education; they are promised substantial funding to pay for their education; they are promised personal academic support throughout their program; and most importantly, the students are promised a job. Many of these promises come from historical statistics of the school, and with a consistent staff and student profile, it is very realistic to assume that these promises are valid. Other promises come from repetitive seminars with admissions and financial aid staff with their corporate entities encouraging them to increase enrollment and decrease retention. But there is certainly a point where for-profit schools need to stop focussing on quantity and start focussing in on quality. This is perhaps the claim that the department of education has with passing this new regulation. No doubt it is important that for-profit schools be reminded that though they are business-minded individuals, they did make a choice to invest in education. Students, though, also hold some responsibility. This is another area, not unlike elementary and secondary education, where all to often, the schools and their staff are blamed, and students are given a free pass. Why shouldn’t students take charge of their education, investigate what a for-profit school is, how it was founded, how it is accredited, and whether credits are transferrable. A simple google search will answer all these questions for the student. Since many referrals to for-profit schools come from word of mouth, is it too much to ask these friends of students/alumni what they didn’t like about the school? That one dislike could be the difference between a student attending or not attending.
Coming from the field of financial aid, and most recently from a for-profit school, it is important for me to address the all too important financial aid issues. Of course, that’s what this blog is all about; however, it is necessary to dig deeper.
First, Peter Cohan cites Business Insider, stating that “the dropouts default on loans “as big as $100,000 for incomplete bachelor’s degrees and up to $200,000 for advanced degrees”. While these numbers are staggering, they do not reflect accurate numbers for federal loans, the very ones that the department of education would like to make more restricted. When a student is working toward a bachelor degree, him to a total of $57,500 in outstanding federal stafford loans. That same student continuing on to graduate studies is limited to a total of $138,500 in outstanding federal stafford loans. So, how does a college drop out, who was once pursuing a bachelor degree, then default on $100,000? The answer is that student accumulates other debt, most likely unsecured debt such as credit cards, outside private loans. Even if a student could be pursuaded by a for-profit school to secure funding outside of the federal funding, each individual student’s credit history will be evaluated for creditworthiness. Should a school be blamed for a student irresponsibly borrowing outside funding to attend school? These lenders who offer private educational loans already provide checks on their lending where they will stop lending to any school, for-profit or not, if too many students default on their private loans. So, why is this a federal lending issue?
Second, even if a student decides to attend school, drop out, enroll again, drop out, etc., and accumulate up to $57,000 in outstanding federal loans, there are repayment options designed to help the student, including financial hardship. By instituting this new regulation, the department of education, is in effect stating that any student who enrolls at a for-profit schools cannot request a financial hardship deferment or forbearance. So, students must prove that they can’t afford to repay their student loans, damage their credit history even further by not having any recourse just so that the department of education can demonstrate due dilligence in stripping a school of its ability to assist students earn their degrees and certificates? This doesn’t seem to make too much sense and appears to be more damaging to the student than to the school.
Third, applying for title IV funding (student financial aid funding) is a very rigorous process. Schools must first seek to be academically accredited through any number of regional or national accrediting bodies, a process that can take a few years and requires the school to first be established before application. After receiving academic accreditation, there are still many steps to get approval through the department of education. And, even after department of education approval, a school can lose it very easily if too many students don’t repay their loans as directed and don’t seek options to assist them with repayment. Again, why add this additional rule for for-profit schools? For-profit schools provide a benefit that other public or non-profit universities can’t offer, finding an alternative way to educate single moms, single dads, full time workers, part time workers, unemployed, career changers, military, military spouses, and, well, the list is endless. In an era where the United States wants to highly encourage everyone to pursue higher education, blindly limiting all for-profit schools when only some are not acting in a student’s best interest is not a good thing.
So now, satisfied for-profit school graduates, where are you? You might be slowly building your business, asking your boss for a raise, rewriting your resumé, or calling your lender to request a deferment — speak up! The best thing you can do for your alma mater, if you felt that you received a quality education, is to speak up for it when too many complainers would have it shut down.