By Krisztina Pusok, American Consumer Institute
February 14, 2022
This week, the Department of Education’s negotiated rulemaking committee will meet to discuss sweeping changes to the 90/10 rule governing the share of revenue that career colleges can receive from the federal government. According to reports, the committee is likely to recommend broadening the scope of “federal funds” under 90/10 to make it more difficult for career colleges to meet the standard and remain certified. If the Department enacts these changes, hundreds of schools may be forced to shut their doors, leaving thousands of students who attend these schools scrambling.
Shuttering so-called “for-profit” schools has long been a dream of some ideologues, but that path represents a dereliction of duty for the Department of Education (DoE). The agency exists to ensure that all Americans have access to a quality education. This mission demands a system that provides a diverse array of options for learners of all types with the understanding that American students have different education needs, expectations, and abilities.
The American Consumer Institute’s research shows that proprietary and career colleges play a vital role in providing that choice, offering educational and vocational opportunities to the students the DoE should prioritize – nontraditional learners who might otherwise fall through the cracks. Through the introduction of measures like open enrollment, flexible scheduling, and career-oriented curriculum, these schools have provided proven pathways to success for students who lack the academic credentials required by traditional state and nonprofit schools. And as these more traditional schools have eschewed vocational training, for-profit career institutions have filled the gap, training students in fields that are in high demand, including home health care workers to auto mechanics and truck drivers.
Transparency and accountability are necessary to reform education, but regulating on the basis of tax status ensures that students at high performing for-profit schools will suffer, while the failures of state and nonprofit schools get a pass. These failures are well-documented. Consumer Action for a Strong Economy, for example, emphasizes that some public non-profit colleges have graduation rates as low as nine percent. Similarly, research by the Independent Women’s Forum notes that most four year, non-profit schools would have to close their doors if subjected to the same gainful employment requirements the committee intends to restore on for-profit colleges.
Certain measures even find America’s elite institutions are failing students in meaningful ways. A report by Third Way introducing an Economic Mobility Index for measuring the success of institutions of higher education found that the reach of institutions that rank high on traditional college rankings do very little to offer students economic mobility—in large part because they admit such a small share of low-income students to begin with.
Meanwhile, the successes of proprietary institutions are often overlooked. In comparing nonprofit and proprietary schools, Heritage Foundation found that “when apples to apples comparisons are made between program types, for-profit colleges even graduate students at higher rates than their traditional college counterparts.” A recent Georgetown University study focused on return on investment for low-income students found that when accounting for graduation rates and earnings of Pell Grant students, the bachelors-level colleges with the best return on investment for low-income students are two for-profit colleges, the Neumont College of Art and Design and SAE Expression College. The same study found that when ratings are designed to reflect graduation rates and long-term earnings, six of the top ten associate’s level colleges were private for-profit institutions.
Career and proprietary colleges play an essential role in our education system and DoE’s scapegoating of these institutions are harming students. Instead, the Department should implement system-wide transparency and accountability measures to ensure that every American can get the quality education they need. If improving educational outcomes is the goal for this rulemaking, then transparency and accountability standards should be made uniform for ALL colleges, and not just a few.