U.S. Education Dept. is Wrong on For-profit Colleges

By Harris Miller

We cannot fix the economy without an educated work force. President Barack Obama has set a goal for the United States that by 2020 we must lead the world again in the percentage of adults with a college credential.

Yet his Department of Education’s so called "Gainful Employment" proposed regulation would drastically undermine the goal. It could push many of the almost 7,000 students in Santa Clara County attending private sector, for-profit colleges and universities out of postsecondary education.

The gainful employment rule is supposed to remedy excessive student loan debt. But with few exceptions, it applies only to private-sector colleges and universities, while traditional college and university students generate the vast amount of student loan volume and 57 percent of defaulters.

The rule would impose an 8 percent debt-to-earnings ratio on private college programs, which means that students’ annual loan payments could not equal more than 8 percent of their income. This would be calculated on their first three years of employment. If debt was too high, the programs would be denied federal student loan eligibility. This would leave hundreds of thousands of students without the opportunity for a postsecondary education.

The rule ignores the fact that a college education pays off over a lifetime, and the lowest earning years are likely to be in the earliest stages of a career. It also runs counter to the president’s goals, given high unemployment and the demands of a global economy for a more highly skilled work force.

For-profit private colleges provide career-oriented education in areas such as health care and information technology to more than 3 million students. They provide opportunities for those underserved elsewhere, especially minorities and working adults. In 2009, 342,000 California students attended private colleges, 50,000 in the Bay Area alone.

Private colleges have been the leaders in more student-oriented approaches to learning, such as using technology to overcome barriers. Some traditional schools slowly are following suit.

Yet Washington proposes singling out private colleges for extra restrictions. If the proposed rules applied to traditional schools, many of them also would fail.

We would like to see tighter controls on costs covered by federal student loans and grants. But student debt is an issue for all types of institutions, not just private-sector colleges and universities. While this proposed rule may be well-intentioned, the unintended consequences — closing thousands of programs and cutting off access for more than 2 million students by the end of this decade — will fall hardest on the very people it aims to protect.

This trend not only moves our county’s graduation numbers backward, but it also has very real consequences for individual students. The median salary for an associate degree earner is $31,906, compared with $26,140 for a high school graduate. Although private colleges enroll only 12 percent of all postsecondary students, our institutions award more than 18 percent of all associate degrees. Over the past few years, our percentage of graduates has risen faster than our overall growth.

Private colleges and universities award 11 percent of all nursing and 58 percent of all allied health care degrees and certificates in this country. Their graduates keep doctors’ and dentists’ offices running smoothly and perform critical hospital functions like medical billing and coding, radiology and surgical technology.

With health care programs at community colleges running at capacity and the health care delivery system struggling to keep up in many communities, our schools provide a key source of skilled, job-ready professionals. The Education Department should withdraw its proposal and work on preventing excessive debt for all of higher education.


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