Here at the Monthly we’ve been concerned with the role of for-profit colleges in this country’s education system for many years.
During the administration of George W. Bush changes in the regulations regarding federal financial aid made it possible for many proprietary colleges to really cash in on low-income, unprepared students. They wouldn’t get much of a career out of these “career” colleges, but they’d fork over a lot of money, mostly in the form of loans they didn’t understand. Through a quirk of the student loan market, the colleges got the money even if the students couldn’t really afford to pay.
The Obama administration’s Department of Education has cracked down on some of the worst for-profit colleges and issued stronger regulations, making it more difficult for many institutions to continue to operate.
And so, wrote David Halperin at the Huffington Post, predatory for-profit colleges might be a thing of the past:
…We saw the final collapse of Corinthian Colleges, as well as dramatic contractions by fellow for-profit college giants EDMC and Career Education Corp. In March, industry leader the University of Phoenix admitted it has less than half the number of students it had five years ago.
It’s really a pretty dramatic change.
A year ago, Marco Rubio was writing to the U.S. Department of Education seeking leniency for Corinthian, which had been caught in a string of deceptions. Jeb Bush was appearing at the annual convention of the for-profit colleges lobby group, APSCU, denouncing the Obama administration’s “gainful employment” rule, which is aimed at holding career education programs accountable for consistently leaving graduates with insurmountable debt.
“But the politicians who have been cheerleaders for the industry are quiet right now,” Halperin wrote. How do we know these days are over? Well, for one thing, it doesn’t really seem to be an industry that has much of a future as an investment.
“I’m writing to let you know that Wells Fargo has elected to cease covering Education as a stand-alone sector and I have been displaced as a result,” read a mass email to colleagues this week from Trace Urdan, who long hawked the stocks of for-profit colleges like Corinthian for Wells Fargo Securities, usually without reminding investors that Wells Fargo was the largest institutional investor in Corinthian. Urdan, a smiling symbol of the for-profit college industry’s indifference to student misery, a man who once called for-profit enrollees “subprime” students, acknowledged in the email, “Wells’ decision was an understandable one based primarily on the continued dwindling market cap and volumes of the for-profit post-secondary stocks” — in English: many key for-profit college stocks are now almost worthless.
For profit colleges won’t be over. Indeed, for-profit schools have long been the way we trained people for good vocational jobs in America. Hairdressers, automotive mechanics, and many electricians and plumbers trained for their jobs in institutions that were proprietary businesses, mostly local ones that could help get graduates local jobs.
But those kind of for profits, the huge, impersonal, publicly-traded companies with big office buildings and massive online programs linked to vague promises of professional careers, might be over. And that’s a good thing, because they never really worked to do what they said they could do, either explicitly or implicitly: help working people enter the middle class.