The Hechinger Report: In a tough economy, new focus on job-oriented certificates

The Hechinger Report

January 18, 2011
By Joanne Jacbos

PALO ALTO, CALIF. - Omid Khofasani wants to be a pharmacist - without taking on huge student loans. So the 35-year-old is paying about $1,700 for a nine-month course at nearby Foothill College that leads to a pharmacy technician certificate and a chance to earn a solid middle-class wage of up to $60,000 a year as he works his way through pharmacy school.

"It's short, it's fast and it's cheap," says Khofasani, who earned an engineering degree in Iran but now works at a carpet store.

Labor economists and some educators believe career-driven degrees should become an increasingly common choice and are advising students to pursue skills-oriented fields of study they feel offer better job opportunities.
Fueling the trend is the worst economic decline in more than 70 years and a slowly falling unemployment rate of 9.4 percent. Add to that the staggering total of $830 billion in student debt nationally.

"The recession has brought in clear focus the value of a career versus a job," said Willis Holcombe, chancellor of Florida's fast-growing community college system. A new report based on the state's employment data shows that students who earn certificates or associate of science degrees make more money in their first year out of college than four-year graduates of Florida's university system.

The unemployment numbers are "a powerful case for some postsecondary credential, not just going to classes, but completing a credential,"
Holcombe said. "If you want to insulate yourself against unemployment, you need a career."

The national unemployment rate for four-year college graduates is 4.8 percent, compared to 9.8 percent for those with only a high-school diploma.

Goal: 1 year-plus of postsecondary education President Barack Obama wants the United States to lead the world in college degrees by 2020, with all Americans completing at least one year of postsecondary education, which is seen as the dividing line between living in poverty and a shot at a middle-class lifestyle.

Nationally, 27 percent of people with licenses and certificates also earn more than the average bachelor's degree recipient, according to Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce.

Carnevale's newest data show that at least half of all anticipated job opportunities in the next seven years will be open to "middle-skill" workers like pharmacy technicians - what Khofasani will be after he passes a certification exam. Training for such jobs is offered at both community colleges and for-profit career and trade schools.

Middle-skills jobs require more than a high-school diploma but less than a college degree, along with significant education and training - and they make up roughly half of all U.S. jobs, according to the Urban Institute, a nonprofit policy research organization based in Washington, D.C.

Carnevale says higher education needs to shift its focus to producing workers with degrees and certificates that the workforce needs, although he acknowledges that ultimately, "the higher your education level, the more you'll earn."

By 2018, the United States will need 22 million new employees with postsecondary degrees of some kind.


Middle-skill workers in demand will likely include plumbers, electricians, health-care workers, legal assistants, machinists and police officers. Such jobs require strong math, communications and science knowledge, in addition to "soft skills" like the ability to solve problems in teams. They do not necessarily require a four-year, or even a two-year, college degree.

Targeted training for specific jobs
Students "are choosing lower-level alternatives that may have a high yield in the workforce," said Julian Alssid, founder and executive director of Workforce Strategy Center, a nonprofit think tank that works to develop effective education and employment policies. "People can get good jobs with targeted training. Targeted credentials are as good as broader, generalized degrees, especially at the entry level."

And nationally, enrollments have surged 17 percent since last year at community colleges, which charge far less than most four-year institutions, showing that more students are aware of the risks of incurring debt, said Alssid.

Certificates aligned with specific skills can take less than a year and be "trajectory-changing" for average and below-average students, said Brian Bosworth, president of FutureWorks, a consulting and policy development firm based in Seattle, and author of the 2010 report "Certificates Count."

Bosworth said completion rates for certificates are twice or even three times as high as graduation rates for two-year degrees.

"I would not advise a student to go to a four-year college if they're not confident about their skills and the family is under economic pressure," he said.

Some community college students are finding out their degrees are in high demand.

At Los Medanos College in Pittsburg, Calif., students who complete a two-year associate of science degree in the Power Pathways program can qualify for a job as an apprentice electrician at Pacific Gas & Electric, starting at $64,418 per year.

Recruiters descended upon the class that graduated on Dec. 20, said Katie Romans, a spokesperson for PG&E.

Preparing for immediate employment
Change is already under way in some areas. At Tennessee's technical colleges, all students work to earn certificates rather than associate degrees, and 75 percent go on to middle-skills jobs, Bosworth said. All programs prepare students for immediate employment.

"Quick-win certificates can be the first step on a degree ladder to associate and bachelor's degrees," said James Rosenbaum, a professor of education and social policy at Northwestern University in Chicago.

It should be no surprise that certificate-holders can earn as much or more than those with bachelor's degrees, said Richard Vedder, an economist and founder of the Center for College Affordability and Productivity, a nonprofit research center in Washington, D.C.

"These certificates are targeted to vocations, usually in demand," he said.
"The huge earning gains people associate with four-year degrees are dissipating."

Nursing, medical technology and other health-care jobs are growing rapidly, according to the Bureau of Labor Statistics. Even in Michigan, where the unemployment rate is 12.4 percent - tied with California for the second-highest nationally - those with associate degrees in nursing and allied health fields can find jobs, said James Jacobs, president of Macomb Community College in Warren, Mich.

Carnevale of Georgetown notes that while "plastics" was the word for jobs of the future in the 1967 film "The Graduate," today's equivalent term is "health care," including nursing, medical technology, dental hygiene and other health-care support jobs.

Nursing 'the closest thing there is to a sure thing'
An associate degree in nursing, at a time when Baby Boomers are retiring, is now "the closest thing there is to a sure thing," Carnevale said.

Advanced manufacturing and engineering technicians with a certificate or associate of applied science degree are in demand too, said Alssid of the Workforce Strategy Center. And middle-skill workers also are finding jobs in high-tech manufacturing, construction and the energy industry, says Rachel Unruh of the National Skills Coalition, based in Washington, D.C.
But hurdles to degree and certificate completion remain.
Some two-thirds of community-college students aren't ready for college-level courses, and 69 percent of those placed in remedial math never move beyond it, according to the Community College Research Center at Columbia University's Teachers College. The three-year graduation rate is just 28 percent for community-college students, data from the National Center for Education Statistics show.

"Huge numbers of people who go to community college get nothing out of it,"
said Bosworth of FutureWorks. Students are far more likely to succeed if they start by earning a certificate and then return for more training when they're ready, Bosworth said.

A vocational certificate is a more realistic goal than a bachelor's degree for students with mediocre grades, advises Rosenbaum of Northwestern. In one research study, just 19 percent of high-school seniors with a C average or below went on to earn a postsecondary credential of any kind.

"They've been told everybody can go to college," said Rosenbaum. "But not everybody can take college classes when they get there."

Vedder agrees. While A students should go for a bachelor's degree, "most C students won't make it through to a four-year degreem but they probably could make it through a one-year or two-year course" that would lead to a decent job, he said.

Liz Willen contributed to this story, which was produced by The Hechinger Report. Beth Hawkins will return to The Learning Curve on Wednesday.

Direct link to article: In a tough economy, new focus on job-oriented certificates

The Chronicle of Higher Education: Carnegie Classification Update Shows Boom in For-Profit and Professional Education

The Chronicle of Higher Education

January 18, 2011
By Scott Carlson

The Carnegie Foundation for the Advancement of Teaching released an update on Tuesday of its Carnegie Classification of Institutions of Higher Education that it says shows a few shifts in the higher-education landscape:
significant growth in the number of for-profit institutions, more institutions that offer professional degrees, and more traditional two-year colleges offering four-year degrees.

"The rise of the for-profit sector is not new, but with this classification update in particular, we see a pretty significant increase in that sector,"
said Chun-Mei Zhao, a senior scholar at the Carnegie Foundation who directs the Carnegie Classification project. "Those areas that are in high demand are the more professional and career-focused fields."

Since 2005, when the foundation last made major revisions in its classification system and updated its list, it has added 483 institutions, for a total of 4,633. Of those new institutions, 77 percent were private, for-profit entities, while 4 percent were public and 19 percent were private, nonprofit. (The vast majority of the new for-profit institutions were two-year colleges.) Those numbers, however, might give an inflated sense of the growth in the for-profit sector. That's because the Carnegie Foundation lists individual campuses of the Art Institute, DeVry University, ITT Technical Institute, the University of Phoenix, and other multicampus for-profit entities as separate institutions.

In Carnegie's index of new institutions, campuses from those giants are listed alongside relatively little-known institutions, like the Won Institute of Graduate Studies, which specializes in alternative medicine, and postsecondary offshoots of well-established organizations, like the Hazelden Graduate School of Addiction Studies.

Supply and Demand

Some observers of higher education were cool on the significance of the new numbers. Barmak Nassirian, associate executive director of external relations at the American Association of Collegiate Registrars and Admissions Officers, said the Carnegie Classification update did not necessarily show a growth in demand for for-profit education.

"Sometimes things are supply driven, not demand driven," he said.
Richard H. Ekman, president of the Council of Independent Colleges, said it was no surprise that there were more for-profit institutions. "This is a worrisome thing," he said, because "many of these for-profit institutions are doing a bad job. But it is a fact that the enrollments have increased."

A breakdown of the numbers seems to reveal some notable growth in select fields. Of the new institutions, 6.2 percent were in the health professions, split between private for-profit and nonprofit. Nearly 6 percent were in business and management, almost entirely in the for-profit realm. And 5 percent were seminaries or Bible colleges, all of them not-for-profit.

The Carnegie Foundation noted that there had been a 17-percent increase in institutions that awarded more than 60 percent of their degrees in professional fields over the past five years, while there was a 5-percent drop in institutions that awarded more than 60 percent of their degrees in the liberal arts.

More two-year colleges were also offering four-year degrees, with growth since 2005 of 23 percent to 49 percent, depending on the type of institution. Mr. Ekman said that the increase in the number of institutions awarding of professional degrees and four-year degrees was also no surprise.

"A lot of bachelor's institutions are offering master's, and a small number of master's institutions are offering doctorates," he said. "There is an appetite for more education at higher levels, and that's not a bad thing."

Direct link to article: Carnegie Classification Update Shows Boom in For-Profit and Professional Education

Bloomberg News: For-profit colleges fight aid limit

Bloomberg News

January 18, 2011
Contact the Omaha World-Herald newsroom 



For-profit colleges are urging Congress to change a law that threatens their access to billions of dollars in federal student aid, the companies' biggest source of revenue.

Education companies that get more than 90 percent of their revenue from the Education Department's student grants and loans for two years in a row may lose eligibility for the money under the law. Apollo Group Inc. - operator of the University of Phoenix, the biggest U.S. for-profit college - and Santa Ana, Calif.-based Corinthian Colleges Inc. have said they may violate the limit next year.

For-profit college revenue already is being threatened by slowing new-student enrollment amid government investigations of sales practices and the use of federal funds. The companies are lobbying Congress to strike down the revenue cap, called the 90/10 rule, or extend an exemption that would help them comply for the next fiscal year.

Changing the rule will be the industry's most important battle in Congress, said Jarrel Price, an analyst with Height Analytics in Washington.

"If the industry fails to push Congress beyond gridlock, several schools are at risk" of violating the rule, Price said. "There's great urgency."

The 90/10 rule, enacted in 1998, requires for-profit colleges to get at least 10 percent of their revenue from sources outside the Education Department. The law is meant to ensure quality and discourage fraud at for-profit colleges by requiring students to invest some of their own money in tuition.

"University of Phoenix believes 90/10 is not a good measure of quality, which is better assessed through graduation rates, default rates, compliance audits, financial ratios, etc.," the for-profit college said.

Federal student grants and loans made up about 88 percent of the college's revenue in the year ended Aug. 31, Apollo said in October.

For-profit colleges are approaching the 90 percent cap as the Education Department has increased the availability of student loans and Pell Grants, said Harris Miller, president of the Association of Private Sector Colleges & Universities, a Washington-based trade group. Congress needs to act so the schools can continue to operate and students can stay in class, he said.

Strayer Education Inc., a for-profit college based in Arlington, Va., said Jan. 7 that enrollment for new semester dropped 20 percent from a year ago.
Apollo said Jan. 10 that new student enrollment for the three months ended in November dropped 42 percent from the year earlier to 56,500.

Congress granted an exemption to the 90/10 rule of up to $2,000 per student during the global financial crisis when unemployed workers needed job training. The exemption expires at the end of June.

Sen. Tom Harkin, D-Iowa, is chairman of the Senate education committee and investigated student recruitment, job-placement claims and use of government funds by for-profit colleges. He called the 90/10 rule "one of the few protections students at these schools have."

"Given the abuses that my committee has documented - alarmingly high dropout rates and crushing debt loads for students - the 90/10 rule clearly isn't enough," Harkin said in an e-mail. "I intend to look at ways to make it work more effectively to ensure that for-profit colleges put a renewed focus on the success of their students rather than the profits of their shareholders."

Harkin doesn't favor extending the exemption, said Justine Sessions, a spokeswoman.

Rep. John Kline, R-Minn. and chairman of the House education committee, said he is "not thrilled" with the 90/10 rule. Job placement and student loan repayment rates are better indicators of program quality, he said.

To avoid violating the 90/10 rule, education companies sometimes raise tuition above federal financial-aid limits, forcing students to pay the difference out of pocket or find the money elsewhere, said Miller, of the trade group.

An Obama administration proposal known as "gainful employment" encourages for-profit colleges to lower tuition so students won't default on loans, said Mark Kantrowitz, publisher of FinAid.org, a website that provides information on student aid.

"If they increase tuition to comply with 90/10, they're going to have problems with the gainful employment rule," he said. "They're going to be between a rock and a hard place."

Direct link to article: For-profit colleges fight aid limit

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The Wall Street Journal | Opinion: If the FDA deems saccharin safe enough for coffee, then the EPA should not treat it as hazardous waste.

‬The Wall Street Journal | Opinion

January 18, 2011‪
By: Barack Obama

For two centuries, America's free market has not only been the source of dazzling ideas and path-breaking products, it has also been the greatest force for prosperity the world has ever known. That vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.

But throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

>From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It's a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

Where necessary, we won't shy away from addressing obvious gaps: new safety rules for infant formula; procedures to stop preventable infections in hospitals; efforts to target chronic violators of workplace safety laws. But we are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.

For instance, the FDA has long considered saccharin, the artificial sweetener, safe for people to consume. Yet for years, the EPA made companies treat saccharin like other dangerous chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA wisely eliminated this rule last month.

But creating a 21st-century regulatory system is about more than which rules to add and which rules to subtract. As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online, just like companies are doing.

We're also getting rid of absurd and unnecessary paperwork requirements that waste time and money. We're looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation. And finally, today I am directing federal agencies to do more to account for—and reduce—the burdens regulations may place on small businesses. Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way.

One important example of this overall approach is the fuel-economy standards for cars and trucks. When I took office, the country faced years of litigation and confusion because of conflicting rules set by Congress, federal regulators and states.

The EPA and the Department of Transportation worked with auto makers, labor unions, states like California, and environmental advocates this past spring to turn a tangle of rules into one aggressive new standard. It was a victory for car companies that wanted regulatory certainty; for consumers who will pay less at the pump; for our security, as we save 1.8 billion barrels of oil; and for the environment as we reduce pollution. Another example: Tomorrow the FDA will lay out a new effort to improve the process for approving medical devices, to keep patients safer while getting innovative and life-saving products to market faster.

Despite a lot of heated rhetoric, our efforts over the past two years to modernize our regulations have led to smarter—and in some cases tougher—rules to protect our health, safety and environment. Yet according to current estimates of their economic impact, the benefits of these regulations exceed their costs by billions of dollars.

This is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.

Mr. Obama is president of the United States.

Direct link to article: If the FDA deems saccharin safe enough for coffee, then the EPA should not treat it as hazardous waste.

National Journal: Issa Investigates GAO Investigators in Battle over For-Profit Schools

National Journal

January 18, 2011
By Fawn Johnson

House Oversight Committee Chairman Darrell Issa, R-Calif., is making trouble for the Government Accountability Office, the nonpartisan government watchdog. Issa has started his own committee’s investigation of GAO’s Forensic Audit and Special Investigations Unit after GAO revised a report issued in the summer outlining alleged fraudulent recruiting practices at for-profit career colleges.


The GAO’s revisions raise concerns about the investigative unit, Issa said in a letter to GAO Chief Quality Officer Timothy Bowling. The for-profit college lobby has accused the GAO of fabricating information and misleading lawmakers in the report. GAO is undertaking its own review of the situation, including potential culpability of team members.

Issa's move comes as the Education Department is finalizing rules that would make it more difficult for career colleges to get student loan money and Senate Health, Education, Labor, and Pensions Committee Chairman Tom Harkin, D-Iowa, is continuing hearings on the industry.

Critics of for-profit schools like DeVry and Kaplan University say they rip off students and taxpayers by luring people to enroll and apply for student aid, and then fail to help them finish a program or find a job. The for-profit lobby, meanwhile, has been involved in an advertising blitz to counteract the attacks, arguing that the Education Department’s new student loan rule will hurt educational choice.

The Center for American Progress’s youth outreach program is counteracting the ad hype this week with TV spots that will run on MSNBC and Fox on Tuesday and Wednesday, charging that for-profit colleges deceptively recruit homeless people and felons as students and overcharge them for a second-rate education.

Direct link to article:
Issa Investigates GAO Investigators in Battle over For-Profit Schools

The Star's Editorial: Colleges must ratchet down their ever-rising costs

The Star’s editorial

January 15, 2011

For-profit colleges are fighting a proposed rule that would cut off their pipeline to federal student loans if too many students default on those loans.

At the other end of the higher education spectrum, law schools are fending off accusations that they, too, entice students to take on mountainous debt, knowing many graduates won’t be able to find jobs at salaries high enough to pay off their loans.

Public and private colleges and universities are facing related problems. Overall, students and schools are tacking into a perfect storm.

Students are told their lifelong earning potential hinges on getting a college degree. But state support for public universities has tanked, as have endowments at private colleges. Meanwhile, the average cost of tuition and fees has increased by 466 percent over the last 25 years, more than four times the rate of inflation.

For most families, money to finance college isn’t readily available. But student aid is, especially federally backed loans. The average college senior in 2009 graduated $24,000 in debt — and facing the bleakest job market in more than a decade.

Experts warn that higher education is the next bubble about to burst. More than $800 billion in public and private student loan debt is outstanding, but only 40 percent is actively being repaid.

Graduates who default on federally backed loans eventually will find their paychecks garnisheed. Some will spend entire lifetimes paying for their post-high-school education.

Obviously, reforms are needed.

Despite their well-financed protests, for-profit colleges and technical schools are the place to start. This booming sector accounts for 43 percent of all federal student loan defaults, even though it makes up only 12 percent of total post-high-school enrollment.

The U.S. Department of Education has proposed a rule that would cut off federal student aid to for-profit schools if their students earn too little to repay their loans. Students’ overall debt in their first three years of employment could not exceed 8 percent of their income.

The for-profit sector, which has doubled its lobbying firepower and increased contributions to members of Congress in an effort to head off the rules, protests that its default rate is high because it serves high-risk students.

But the Education Trust, a nonprofit group that promotes equality in education, rebutted that claim nicely in a recent report: “Access without success — without graduation, without employment — is something the nation cannot afford.”

Corrective action can’t end with the for-profit sector. All schools should be looking at return on investment, or the ability of graduates to find jobs that pay enough to make the cost of college worthwhile.

This already takes place at some levels. In Missouri, career and community colleges that receive state funds must meet a threshold ensuring that job demand and wages are high enough to justify their programs.
The Metropolitan Community College system has so far declined to offer training for medical assistants, for instance, because the demand and pay levels for that profession don’t meet the threshold.

By contrast, medical assistants’ training is a popular offering at some career colleges, whose tuition rates are many times higher than those of area community colleges.

Demand and pay thresholds are harder to impose at four-year colleges, which offer more intrinsic benefits than technical schools.

But four-year colleges, be they public or private, must take drastic steps to ratchet down their costs.

The race to build five-star dormitories and luxury recreation facilities might attract students, but it won’t help them pay their bills upon graduation.

And, even with endowments plummeting and philanthropic giving at low levels, schools must find ways to provide aid to low-income students who otherwise would fall into the debt trap.

The Hill: GAO bias evident in report on for-profit college industry

The Hill

January 14, 2011
By Dr. Jean Norris

Last November, the U.S. Government Accountability Office (GAO) quietly issued a heavily edited and revised version of an earlier report they published that incorrectly criticized the for-profit college sector. At the time, the GAO received significant criticism on their effort from media, education experts and other commentators.

Critics pointed out the shoddy and unprofessional work originally put forth by the GAO, as well as the resulting damage it caused the for-profit college industry. It was clear that many errors and misleading conclusions were retracted from the earlier study that was broadly touted.

However, the GAO had its defenders and champions – among them Tom Harkin, Chairman of the U.S. Senate HELP Committee. At the time the updated report was released, Sen. Harkin, the Department of Education and others insisted that the new report did not change the fact that all 15 schools examined by the GAO were still guilty of violations. They even used the GAO report and testimony to aggressively pursue the for-profit college sector -- resulting in substantial damage to college reputations and revenue.

In further defense of the report, Sen. Harkin took the step of posting all of the supporting materials the GAO used to develop the report. In essence, Sen. Harkin issued a bold challenge to everyone by insisting that these underlying materials revealed the same violations in the for-profit industry that the original report chronicled.

Well, we accepted this challenge.

A skilled group of industry experts from Norton│Norris, Inc., including myself, spent more than 164 staff hours reviewing 25 audio recordings, made publically available, against the findings reported in the updated GAO report. The results were astonishing.

The lack of basic knowledge regarding college admissions practices and inaccurate reporting of conversations in order to skew facts was shocking. Instead of using enrollment and financial aid experts to analyze the recordings, the GAO clearly rushed their report and included factually incorrect information.

We determined that the GAO inappropriately conducted, analyzed and reported on its undercover testing of the for-profit college industry. Of the 65 original findings in the GAO study of misconduct, we found only 14 to be credible (an additional 14 cannot be confirmed due to lack of publically available materials.)

No found flagrant errors and misrepresentations by the GAO, even after they issued a heavily amended and revised version of the study in November 2010. In fact, only 25% of GAO findings can be confirmed when factoring out the missing recordings. The other 40 alleged findings were not valid and serve no meaningful purpose to be included in the GAO report.
There is no question the GAO misrepresented many conversations and explanations from their investigation to fit a policy agenda, rather than an unbiased reporting of their findings Here are three simple examples that demonstrate further what I’m talking about.

First, throughout the report, the GAO shows it does not understand the difference between an academic year and a calendar year. As a result, five of their findings regarding program length and cost are completely wrong and do not even merit mention in the report. This is a sophomoric mistake and is a prime example of an agency that does not understand the industry.

In another instance, an admissions representative thoroughly explains student loans and the importance of financial responsibility. The admissions representative even suggests the undercover applicant borrow less than what they need. However, the original GAO report, as well as the revised version, ignores these statements. Instead, they focus solely on another statement offered during the conversation regarding the undercover applicant’s ability to take out the maximum in loans.

Finally, in an attempt to paint a college as “over-promising” expected earnings at graduation, the original GAO report stated the undercover applicant could make up to $100 an hour. The revised GAO report adjusts this down to $30 an hour. But the recording reveals that the undercover applicant is given a data sheet and the admissions rep states that the minimum average rate per hour for their profession is $22. The GAO never reports this accurate piece of information.

It’s one thing to perform a faulty and error-ridden investigation that leads to false conclusions. It’s another thing to use this faulty information to advance public policy and tarnish the reputation of many well-regarded institutions and organizations. The GAO report has caused a loss of billions of dollars of market value for companies in the for-profit industry, not to mention reputational damage. And let’s not forget the negative impact on the students who attend or were considering attending one of these colleges.

Sen. Harkin vigorously defended GAO’s amendments by challenging anyone to refute its conclusions about for-profits. In December, he wrote “While the GAO made some revisions and clarifications of the long list of misleading practices it documented, the finding stands -- every single school its investigators visited engaged in misrepresentation, deception or outright fraud.”

Far from “revisions” and “clarifications”, the GAO’s work in this instance is embarrassingly unprofessional and poor. The fact that we found the report’s conclusions to be outright false is entirely fitting for a whole process riddled with mistakes, failed analysis and a fundamental lack of understanding. To defend this body of work’s conclusions is to ignore the realities that we discovered – simply by taking the time and care to look.

Direct link to article: GAO bias evident in report on for-profit college industry

Dr. Jean Norris is Managing Partner of Norton | Norris, Inc. (nortonnorris.com), a Chicago-based marketing, advertising and training company focused on the higher education sector. She is the author of a new study that reviewed the GAO undercover testing on for-profit colleges. The study was commissioned by the Coalition for Educational Success.

The Chicago Tribune: For-profit colleges fight negative federal report

The Chicago Tribune

January 10, 2011
By Becky Yerak, Tribune reporter

A for-profit college coalition co-chaired by a Chicago private-equity executive is suing the U.S. Department of Education over an August report that accused the fast-growing industry of deception and questionable marketing practices.

The Dec. 9 lawsuit stems from the coalition's failed efforts to gain access to documents, notes and videotapes the U.S. Government Accountability Office referred to in concluding all 15 for-profit colleges visited by undercover student applicants engaged in deceptive practices, including encouraging applicants to falsify their financial aid forms to qualify for federal aid.

On Nov. 30, the GAO reissued its 27-page report "to clarify and add more precise wording." The revisions generally made the colleges look better. But the GAO said it stands by its findings. The Department of Education declined to comment about the suit.

The Coalition for Educational Success, whose members include career colleges, maintains in its suit that the report is being used by critics of career colleges to tarnish the reputation of all for-profit schools and to advance the Obama administration's effort to push what are called "gainful employment" rules. The rules essentially tie for-profit schools' access to federal student aid to their graduates' ability to repay their student debt.

Sen. Tom Harkin, D-Iowa, a critic of for-profit colleges, said at a Senate education committee hearing that federal financial aid to students at for-profit colleges has ballooned to more than $23 billion a year from $4.6 billion a decade ago.

The GAO contends that students who attend for-profit colleges are more likely to default on federal student loans than students from other colleges. Over the past decade, for-profit college enrollment has risen to more than 2 million students from 600,000, Harkin said.

But for-profit college advocates say default rates are mostly related to students' socioeconomic status, not the type of school. Colleges that serve more minority students have lower loan repayment rates, one study found. The average loan repayment rate is 30 percent at colleges with more than two-thirds minority enrollment, compared with 62 percent at colleges where less than a tenth of students are minorities, according to a September report by FinAid.org, an online resource about student financial aid.

Avy Stein, managing partner of Chicago-based private-equity firm Willis Stein & Partners — whose holdings include Birmingham, Ala.-based Education Corp. of America, which operates Virginia College — told the Tribune that the government's actions against for-profit schools will cost jobs and eliminate options for minority students. Stein is co-chairman of the Coalition for Educational Success.

On Nov. 29, Stein and other coalition members met with four education department officials in Washington, about the gainful employment issue, according to the DOE. The following day the GAO reissued its report.

Suspecting that errors and biases still permeate the revised report, the coalition sued the DOE in U.S. District Court in Washington, accusing the department of "wrongfully withholding records by failing to respond to a Freedom of Information Act request." The original FOIA request, filed Oct. 15, sought documents, including tapes, videos and notes related to the GAO report, according to the lawsuit.

On Oct. 27 the DOE acknowledged the request, and under federal law has 20 working days to respond, the lawsuit contends. The coalition said its request is being stonewalled.

In its Dec. 9 suit, the coalition said it also requested documents related to communications between DOE and investors who may have "shorted" stocks of for-profit colleges. Short-sellers bet against stocks.

Since the beginning of 2010, an index of 13 for-profit colleges is down 24.3 percent on an otherwise up year for the broader market. Hoffman Estates-based Career Education Corp. and Downers Grove-based DeVry Inc. are down 9.7 percent and 14.8 percent, respectively, in that time.

In August, the GAO said all 15 for-profit colleges, including two in Illinois, made questionable statements to undercover applicants.

The GAO report didn't mention the schools by name, but their identities were divulged in Aug. 4 Senate testimony by the report's author. They included the College of Office Technology in Chicago and Chicago's Argosy University, which is owned by publicly traded Education Management Corp., whose stock is down 23 percent since the beginning of 2010.

Gregory Kutz, GAO managing director, testified that all 15 provided "deceptive and questionable information," but he said that three sprinkled "good practices" into meetings with undercover students. Two of the three, he said, were Argosy and the College of Office Technology.

Pedro Galva, president of the College of Office Technology, said last week he was dissatisfied that his business' recruitment practices have come under GAO criticism. "We shouldn't have been painted with the same brush," he said.

In the only example given in the GAO report about questionable behavior at his school, an admissions worker was asked by the undercover applicant about transferring credits. Initially, the admissions worker told the applicant that the credits would transfer but "later, she correctly told the applicant that it depends on the college and what classes have been taken," the report said.

Galva said his worker might have misspoken initially, but "in the same conversation she realized that there is no such thing as universal transferability of credits, not even from Harvard," Galva told the Tribune. He said that, on other questions posed by the undercover applicant, his school came out "squeaky clean." The write-up on his school wasn't among those amended.

An Argosy spokeswoman points out that one of the examples of its alleged conduct was dropped from the revised report, and that remaining allegations, even after the revisions, "are incorrect and misleading and should have been deleted as well."

A bipartisan group, including Rep. Daniel Lipinksi, an Illinois Democrat, and members of the Congressional Black Caucus, has expressed concerns about the gainful employment rules. After receiving more than 90,000 comments on the DOE's gainful employment proposals dealing with a program's eligibility to receive federal student aid, the DOE announced plans in September to change the publication date of these final regulations from November to early 2011. They're expected to go into effect on or around July 1, 2012.

A Dec. 21 letter to the GAO from six members of Congress, including Rep. Darrell Issa, a Republican and head of the oversight and government reform committee, and Reps. Alcee Hastings and Carolyn McCarthy, both Democrats, notes that the revised GAO report changed language in 16 of 28 scenarios. They're asking the GAO to look into, among other things, the facts surrounding the report's revision, and why the GAO's Web site didn't announce that the report had been revised.

The GAO has "reached out to set up a meeting," GAO spokesman Chuck Young said. "We plan to provide the members with the information they're seeking."

The coalition also questions why only for-profit colleges were studied, or how those 15 were picked.

http://www.blogger.com/byerak@tribune.com

The Washington Post | Opinion: A higher education stumbling block for at-risk students

The Washington Post | Opinion

January 7, 2011
By Marc H. Morial

Statistics show that there are more Americans below the poverty line now than when President Lyndon Johnson declared the War on Poverty. We must use every arrow in our collective quiver to reverse this devastating trend.The Urban League is dedicated to fighting poverty by empowering youth in underserved communities through education and job training. We have found that a college education, whenever it is possible, is the best path to employment.

The league strongly supports President Obama's pledge that America will have the highest percentage of college graduates in the world by 2020. But as the nation navigates the various paths of education reform, we must be careful not to inadvertently set up roadblocks for the students most at risk for failure.

The so-called gainful-employment rule, proposed by the Education Department in response to allegations of improper recruiting and loan practices at proprietary career colleges, would establish fixed targets for student-debt-to-income ratios and new loan repayment rates that many traditional public and nonprofit institutions could not meet. The proposed rule stems from a request to demonstrate that courses at for-profit institutions lead to gainful employment for their students. However, we are concerned that students who rely on federal loans might no longer have access to financial aid to attend the schools of their choice because the government will deny federal funds to students who attend for-profit institutions that can't comply with the proposed rule.Before this rule can be imposed, the Government Accountability Office or some other independent entity should conduct a thorough study of the likely effects of the proposed rule on access to education by minority students and students from low-income backgrounds.

If, as some analysts have predicted, as many as 360,000 students could be denied access by next year, the rule would have disastrous consequences for those who are at greatest risk of a life in poverty if they don't obtain a college education.

This is why Rep. Alcee Hastings (D-Fla.), in a recent letter to Education Secretary Arne Duncan, asked the department to withdraw the regulation. As Rep. Hastings aptly noted, "Too many students will be impacted and too many questions are still unanswered to justify the Department's insistence on pursuing the draft regulations." Eleven other members of the Congressional Black Caucus have asked the department to hold off until the significant negative effects of the proposed rule are understood.

Congressional Black Caucus members are concerned because black students stand to be harmed the most by the proposed rule. Minority students attend career colleges in much higher proportions than do other students, and these are the only schools targeted by the proposal. Many career colleges receive their accreditations through the same agencies as the nation's top private and nonprofit universities, which would be spared from the effects of the rule (though 93 percent of historically black colleges would fail the rule's repayment rate test if it were applied to them). Career colleges are different only in that they are the schools of choice for many at-risk students, including minorities, parents and full-time workers who believe these schools offer them the best shot at a good job in a field they will enjoy.

The Education Department's proposed rule is grounded in good intentions, and in any industry, there are good actors and those that do not live up to the necessary standards. The department must deal with them while ensuring access to higher education for the most vulnerable students.

As the world's economies continue to strive for momentum, we should look for every possible way to give minority students a leg up. Career-oriented colleges are the answer for many of them. The last thing that students already constrained by poverty need is another, government-erected barrier to a better life.

Marc H. Morial is president and chief executive of the National Urban League.

The Washington Post: Handicapping education for at-risk students

The Washington Post

By Marc H. Morial
January 7, 2011

Statistics show that there are more Americans below the poverty line now than when President Lyndon Johnson declared the War on Poverty. We must use every arrow in our collective quiver to reverse this devastating trend.

The Urban League is dedicated to fighting poverty by empowering youth in underserved communities through education and job training. We have found that a college education, whenever it is possible, is the best path to employment.

The league strongly supports President Obama's pledge that America will have the highest percentage of college graduates in the world by 2020. But as the nation navigates the various paths of education reform, we must be careful not to inadvertently set up roadblocks for the students most at risk for failure.

The so-called gainful-employment rule, proposed by the Education Department in response to allegations of improper recruiting and loan practices at proprietary career colleges, would establish fixed targets for student-debt-to-income ratios and new loan repayment rates that many traditional public and nonprofit institutions could not meet. The proposed rule stems from a request to demonstrate that courses at for-profit institutions lead to gainful employment for their students. However, we are concerned that students who rely on federal loans might no longer have access to financial aid to attend the schools of their choice because the government will deny federal funds to students who attend for-profit institutions that can't comply with the proposed rule.

Before this rule can be imposed, the Government Accountability Office or some other independent entity should conduct a thorough study of the likely effects of the proposed rule on access to education by minority students and students from low-income backgrounds.

If, as some analysts have predicted, as many as 360,000 students could be denied access by next year, the rule would have disastrous consequences for those who are at greatest risk of a life in poverty if they don't obtain a college education.

This is why Rep. Alcee Hastings (D-Fla.), in a recent letter to Education Secretary Arne Duncan, asked the department to withdraw the regulation. As Rep. Hastings aptly noted, "Too many students will be impacted and too many questions are still unanswered to justify the Department's insistence on pursuing the draft regulations." Eleven other members of the Congressional Black Caucus have asked the department to hold off until the significant negative effects of the proposed rule are understood.

Congressional Black Caucus members are concerned because black students stand to be harmed the most by the proposed rule. Minority students attend career colleges in much higher proportions than do other students, and these are the only schools targeted by the proposal. Many career colleges receive their accreditations through the same agencies as the nation's top private and nonprofit universities, which would be spared from the effects of the rule (though 93 percent of historically black colleges would fail the rule's repayment rate test if it were applied to them). Career colleges are different only in that they are the schools of choice for many at-risk students, including minorities, parents and full-time workers who believe these schools offer them the best shot at a good job in a field they will enjoy.

The Education Department's proposed rule is grounded in good intentions, and in any industry, there are good actors and those that do not live up to the necessary standards. The department must deal with them while ensuring access to higher education for the most vulnerable students.

As the world's economies continue to strive for momentum, we should look for every possible way to give minority students a leg up. Career-oriented colleges are the answer for many of them. The last thing that students already constrained by poverty need is another, government-erected barrier to a better life.

Marc H. Morial is president and chief executive of the National Urban League.

The Orlando Sentinel: Let working adults pursue their dreams

The Orlando Sentinel

January 7, 2011
By Klaus Friedenreich | Guest columnist

Would you get up early enough to take a college class that begins at 7:15 a.m.?

You might if you hope to start a culinary career and aspire to someday become a chef, a professional baker or a pastry maker.

Perhaps you're already working in food service, and you're seeking the skills and credentials that can help you work your way up the culinary ladder. Or you're employed in a different sector, but you're a "foodie" at heart and want to start a second career before it's too late.

Such descriptions apply to many students in our introductory cooking class at the Le Cordon Bleu College of Culinary Arts in Orlando. Many wake up before daybreak to do my demanding classwork — from filleting fish to boning chickens — after working late the night before at the jobs that put food on their tables at home.

These hardworking, dedicated adult learners should have been on the minds of U.S. Department of Education officials when they proposed a set of rules targeting career-college students. Among them is the gainful-employment rule, which could limit federal financial assistance to only those students who are trained in jobs lucrative enough to allow them to pay back their loans. Complex and unfair debt-to-earnings measures would be used to determine eligibility.In short, the rule would limit students' access to quality programs, such as ours, in which they'll learn important skills as they prepare to work their way up from typically low starting salaries. It would even penalize students for using loan-management programs that have been approved by Congress.
I'm not a professional educator, much less a federal policy maker. But I am a certified master chef with more than 40 years in the industry, including almost three decades in the Orlando area. I was part of the opening team at The Walt Disney World Resort, developing the original menu at Disney's Contemporary Resort.

I also ran my own restaurant, captained a U.S. culinary Olympic team, worked for a major airline and taught at other institutions before joining the Le Cordon Bleu faculty.

As such, I know how valuable training and credentialing can be for aspiring culinary professionals. I know how culinary graduates are in demand throughout the industry, even in hard times.

The education department should make it easier, not more difficult, for aspiring culinary professionals to climb the ladder of success.

Career colleges, such as ours, meet the needs of students whom traditional nonprofit private colleges, state universities and community colleges often overlook. Most career-college students are older than those at traditional colleges and universities.

By my reckoning, at our institution, about one-third work full-time while attending our culinary courses — pretty typical in most career colleges across the country.

Many are from low-income households and are the first in their families to go to college. Some have also served in the military. At Le Cordon Bleu in Orlando, 28 percent of our students are Hispanic, and 13 percent are African-American.

From my contacts in the culinary, hospitality and resort industries throughout our state and nation, I know that employers respect our graduates' skills and work habits. This is one of the reasons why a high percentage of our graduates has been successful in finding jobs in the culinary industry.

Our students keep their eyes on the prize: certificates and degrees in culinary arts, patisserie and baking. Yet if the federal government's gainful-employment rule comes to pass, many of our students will have their dreams of a career in the kitchen dashed.

Take it from a master chef: Making it even more difficult for working adults to follow their dreams is a recipe for disaster.

Klaus Friedenreich is an instructor at Le Cordon Bleu College of Culinary Arts in Orlando.

The Chronicle of Higher Education: For-Profit Colleges on the Brink

The Chronicle of Higher Education

January 6, 2011
By Peter Wood

The for-profit sector of higher education is in the political spotlight these days. Last year an Obama administration official launched an attack on the legitimacy of for-profit colleges and universities. Although that official subsequently resigned his position in the Department of Education, the measures he promoted took on a life of their own. Now the for-profits are faced with what could be an existential crisis. The legal challenges have driven down the stock prices of the publicly-traded institutions and a daunting new regulation is about to take effect.

The story has been well-reported in the Chronicle. The former official who got the anti-for-profit ball rolling is Robert Shireman, who served as deputy undersecretary of education, until his resignation in July. Shireman jawboned the accrediting associations to be tougher on for-profits; called for a new system whereby each individual state in which an online university does business would have the right to regulate the enterprise; and pushed for the now notorious idea that for-profit colleges and universities would have to show high levels of “gainful employment” for their graduates in the fields they studied. His animus against the for-profits didn’t seem to sit all that well with the rest of the Obama administration. On May 11, Secretary of Education Arne Duncan went to a policy forum held by the for-profit DeVry University and declared that the for-profits play a “vital role” in educating underserved populations.

Shireman had played a key role in the Obama administration’s successful effort to abolish the role of commercial lenders in making Title IV federally-guaranteed student loans and replacing that system with direct lending managed by the Department of Education. So his decision to head for the exit had more an air of victory than of forced departure. The Chronicle, however, ran an in-depth analysis pointing to an all-out lobbying campaign by the for-profits to discredit Shireman. Whatever the case, the administration continued with the tone of suspicion and hostility toward the for-profit institutions, despite Secretary Duncan’s reassurances.

The debate that has emerged is only at the most superficial level about the for-profit motive in higher education. The problem to which Shireman drew attention is that most of the for-profit colleges and universities are aggressive rent-seekers, i.e. they had learned how to exploit the federal student-loan system with astonishing efficiency and often with unscrupulous disregard for the quality of education they provided students and for the disastrous debt they often burdened those students with. They were (and often still are) “for-profit” in the sense of creaming government resources, but not in the sense of competing in a market by offering an especially good service.

But the hard truth of the matter is that a great many colleges and universities in the not-for-profit sector are barely distinguishable from the for-profit institutions on any of these parameters—except perhaps the efficiency with which they exploit the federal loan system.

The challenge that looms for the for-profits is a Department of Education regulation that would impose a rationing of student loans proportional to the percentage of their graduates who succeed in finding “gainful employment’ in their majors. The matter has been tied up in debate among officials for several months but a meeting scheduled in late January may determine its fate. The legacy of Robert Shireman, however, includes his role in sufficiently traumatizing the for-profit institutions that they are now very actively lobbying for their case.

I have been meditating for some time what position my organization, the National Association of Scholars, should take. The for-profit colleges and universities as they are now are certainly not bastions of scholarship or liberal arts education. I see no grounds on that basis for NAS to take an interest. But they are very much part of what I take to be the fundamental transformation of American post-secondary education—and that is very much a matter of concern to NAS and to anyone concerned with the survival of liberal education. I’ll address that in my next post.

This entry was posted in Uncategorized and tagged Arne Duncan, DeVry University, for-profit college, Robert Shireman, University of Phoenix. Bookmark the permalink.

Daily Business Review: The "gainful employment" rule would hurt students of all economic sectors

Opinion: U.S. Education Dept. is wrong on for-profit colleges

Mercury News - San Jose


Opinion: U.S. Education Dept. is wrong on for-profit colleges

By Harris N. Miller

Special to the Mercury News

Posted: 01/05/2011 12:01:00 AM PST

We cannot fix the economy without an educated work force. President Barack
Obama has set a goal for the United States that by 2020 we must lead the
world again in the percentage of adults with a college credential.

Yet his Department of Education's so called "Gainful Employment" proposed
regulation would drastically undermine the goal. It could push many of the
almost 7,000 students in Santa Clara County attending private sector,
for-profit colleges and universities out of postsecondary education.

The gainful employment rule is supposed to remedy excessive student loan
debt. But with few exceptions, it applies only to private-sector colleges
and universities, while traditional college and university students generate
the vast amount of student loan volume and 57 percent of defaulters.

The rule would impose an 8 percent debt-to-earnings ratio on private college
programs, which means that students' annual loan payments could not equal
more than 8 percent of their income. This would be calculated on their first
three years of employment. If debt was too high, the programs would be
denied federal student loan eligibility. This would leave hundreds of
thousands of students without the opportunity for a postsecondary education.

The rule ignores the fact that a college education pays off over a lifetime,
and the lowest earning years are likely to be in the earliest stages of a
career. It also runs counter to the president's goals, givenhigh
unemployment and the demands of a global economy for a more highly skilled
work force.

For-profit private colleges provide career-oriented education in areas such
as health care and information technology to more than 3 million students.
They provide opportunities for those underserved elsewhere, especially
minorities and working adults. In 2009, 342,000 California students attended
private colleges, 50,000 in the Bay Area alone.

Private colleges have been the leaders in more student-oriented approaches
to learning, such as using technology to overcome barriers. Some traditional
schools slowly are following suit. Yet Washington proposes singling out
private colleges for extra restrictions. If the proposed rules applied to
traditional schools, many of them also would fail.

We would like to see tighter controls on costs covered by federal student
loans and grants. But student debt is an issue for all types of
institutions, not just private-sector colleges and universities. While this
proposed rule may be well-intentioned, the unintended consequences --
closing thousands of programs and cutting off access for more than 2 million
students by the end of this decade -- will fall hardest on the very people
it aims to protect.

This trend not only moves our county's graduation numbers backward, but it
also has very real consequences for individual students. The median salary
for an associate degree earner is $31,906, compared with $26,140 for a high
school graduate. Although private colleges enroll only 12 percent of all
postsecondary students, our institutions award more than 18 percent of all
associate degrees. Over the past few years, our percentage of graduates has
risen faster than our overall growth.

Private colleges and universities award 11 percent of all nursing and 58
percent of all allied health care degrees and certificates in this country.
Their graduates keep doctors' and dentists' offices running smoothly and
perform critical hospital functions like medical billing and coding,
radiology and surgical technology.

With health care programs at community colleges running at capacity and the
health care delivery system struggling to keep up in many communities, our
schools provide a key source of skilled, job-ready professionals. The
Education Department should withdraw its proposal and work on preventing
excessive debt for all of higher education.



HARRIS N. MILLER is president of the Association of Private Sector Colleges
and Universities. He wrote this article for this newspaper.