Las Vegas — The annual convention of the Career College Association was just gearing up for the day Thursday when word started circulating that the U.S. Senate’s education committee planned to start this month a series of hearings on the increasing flow of federal student aid money to for-profit higher education.
It was a stark reminder — in case anyone here really needed it — that the rapidly growing college sector faces a level of federal scrutiny probably unmatched since the early 1990s, when Congress approved a set of changes to the Higher Education Act aimed at reining in perceived abuses of the financial aid programs by what were commonly referred to as "fly-by-night trade schools."
Just how much today’s environment felt like déjà vu from 20 years ago depended on whom you talked to here.
To many financial analysts, investor types and others who focus on stock prices or otherwise take a short-term view, the mood was one of steady-state alarm, focused on the cloud of intensified federal regulation that has loomed over colleges for the last year. Those in this group believe that the for-profit sector has a target on its back, with a coalition of consumer advocates, short-selling investors (who profit if stock prices fall), and ideological government bureaucrats pushing an aggressive, activist agenda.
To some observers who’ve worked in and around the industry longer, though, the current round of federal scrutiny (in the form of potentially tough new rules) — while unfair in their eyes — is a far cry from the ’90s, for a few reasons. First, they argue, for-profit colleges are too embedded in the fabric of higher education, and too essential to meeting President Obama’s goals for increasing the country’s college completion rates, to be dealt with in a way that would seriously damage their ability to contribute to that effort.
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