New Rules May Hurt For-profit Colleges

JACKSON, Miss. – Andrea Thomas tried the traditional college route.

After graduating from Ridgeland High School, she enrolled at one of the state’s public universities, but she felt like a number and didn’t have a base of support.

“I used to go back to my dorm room crying every day,” Thomas, 22, said. “It was just too much, too fast.”

She quit school and didn’t know what she’d do until she saw a commercial for Antonelli College, an Ohio-based for-profit school with campuses in Jackson and Hattiesburg. She’s now pursuing a graphic design degree at the Jackson site.

“It’s the best decision I’ve ever made,” Thomas said.

The for-profit college industry has been criticized as being predatory or too business-focused, but the institutions say new federal regulations on them will limit access to higher education and prevent others from having the option Thomas has had.

“This is going to derail a ton of people,”’ said Milton Anderson, president of Virginia College’s Jackson campus. “It’s going to be a major problem.”

The rules would base a school’s eligibility to receive federal aid on students’ loan repayment history and graduates’ ability to land a job.

Supporters of the new rules say they are holding institutions—many of which receive millions in federal loans and grants—accountable and protecting students from ending up with high debt loads and inadequate job skills.

“These schools and their investors benefit from billions of dollars in taxpayers subsidies, and in return, taxpayers have a right to know that all of these programs are providing solid preparation for a job,” U.S. Secretary of Education Arne Duncan said in a statement.

The regulations could eliminate federal financial aid for programs in which a high proportion of students graduate with debt loads that outpace the salaries they can earn.

A coalition of education and consumer groups support the changes.

The for-profit college industry and its allies have been fighting them.

“It’s a solution in search of a problem,” said Harris Miller, president of the Association of Private Sector Colleges and Universities, a group that represents the for-profit industry. Antonelli College and Virginia College both are members of the association.

Miller said the government seems to assume that a high debt-to-income ratio means there is a problem with the program. “It’s an interesting assertion, but there are no facts to support that,”’ he said.

The for-profit college industry has boomed in the past decade, with most schools attracting lower-income students and minorities.

Most recruit through heavy marketing campaigns. Both Virginia College and Antonelli run frequent TV commercials and have billboards throughout the metro area. Virginia College’s advertisements also can be seen on city buses.

“There are some bad players, but we’re not all bad,” Anderson said.

Nearly 90 percent of the 1,000 students on Virginia College’s Jackson campus are minorities. About 60 percent qualify for the federal Pell Grant and 65 percent have federal loans.

Antonelli, with about 300 students on its Jackson campus, has a 70 percent minority enrollment and 85 percent who qualify for the Pell Grant. About 97 percent have federal loans.

University of Phoenix opened its first campus in Mississippi—in Flowood—earlier this year. Strayer University, a Virginia-based for-profit, also opened a campus in Jackson this year. Figures are not yet available on their programs, but nationally their student and financial aid trends have mirrored others in the industry. Nationally, more than $7.3 billion in Pell Grants went to students attending for-profit schools in 2009-10.

A study released by the Americans for Democratic Action earlier this year found widespread public approval of for-profit colleges, particularly among groups like Latinos, Blacks and lower-income Whites. ADA is a political lobbying organization that focuses on social and economic issues.

“The public does not buy arguments that for-profit colleges and universities exploit their students,” the ADA report states. “Nor do Americans buy the attacks that for-profit schools provide a lower-quality education, though standards are important.”

Thomas said she’s comfortable with her choice to turn to the for-profit side, even though the schools have their critics.

“The teachers I have here are actually working in the field,”’ she said.

 

She’s already using programs necessary for graphic design. At her old school she took classes for two years and “never touched a computer.”

Pauline Abernathy, vice president of the Institute for College Access and Success, said problems in the industry as a whole mean students and taxpayers “are getting fleeced and cannot afford to wait for protection from unscrupulous school”

The sector makes up about 10 percent of total students, but nearly half of student loan borrowers who entered repayment in 2008 and defaulted by 2010 attended for-profit schools.

The U.S. Department of Education recently announced that it would delay issuing final guidelines on the “gainful employment” regulation until early 2011. The intent is still to have the new regulation go into effect in July 2012. Other regulations affecting for-profit colleges will be issued Nov. 1.

“Let me be clear: We’re moving forward on gainful employment regulations,” Duncan said at the time. “While a majority of career colleges play a vital role in training our work force to be globally competitive, some bad actors are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use.”

Until formal guidelines are set, it’s unclear how many programs could be affected by the new regulation. It’s been estimated that more than 300,000 students nationwide would be affected.

“That’s the lowest estimate I’ve seen,” Miller said. “Some are much higher.”

Ben Miller, a policy analyst with the nonprofit Education Sector, said the for-profit industry may not be as dramatically impacted as some say, though.

“The fears of a widespread sector shutdown are overblown,” he said. He said some programs would have to be eliminated, but not whole schools.

The programs most likely to be affected are those that do not pull in high salaries, such as medical assistant or cosmetology programs, or those that have less demand, such as computer animation.

Joseph D’Amico, president of University of Phoenix parent-company the Apollo Group, has said the regulation could “potentially eliminate programs,” but he would not give specifics.

Harris Miller said the for-profit industry has been successful by honing in on a segment of the population left behind by traditional colleges.

“Lower-income adults have difficulties fitting into the mold,” he said. “At a time of high unemployment, when we see employers saying there are not qualified people for the jobs that are opening, why in the world would the Obama administration want to limit access?”

Nearly half of for-profit students have children, and even more have full-time jobs. Many are the first in their families to attend college.

“The whole idea is that the programs accommodate the students’ availability—not the faculty,” Harris Miller said.