The Value of Private Higher Ed

By Harris Miller

Amid the numerous legislative battles in Washington, DC, the Obama Administration is preparing to release its so-called "gainful employment" regulation, a step that will eliminate education opportunities for millions who seek the flexible and career-focused options offered by private sector colleges and universities (PSCUs). Critics of our schools regularly dismiss what the private sector offers. I doubt those critics have talked to many – if any – of our students and graduates.

If they had, they might have met the former student who got her Associate’s degree from Denver Business College, paid back her Federal loans, and works in healthcare administration. She is proud to say she could not have received her degree without the flexibility her school offered, enabling her to work during the day and take classes at night. They might have spoken with a male student, an Iraqi war veteran who found the online learning option offered by private sector college met his education needs; he now has a his Associate’s and Bachelor’s degrees from Colorado Technical University and is pursuing an MBA.

These are but two of the millions of student success stories from PSCUs. But rather than volley anecdotes with our critics, as we all know we can find both good and bad news stories from any higher education institution, let’s look at the facts.

The Obama Administration has set a goal of having more college graduates than any other nation by 2020-and PSCUs can help add capacity and improved completion rates to our higher education system. What we don’t need are poorly conceived proposals that will not eliminate "bad actors," as the advocates claim, but will instead close thousands of quality programs and leave potential students nowhere to turn. The US Department of Education’s "gainful employment" regulation would prevent working adults, including single parents and lower income students, from accessing higher education opportunities at a time when traditional schools, including state colleges and universities and community colleges, are rejecting applicants in huge numbers because of state budget cuts. Just recently, California’s community colleges announced that they would turn away 400,000 students this coming academic year.

The gainful employment rule would set up an unproven, untested student debt to earnings ratio, applying it almost exclusively to PSCU programs. Independent analysis of the Department’s ratio metric indicates it could push 2.3 million students out of higher education over the next ten years, including close to a quarter of a million in Colorado. If the same metric were applied to traditional higher education, most medical schools would fail. Does such a metric really make sense?

But it does not have to be this way. The sector is already highly regulated. By effective implementation and oversight of existing rules, increased transparency, and more student counseling, the higher education sector can address the growing challenge of student debt while still enabling students of all walks of life to access the career preparation they need.

We are concerned about rising student loan default rates at all institutions that accept lower income students and working adults. If you compare default rates at PSCUs to traditional schools with similar student demographics, you will find similar default rates, a fact that our critics fail to acknowledge. As independent research has shown, it is the student population – and not an institution’s tax status – that is the best predictor of default rates. But our schools do not just accept as a given that students will default because they come from lower income brackets. Instead, they work aggressively with the students, the lenders, and the government to minimize defaults. Unfortunately, federal law currently prohibits schools from using "tough love" and telling a student not to over-borrow-a law that needs to be revised. Some schools are experimenting with new practices, such as enabling potential students to "try before they buy" with classes-gaining a sense of the demands of higher education before making a full commitment.

PSCUs produce positive results for students, and do better than their traditional higher education counterparts in enabling similar, higher-risk student populations to obtain degrees.

Our graduation rates are solid-60% for two-year institutions and 44% overall. Our schools also have better graduation rates among minority students: at two-year private sector colleges and universities, the graduation rate for African-Americans students is nearly 49% and for Hispanic/Latino students, nearly 64%, much better than graduation rates of 15% and 17% respectively at community colleges. And 70% of our graduates at nationally accredited institutions are placed in jobs, including in high growth fields like healthcare and information technology.

With positive outcomes like these, why do our critics continue to single out private sector colleges? Why not examine why PSCUs have better outcomes with nontraditional students, and how those lessons can be applied more broadly? How can we create standard measures of quality across all of higher education – such as graduation and placement rates – that clearly answer questions about the return on investment for students and taxpayers?

At a time when job creation is this country’s top priority, students should have more postsecondary choices, not less. The success of our students is our most pressing concern. With fair and balanced oversight of all higher education institutions, our schools will continue to provide needed professional and career education to millions of students across the country.

Harris Miller is president of the Association of Private Sector Colleges and Universities.


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