AP: The Big Story: For-profit colleges expect fortunes to improve under Trump

By COLLIN BINKLEY  Nov. 29, 2016 4:15 PM EST

BOSTON (AP) — After nearing collapse under the Obama administration, the for-profit college industry is celebrating Donald Trump's election as a chance for a rebound.
As stock prices for some of the nation's largest college chains have surged, industry lobbyists say they have received a warm welcome from Trump's transition team and already have launched a campaign to rebrand the embattled industry as a key to the new president's plan for economic growth.

While Trump has yet to detail his education plan, some in the for-profit sector see the president-elect as an ally who has championed the private sector and promised to roll back many of President Barack Obama's regulations.

Industry lobbyists hope those include federal "gainful employment" rules, which can cut funding to academic programs whose graduates struggle to pay off student debt, and new borrower defense rules that can force financially unstable schools to put up large sums of money to cover student loans if the school fails.

"Unfortunately, the focus in the last eight years has been fighting for survival from an ideological administration that was opposed to our very existence, and hopefully that is a fight we will no longer have to wage," said Steve Gunderson, president of the industry lobbying group Career Education Colleges and Universities and a former Republican congressman.

Gunderson said that early conversations with Trump's transition team showed promise for a smoother relationship with the White House.

"They absolutely see a place for postsecondary career education which is not exclusively constructed around just four-year liberal-arts programs," Gunderson said.

Trump's transition team did not respond to requests for comment.

The for-profit college industry has suffered steep enrollment losses since 2010. Many schools blame Obama, whose administration has cracked down on schools accused of fraud and added new regulations that officials say were meant to protect students from abuse.

In September, the ITT Technical Institute chain shut down after the federal government mostly barred it from enrolling new students as a sanction for academic troubles. A month later, the Apollo Education Group, owner of the University of Phoenix, told investors that it might not survive the policies of another Democratic president.

Trump, who graduated from the University of Pennsylvania, spoke little about for-profit colleges during his campaign. His pick for education secretary, Betsy DeVos, is known for promoting charter schools and school vouchers but has less of a track record when it comes to higher education. DeVos did not respond to a request for comment.

Still, critics expect that Trump will loosen the reins on for-profit colleges, and some see parallels between those schools and the Republican's now-defunct Trump University. This month, Trump agreed to pay $25 million to settle three fraud lawsuits filed against his Trump University real-estate seminars, although he didn't admit fault.

Ben Miller, senior director for postsecondary education at the liberal think tank Center for American Progress, said it's revealing that the industry is celebrating someone accused of misconduct "that resembles the worst practices of that industry."

But Miller and other critics doubt the sector will see a major rebound because its image has already been tarnished.

To repair its reputation, Gunderson's group is rebranding the industry as a key to Trump's plan for economic growth. This month, the schools Gunderson represents promised to train 5 million skilled workers over the next decade, echoing Trump's promise to create 25 million jobs in that span.
"Our sector needs to reintroduce ourselves to the policymakers," Gunderson said.

Four-year for-profit colleges enrolled an estimated 1.1 million undergraduates in spring 2016, according to the National Student Clearinghouse Research Center, a nonprofit research group.
The DeVry Education Group said in a statement that it will work with the administration and "offer suggestions and reforms." Shares in the parent company of DeVry University jumped 30 percent in the weeks after Trump's election, to their highest value in more than a year.
Other for-profit colleges declined to comment.

Students who attend for-profit colleges are typically older and poorer than their peers at four-year universities, and more often they're minorities, according to federal data. Industry backers say that's because for-profit schools offer accelerated programs with flexible schedules for working adults. Opponents say it's because they lure low-income students with aggressive tactics.

A study released by the Education Department this month found that graduates of public colleges earned an average of $9,000 a year more than their counterparts at for-profit colleges. Gunderson's group countered with another study projecting that the sector could produce 8.5 million professionals over the next decade.

Those offering recent support to the industry include former House Speaker Newt Gingrich, a close adviser to Trump who is making a case to be the president-elect's strategic planner. At a recent event in Dallas for Gunderson's group, Gingrich urged the next administration to embrace for-profit schools in its education plan.

"They have an opportunity to try to create a movement, to create 8.5 million new jobs, which gets precisely at what Donald Trump has been campaigning on," Gingrich said in an interview.
Gingrich, who is personal friends with Gunderson, added that he believes some of Obama's major regulations targeting the industry will be scaled back.

"I expect them to be dramatically modified," Gingrich said. "They were impossible to administer and they simply set up rules designed to force schools into bankruptcy."

Direct link to article: http://bigstory.ap.org/article/e2ee39e8a0d045e4921c025ade9017dd/profit-colleges-expect-fortunes-improve-under-trump

Manhattan Institute Commentary: Public Colleges Aren't a Better Bet Than For-Profits


Forbes November 21, 2016
EducationHigher Ed
The Department of Education has released new data on the earnings of graduates from career college programs as part of the implementation of its “gainful employment” (GE) rule. The rule, which went into effect last year, requires colleges that receive federal funding to ensure their graduates have high earnings relative to the student debt they have accumulated. The rule applies to all for-profit colleges and to certificate programs at colleges in any sector, public or private.

In its press release, the Department of Education touts the $9,000 gap between the average earnings of graduates of public and for-profit career college programs with the assertion “public colleges pay off.” This data point will certainly be deployed to justify the Department’s uneven regulatory strategy, wherein for-profit colleges receive much tougher scrutiny than their peers in the private nonprofit and public sectors. But the earnings gap only tells part of the story.

The following graph, which focuses only on undergraduate certificate programs for simplicity’s sake, shows wide variation in graduate earnings within both the public and for-profit sectors.

The earnings gap doesn’t tell the whole story.

There are plenty of public schools which are worse than the average for-profit, and many for-profits which outperform the average public institution. Painting either sector with a broad brush is inappropriate.

More importantly, the earnings data only refer to graduates. (When I contacted the Department of Education, a spokesman told me that they were barred from releasing data on the earnings of dropouts.) Defenders of the Department’s regulatory strategy can only make a case that public colleges “pay off” for those who manage to graduate. For public colleges, graduates are a minority.

According to the Beginning Postsecondary Students Longitudinal Study, only 45% of certificate-seeking students at public colleges had attained their credential three years later. However, this attainment rate was nearly 70% for comparable programs at for-profit colleges. That is a 25-point gap in favor of for-profits.

In short, these data points suggest that there is a tradeoff between public and for-profit colleges, rather than one or the other being objectively better. At a public college, you’ll collect higher earnings if you manage to graduate. At a for-profit, you’ll probably graduate, but you’ll also end up with lower earnings.

Specifically, it appears that for-profit schools have a lower bar for graduation than public schools, thus allowing more students with lower earnings potential across the finish line. Since the GE data only refer to completers, two certificate programs with identical instructional quality and student demographics could have different average earnings if one program has a higher standard for graduation. The higher-standard program will allow fewer students with low earnings potential across the finish line, which will push up the average earnings of the students who do manage to complete.

In addition, for-profit schools have a stronger incentive to admit more students who might have low earnings potential to begin with. Both public and for-profit schools are heavily subsidized. But in the case of for-profit schools, most of the subsidies generally follow the student through Pell Grants and subsidized student loans. Public schools receive those funds as well, but they also get a substantial share of revenue from direct government appropriations. To increase revenues, therefore, for-profits must go out and recruit more students. Public schools, meanwhile, will have more luck lobbying their state legislature for additional direct funds.

This is why for-profit colleges spend heavily on recruitment and advertising—more students mean more subsidies. It also explains why, according to the GE data release, the average for-profit undergraduate certificate program graduated 131 students, compared to just 30 students for comparable programs at public schools.

An odd set of incentives is at play here. Federal student aid encourages for-profit colleges to enroll as many students as possible. However, the gainful employment rule will also encourage them to graduate as few of those students as possible, letting only the highest potential earners over the finish line. (Remember, low graduate earnings put a school at risk of losing federal funding, per the gainful employment rule.) A college may want to stop a mediocre student from earning a certificate so his likely low earnings will not count against it in the GE data.

Regulators could blunt these perverse incentives by looking at graduate earnings in tandem with a school’s graduation rate. That way, colleges would have a harder time concealing their poor performance by relegating likely low earners to the pool of non-completers. But the Department of Education explicitly rejected any regulatory approach based on completions. Many public colleges, which the Department seeks to present as better alternatives to their for-profit counterparts, would fail any reasonable aid eligibility test based on graduation rate.

For-profit colleges must do better, especially given that they are the beneficiaries of billions in taxpayer money. But the idea that public colleges are superior is questionable to say the least. The outgoing Obama administration will doubtless point to the gainful employment data as a mandate to push more students into public colleges’ certificate programs, or even make the schools tuition-free. But we should really be concerned about the quality of the career college sector as a whole—public and for-profit schools alike.

This piece originally appeared on Forbes

Direct link to article: http://www.manhattan-institute.org/html/public-colleges-arent-better-bet-profits-9544.html
Preston Cooper is a fellow at the Manhattan Institute's Economics21. Follow him on Twitter here.

CECU Press Release: Career Education Colleges and Universities Commits to Producing 5 Million Skilled Professionals

​November 18, 2016 - Dallas - Career Education Colleges and Universities (CECU) announced this morning the Campaign to Create 5 Million Career Professionals in the decade ahead. Using research that connects the academic programs of postsecondary institutions in our sector to related occupations, and calculating projections using state-specific data on occupational growth demands and replacement needs, the sector has outlined its role in America’s economic and social future. 
“The importance of this research is that, for the first time, we are connecting academic and occupational data from the government with local projections to provide policymakers and employers a clear outline of job skill demand in their community and state,” said Steve Gunderson, president of the association. “We have combined this data nationally in ways that emphasize the incredibly important role this sector provides in meeting our nation’s skill demands.”

Independent research conducted by Dr. Wallace Pond and Ian N. Creager developed the protocols leading to this important set of data. The analysis, based upon a sophisticated, program-level, 50-state “cross-walk” of the Department of Education’s IPEDS education data and Bureau of Labor Statistics labor projections, suggests career colleges could produce nearly 8.5 million professionals in critical fields over the next decade.

The research shows that over the next decade, private sector schools will produce:
•    90% of professional divers,
•    83% of cosmetologists,
•    78% of vocational nursing and nursing assistants,
•    64% of dental assistants and
•    55% of heating, ventilation and A/C (HVAC) engineering technicians.

In all, the research shows that in over 200 occupations, private sector schools produce between 25-100% of the academic credentials in a given occupation area.

The data also shows that in certain states, the work of these schools in meeting their state’s economic needs is essential. For example, these schools could produce 1.3 million professionals in California; just over 1 million in Arizona; 589,000 in Florida; 496,000 in Texas and over 400,000 in New York State.

Congressman Pete Sessions (R-TX-32), honorary co-chair of the kick-off event, commended the study as key to building America’s economic future. “This research shows that we must take an active role in creating more opportunities in the marketplace and encouraging Americans to reenter the job market. I am pleased that Texas is leading the way on this initiative and stressing the importance of the role that higher education institutions play in creating an effective skilled workforce.”

Congressman Henry Cuellar (D-TX-28), fellow honorary co-chair, recognized the campaign’s pledge to a skilled workforce. “In today’s 21st century economy, it is important that postsecondary education includes a career focus and prepares our students to be a successful part of the workforce. I applaud the campaign’s commitment of nearly half a million credentials in Texas to meet the demand for skills-based jobs.”  

At a time of educational focus on outcomes, the study lifts up the important achievements of this sector of higher education. Wallace Pond, the director of the study said, “In all higher education career programs, the private sector institutions represent 11% of all students, but 14% of all graduates. It is this sector’s focus on retention and completion rates that shows such positive results.”

Dalphna Curtis, a career institution CEO in Dallas and leader with Women Voters Alliance and Black Vote Advisors, said, “Nearly one in four Texas students in our sector identify as black or African-American. Another 42% identify as Hispanic. Our communities of color need full access to all sectors of postsecondary education to meet labor force growth and replacement demands. This is not a sector conversation. This must become a national conversation. If we have any hope of rebuilding America’s middle class, this sector must play a role.”

Joining in the official announcement, former House Speaker Newt Gingrich called upon the new administration and the Congress to use the campaign and supporting study as an opportunity to work together in creating higher education policy. “It’s time to stop the ideological crusade against private sector schools and work together to give all citizens an opportunity for skills, jobs and wages,” said Gingrich. “This study makes clear America cannot succeed without the role these career schools play in giving all citizens the skills needed for real work with real pay.”

CECU Press Release: CECU On Gainful Employment Data Release

November 17, 2016 - Washington, DC - The following statement can be attributed to Steve Gunderson, president and CEO of Career Education Colleges and Universities:
“The U.S. Department of Education has fulfilled what was our greatest concern around the gainful employment regulation – the use of faulty data that lacks context.

“It is absolutely absurd to compare totally different fields of study and suggest that programs traditionally taught in public institutions have higher incomes than programs taught in proprietary colleges.  This reflects the continuing ideological bias of this Department against our sector and is yet another example of why Americans are tired of out-of-touch bureaucrats in Washington.

“One of the fundamental lessons we have learned from reviewing gainful employment data is that where a person lives can have a significant impact on their earnings – you can have the exact same program in a high wage urban area in California and a low-wage rural area in the Midwest and have two totally different outcomes related to earnings.

“Without seeing the Departments underlying datasets it is impossible to fully answer any of these questions. But geography, age, race and gender are all factors here.” 

Inside Higher Ed: Gingrich Backs For-Profit Group's Campaign

November 17, 2016

By Paul Fain

Newt Gingrich and U.S. Representative Pete Sessions, a Texas Republican, are slated to join Career Education Colleges and Universities at an event Friday. The group, which is the primary trade organization for the for-profit sector, is announcing a new campaign to close the skills gap with five million trained professionals. Gingrich, the former Speaker of the U.S. House of Representatives and a prominent adviser to President-elect Donald Trump, in August appeared in a web video with Steve Gunderson, the for-profit group's president and CEO.

Direct link to article: https://www.insidehighered.com/quicktakes/2016/11/17/gingrich-backs-profit-groups-campaign