Obama’s Budget Excludes For-Profit Colleges from New Programs

For-profit colleges and universities are not being targeted for new job-training funds under President Obama’s fiscal 2013 budget, a bold move from the administration to crack down on the often high-priced and low-quality institutions.

A key portion of the president’s budget is a proposed $8 billion investment in job training at community colleges over three years, leaving other institutions, like for-profit colleges, with little chance of securing any of that pool. In addition, Obama is calling on Congress to allocate more money to the Perkins Loan Program and create a $1 billion “Race to the Top” style program for higher education.

The Obama administration began cracking down on for-profit colleges last year, which serve just 10 percent of students but rake in more than 25 percent of federal student aid. Students at such institutions are also less likely to graduate on time (or at all) and far more likely to default on student loan payments than their peers. In July, the Department of Education released a “gainful employment” rule, though it was weakened dramatically by the $16 million in lobbying by for-profits.

And now, for-profit institutions likely won’t receive access to new funding, including the “Race to the Top” initiative and the $8 billion in job training funds.

For-profit trade group leaders are crying foul on the president’s budget, saying such a move isn’t beneficial.

“We firmly believe that no stone should be left unturned in the search to find solutions to meet the needs of the job market,” said Penny Lee, managing director of the Coalition for Educational Success, a trade group of for-profit schools that has tried to advance a “self-policing” regulation model.

Obama is also proposing a slight increase in the maximum Pell Grant—from $5,550 to $5,635 per year—and preventing students from taking subsidized loans if they take longer than six years to complete a bachelor’s or more than three years for an associate degree.

Lee also said the president needs to “work on widening the impact of this career training fund by partnering with all institutions of higher education,” according to Inside Higher Ed.

But the for-profit industry should be forced to show it can provide affordable and quality education before benefiting more from federal funding. Many institutions already get as much as 90 percent of their revenue from the government, and a number have been sued for misleading students.

The industry has fought stricter regulations fervently while failing many of its students. Obama’s budget is a bold step toward insuring that federal funding goes to colleges helping students graduate and succeed in the job market, not saddling them with student debt and inadequate training.


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