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Experts: Equipping Students With Questions Is Next Best Thing to Stricter Regulations of For-profit Institutions

WASHINGTON, D.C. – In light of weak federal regulations and lackluster completion rates at for-profit colleges, students should be armed with the kind of questions they need to ask to make sure the colleges deliver on what they promise.

That’s one of the main points that higher education experts made Monday at the Congressional Hispanic Caucus Institute’s 2012 Young Latino Leaders Summit during a panel discussion titled “Latinos in Private For-Profit Institutions and College Completion.”

“I think the for-profit sector definitely has a role in getting us to where we need to get as a nation,” said Jose Cruz, Vice President for Higher Education Policy and Practice at the Education Trust, a D.C.-based group that advocates for closing the achievement gap, in reference to the Obama Administration’s college completion agenda of making the United States the most college-educated nation in the world.

“But they need to step up to the plate and fulfill the promise,” Cruz said of the for-profits. “Basically what they are selling students is access to careers, and then they’re not delivering.”

Black, Hispanic, Asian or American Indian students accounted for nearly 40 percent of total enrollment at for-profit schools in 2007, but only 31 percent and 25 percent of enrollment in public and private non-profit institutions, respectively, according to a new Congressional Hispanic Caucus Institute white paper released at the event and titled “Recruiting the Growing Minority: Latino Enrollment Practices in For-Profit Colleges and Universities.”

The paper – written by 2011-2012 CHCI Higher Education Graduate Fellow Enrique Soto – also notes that Hispanics at for-profits completed their degrees at a rate of 25 percent, versus 60 percent at private nonprofits and 46 percent at public institutions.

In light of the disproportionately high enrollment and low completion rates for minority students at the for-profits, which charge a much higher tuition than their non-profit and public counterparts, Cruz suggested that minority students who are thinking about enrolling in a for-profit college should ask:

n    What is the school’s graduation rate, particularly for low-income students and students of color?

n    How long it takes to take the average student to complete a program?

n    What percentage of students find jobs in their field of study?

n    How much do graduates earn during their first year of employment?

n    How much will their education cost in total?

n    What will the total loan burden be after graduation?

n    How many students default on their loans?

In some ways, these are the kinds of things that the so-called “gainful employment” rule is or was supposed to get at, but critics have said the rule – which will be based on metrics for the 2012-2014 school years – is much weaker than what was initially proposed.

Under the rule, a higher education program would be considered to lead to gainful employment only if:

n    At least 35 percent of former students are repaying their loans, which can mean reducing their loan
 balance by at least $1; or

n    If the estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her
discretionary income; or

n    If the estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her
total earnings, according to the U.S. Department of Education.

While the rule applies to occupational training programs at all types of institutions, it is aimed primarily at for-profit programs, which the Education Department says are “most likely to leave their students with unaffordable debts and poor employment prospects.”

Cruz said arming students with questions such as the ones he suggested is the next best thing to stricter regulations and could help get the for-profit institutions to “do the right thing.”

“If we empower the students to ask these questions and not simply sign on the dotted line, I think that we will be driving behavior at these institutions in the right direction,” Cruz said.

Eduardo M. Ochoa, Assistant Secretary for Postsecondary Education at the U.S. Department of Education, said the Administration is currently developing a new “scorecard” that gets at the questions suggested by Cruz.

“We’re going to make it even better in later versions,” Ochoa said. “But the one coming out of the gate will give an eye for institution’s graduation rates, default rates, net costs and average debt loans.”

Beth Stein, Chief Investigations Counsel for the Senate Health, Education, Labor & Pensions Committee, which has been scrutinizing for-profits in recent years, shared some of the data on for-profits that shows that “even though they charge very high tuition, there is very little investment in the education side of the equation.” Specifically, according to one slide she presented, for-profit institutions spent 60 percent of their money in 2010 on profit and marketing.

“One of the things that really struck us was that while for-profits really pride themselves on enrolling Latinos and other students with a high number of risk factors, they do very little to actually provide the services those students need to be successful,” Stein said, noting that one particular for-profit higher education company had hired one career placement specialist but 1,700 recruiters.

Marcela Iglesias, Campus Dean at the Sacramento Campus of DeVry University, said if the for-profit college industry is to be more heavily regulated, the metrics must take into account the unique circumstances of the schools, which serve students with a higher number of risk factors.

Among other things, she suggested that metrics be “risk-adjusted” to the students that schools serve.

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