Pittsburgh Post-Gazette: DeVry CEO backs regulation

By Daniel Malloy
The CEO of one of the country’s biggest for-profit college companies told the Senate on Thursday that the industry should be regulated based on student outcomes.

DeVry Inc. CEO Daniel Hamburger said that schools’ eligibility for federal funding should be contingent on their ability to graduate students and place them in jobs without sinking them in unmanageable debt.
The Obama administration has taken a crack at that goal with recent controversial “gainful employment” regulations that the for-profit college industry has fought in the courtroom and elsewhere. Mr. Hamburger’s testimony, though, broke with the industrywide view.

Downtown-based Education Management Corp., which owns the Art Institutes and other schools, enrolls the second-most students of any for-profit higher education company.

The industry’s primary congressional inquisitor, Sen. Tom Harkin, D-Iowa, convened a roundtable discussion Thursday featuring Mr. Hamburger, the CEO of the Regency Beauty Institute, an official from the new Consumer Financial Protection Bureau and advocates to explore possible laws governing the industry. He has heavily scrutinized for-profit colleges for the past year by giving whistle-blowers and critics a forum to discuss evidence of fraud in an industry that relies on federal grants and loans for the vast majority of its funding.

“We are going to look at making changes,” Mr. Harkin said. “I want them to be meaningful.”
But the obstacle to any new legislation was plain in the empty Republican chairs: GOP senators have boycotted all hearings on for-profit schools in protest. Republicans argue that Mr. Harkin is unfairly targeting the for-profit sector when student loan debt and low graduation rates are seen in public and nonprofit higher education, as well.

The recent scrutiny has targeted the “career” section of higher education, as policymakers argue that those programs are designed to lead directly to employment in certain fields, as opposed to a liberal arts education, where outcomes are tougher to judge.

But when Mr. Hamburger pressed the point of enforcing standards across all of higher education, Mr. Harkin replied, “You’re exactly right.”

Some advocates argue a new law is the only way to bring true reform. Barmak Nassirian, of the American Association of Collegiate Registrars and Admission Officers, criticized the recent gainful employment regulations for being weaker than those initially proposed, due to a furious industry lobbying effort.

“Procedural regs are not going to do the trick,” Mr. Nassirian said. “What you want to do is you want to have very meaningful requirements that tie the outcomes for students and taxpayers to company managers and shareholders.

REUTERS: For-profit colleges sue Dept of Education over new rule

Reporting by A. Ananthalakshmi

An association of for-profit colleges in the United States has sued the Department of Education to block the implementation of a controversial rule, saying the rulemaking process was flawed and the agency was overreaching in its capacity to frame such rules.

The Association of Private Sector Colleges and Universities (APSCU), representing more than 1,650 colleges, filed a lawsuit in the federal District Court in Washington DC seeking to block the department's final 'gainful employment' regulations.

In June, the department finalized the rule which threatens to cut off federal aid -- a key source of revenue -- to colleges if they do not meet certain student debt criteria.

The final version of the rule is a much softer one than the draft published earlier as the industry fought back the strict rules through lobbying.

The rule is part of a larger package of regulations framed by the Obama administration to reduce student debt at for-profit colleges and make them more accountable for the taxpayers money they get to fund student loans.

"By issuing the gainful employment regulations, the Department of Education has clearly exceeded its statutory authority," APSCU's interim CEO Brian Moran said in a statement on Wednesday.

The department could not be immediately reached for a comment.

The group had sued the department in January over a different set of rules, and had won one claim while losing two.

APSCU members include Career Education Corp, Corinthian Colleges, DeVry Inc, Education Management Corp, ITT Educational Services and Lincoln Educational Services.

Sector leader Apollo Group is not a part of APSCU.

The colleges, accused of having high student default rates, had made changes to their admissions policies as they braced for a more stringent set of rules, leading to sharp declines in enrollment numbers. They had also cut jobs and scaled back on expansion plans.

The case is Career College Association vs Arne Duncan, secretary of Department of Education, and the department, U.S. District Court, District of Columbia, No. 11-cv-01314. (Reporting by A. Ananthalakshmi in Bangalore; Editing by Gopakumar Warrier)


NPR: Must All Colleges Show Their Graduates Found Work?



Now that the Education Department has released "Gainful Employment" rules for for-profit schools, some would like to see similar standards for non-profit colleges and universities. With student debt increasing, they say it would be useful for students to know what their job chances are. MARY LOUISE KELLY, host:

This next story also involves debt. It asks what American students get in return for their student loans. And that leads to a deeper and older question: What is the purpose of an education? For-profit universities face new federal rules requiring them to prove their graduates are getting jobs and earning enough to repay their loans. Now non-profit and public colleges could face pressure to apply the same rules, and that has dismayed educators who argue that it's hard to put a dollar value on education.

NPR's Larry Abramson reports.

LARRY ABRAMSON: For-profit career colleges fought tooth and nail against these new rules. But now that they are in place, Brian Moran, acting president of the Association of Private Sector Colleges and Universities, says he'd like equal treatment.

Mr. BRIAN MORAN (Association of Private Sector Colleges and Universities): I guess we look for a little consistency. For those who would think these regulations are beneficial, then why not have them applied to all of higher ed?

ABRAMSON: The Department of Education focused its crackdown on career colleges because their students take out the biggest federal loans. That leaves taxpayers on the hook if students default. But with the average debt of all graduates at nearly $25,000, why not ask the same for all of higher ed?

Mr. MARK KANTROWITZ (Publisher, FinAid.org): Most students think of college as the pathway to a good job.

ABRAMSON: Mark Kantrowitz publishes FinAid.org. He says, sure, students go to school for lots of reasons - to broaden their horizons, to become good citizens, but most, he says, do expect a return on their investment. Kantrowitz says graduates of the best schools do earn enough to repay their loans.

Mr. KANTROWITZ: A college that has a 70 or 80 percent loan repayment rate, which is typical of the Ivy League institutions, is going to show up as a much better institution than a college that has a 25 or 35 percent loan repayment rate.

ABRAMSON: But don't expect to see your local college displaying these numbers any time soon on the front of the catalog. Few do. And Sandy Bowne(ph) of George Washington University says there's a good reason: success can't easily be measured with a single number.

Ms. SANDY BOWNE (George Washington University): If you're a women's college, your graduates are going to make less than if you're a co-ed institution. If you are a liberal arts institution, you may be educating a lot of people who are going off to graduate school and will take a long time to earn money.

ABRAMSON: Schools can't completely control who attends and how they do when they leave, Bowne says. And that's exactly what career colleges have argued. We attract lots of low-income students looking for a second chance. Don't penalize us for that, they say.

Terry Hartle of the American Council on Education says that's the problem with the idea of coming up with a single set of numbers for such a diverse industry.

Mr. TERRY HARTLE (American Council on Education): We have about 6,000 institutions of post-secondary education in the country. They run from three-month vocational programs to enormous research universities. And that heterogeneity that is such a key characteristic of American higher education is the very thing that makes it hard to come up with a single indicator.

ABRAMSON: But Anthony Carnevale, who studies education in the workforce at Georgetown University, says we don't need to settle this debate. He says parents and students should be able to make up their own minds.

Mr. ANTHONY CARNEVALE (Georgetown University): It's not so much that you suppose people will always choose the degree that gets them the most money. It's that they have a right to know what they're getting into.

ABRAMSON: Right now, savvy parents can track down some numbers on their own, like the average debt load at certain schools. But few traditional schools display this kind of nuts and bolts information right there in the catalog the way career colleges have to. Carnevale says no school and no program should be ignoring the big question: Can your students get a job?

Mr. CARNEVALE: So if higher education in America is unable to make people employable, it's very unlikely that it'll complete its other missions.

ABRAMSON: Federal law makes it possible for the Education Department to require that career schools monitor their placement rates. But when it comes to traditional schools, it's up to parents or students to decide whether they demand that information.

Larry Abramson, NPR News.

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The Chronicle of Higher Education: Judge Sides With For-Profit Colleges in Challenge to 'State Authorization' Rule

The Chronicle of Higher Education

By Kelly Field


A U.S. District Court judge has struck down a portion of the Education Department's controversial "state authorization" rule but upheld a pair of rules barring deception in college recruiting and commissions for college recruiters.

In an opinion issued Tuesday, Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia tossed out a requirement that colleges offering online programs to students in other states had to seek approval from each of those states. Colleges had not been given adequate time to review the rule and comment on it, Judge Collyer wrote.

Her decision was cheered by the Association of Private Sector Colleges and Universities, which sued the department in January over the state-authorization requirement, and over the department's "misrepresentation" and "incentive compensation" rules. In a statement issued Tuesday evening, the group called the ruling "a major victory for innovation in higher education and an important answer to the department's obvious overreach in this area."

The association expressed disappointment with the judge's decisions upholding the other rules, however, and said it was considering an appeal.

Justin Hamilton, a spokesman for the Education Department, said the department was "happy that the court fundamentally upheld the three regulations challenged by APSCU."

He added that the department was "still reviewing the opinion and considering our options on the one portion of our state-authorization regulation that the court did not affirm."

The state-authorization rule had been opposed not only by for-profit colleges, but by college lobbyists across all sectors of higher education. Colleges had cited the cost of seeking authorization in every state where they enrolled students as a prohibitive factor, and Republicans in Congress had begun work on legislation to repeal the rule.

House Education and Workforce Committee Press Release: Joint Hearing Highlights Need to Eliminate Job-Destroying Gainful Employment Regulation

House Education and Workforce Committee Press Release

July 8, 2011

The Subcommittee on Higher Education and Workforce Training, chaired by Rep. Virginia Foxx (R-NC), held a joint hearing today with the House Committee on Oversight and Government Reform’s Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending. The hearing examined the negative consequences the Department of Education’s gainful employment regulation will have on student choice and job creation.

“Postsecondary education opens doors for greater job opportunities and the chance for a more stable career path, both of which are critical for Americans struggling to make ends meet and support their families in this tough economy,” said Chairwoman Foxx. “Unfortunately, the administration’s efforts to impose the widely criticized gainful employment regulation on proprietary colleges could severely limit education and job training opportunities for millions of students and inhibit local economic development in communities across the country.”

Proprietary schools are flexible institutions that provide career-training opportunities designed to meet the needs of non-traditional students and the local workforce. Karla Carpenter discussed the key skills she gained from a proprietary school program when she decided to embark on a new career path after 14 years as a stay-at-home-mom. “I am proud to state that I am an American worker who has successfully adapted to working in a global business environment by leveraging the technical skills I gained in college as an adult student,” Ms. Carpenter said. “As a returning adult student,” she continued, “I represent an important and growing demographic of students that our educational institutions will need to serve in order to best fulfill our national goals for postsecondary education and workforce development for our nation.”

Dr. Dario A. Cortes, President of Berkeley College, explained how the close-knit relationship between Berkeley and the local business community helps better prepare graduates to compete in the workforce. “We have cultivated relationships with the business communities surrounding our campuses, as well as the communities at large, to ensure that our graduates are prepared to provide a positive contribution to the community upon graduation, both as qualified members of the workforce and as upstanding citizens who believe in personally investing in the communities where they live and work.” Dr. Cortes also stated, “As new employment demands arise, we have the experience and ability to thoroughly and quickly create new programs that both meet the needs of employers and encourages economic growth.”

Many employers rely on proprietary schools to develop key job-training programs that prepare quality candidates to fill job openings at their businesses. “I am here today because the black-owned businesses that I represent rely on graduates of proprietary colleges targeted by the recent Gainful Employment Rule,” said National Black Chamber of Commerce President and C.E.O. Harry C. Alford. “These proprietary colleges serve minority, low-income, and high-risk students at much greater numbers than traditional four-year institutions and have more success doing it.”

As a result of the gainful employment regulation, Mr. Alford added, these students “will simply be frozen out of the educational marketplace with the result impairing their employment prospects.” He urged committee members on behalf of the employers he represents to find another solution to the problem of accountability in higher education that does not “make a scapegoat out of for-profit schools.”

Chairwoman Foxx stressed the need to be wary of ill-conceived federal regulations during these difficult economic times. “The new unemployment numbers released by the Department of Labor this morning show private sector job growth remains sluggish. More than 14 million Americans are out of work, and the unemployment rate continues to hover above 9 percent. Our economy added only 18,000 jobs in June. That is simply unacceptable. It is absolutely critical Congress do everything in its power to rein in harmful regulations that hamper economic growth and job creation – and we must start by putting an end to the misguided gainful employment regulation.”

To view an archived webcast and related documents from today’s hearing, visit www.edworkforce.house.gov/hearings