Opinion: Feds Shouldn’t Punish Good Apples

Back in 1988, the Sun-Times ran an investigative series about "schools that admit anyone, graduate few and indebt many."

The institutions we wrote about were for-profit post-secondary schools, which as a group have a long history both of providing a pathway to careers for students who otherwise would be forgotten and preying on the dreams of young people.

Now, the federal government, whose loans to students provide the bulk of funding for for-profit schools — sometimes more than 90 percent — is trying to corral the bad actors in the industry. It’s a worthy effort, but care should be taken not to penalize the better schools.

In the 1990s, after an investigation of the industry by former Sen. Sam Nunn (D-Ga.), significant reforms were imposed. A number of the rules later were relaxed under the Bush administration, and a new round of bad practices inevitably resulted. Now, critics say, the bad apples in the industry put far more effort into recruiting students and encouraging them to take out loans than in actually educating them and helping them to find jobs. As a result, many more students attend for-profit schools — up to almost 1.8 million in 2008 — but a big percentage of them (57 percent) never get a degree or a job, just insurmountable debt.

When the Sun-Times wrote about for-profit operations in 1988, no companies running proprietary schools were publicly traded. Now there are 15, and their execs have snagged more than $2 billion in stock sales in the last eight years.

Last year, the U.S. Department of Education proposed new reforms to protect students and to cut the amount of loan money the federal government loses when loans aren’t repaid. Among problems cited by the department were the high percentage of students who don’t graduate, the huge burden of debt taken on by students and the unfounded promises of career opportunities.

The proposal drawing the most criticism is the so-called “gainful employment” rule, which is designed to ensure that graduates spend no more than 8 percent of their average income on loan repayment in their first three years after graduating. It also would deny federal aid to any school in which fewer than 35 percent of the graduates failed to repay their loans.

The Education Department estimates that only 5 percent of all for-profit post-secondary schools would lose all federal aid under the reforms. But the Association of Private Sector Colleges and Universities — which includes only accredited schools — says 30 percent of its schools’ programs cannot meet the new standards. In fact, the association says, even some of the best programs at traditional universities could not do so. The association has proposed alternatives.

The federal government is right to step in. For-profit schools typically cater to a fragile group of young people who, enchanted by the prospect of a real career path after other doors have been closed, may not see that they are being detoured in the wrong direction.

On the other hand, the best professional schools offer a real and substantial opportunity for many folks who might otherwise believe they’ve reached a dead end. The legitimate schools deserve some leeway, given that many of their students were not exactly headed to success before a TV ad encouraged them to get off the couch and make something of themselves.

CHICAGO SUN-TIMES

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