As the Obama Administration proposes new regulations on federal student loans to for-profit colleges and the Senate Committee on Health, Education, Labor and Pensions examines misleading practices undertaken by some members of that same industry, it is important that we focus on what’s really important.
For years, for-profit schools have thrived on their ability to educate students. Their business model is market driven. It rests on the simple fact that they cannot survive without providing a high quality educational experience to their students, according to a newly published study by the Center for College Affordability and Productivity. As this blog has stated before, success of students is as important as access.
For-profit colleges and universities offer classes at convenient times and in convenient locations so that their students – often working and single parents, low-income and minority individuals and persons who have chosen to go back to school later in life – are able to squeeze in class while living their lives. These institutions also often allow students to receive hands-on, real world training without spending four years in a traditional classroom setting. Let’s be realistic – working adults generally do not have four years to spare to work on a Bachelor’s Degree. For-profit institutions allow these individuals the opportunity to get an education in a reasonable amount of time while still receiving on-the-job training.
Federal student loans for gainful employment may risk success
The Department of Education’s “gainful employment” rule for federal student loans, however, has the potential to jeopardize the success of the reputable players as it punishes those who have not delivered. While the student debt issue is one that this nation clearly needs to address, the Department of Education is looking to impose sweeping reforms without fully assessing the impact. In order to counteract the bad actions of a few schools, the “gainful employment” rule intends to impose sanctions on all schools in the for-profit sector – leaving students to feel the impact. If “gainful employment” is implemented, some students who rely on Title IV financial aid as a means to fund their higher education will no longer be able to attend their school of choice. Improvements are necessary in higher education, but let’s address them in a way that improves higher education with more information that informs students’ decisions.
Written by Larry Edward Penley, who is past president of Colorado State University, past dean of the W.P. Carey School of Business at Arizona State University and author of the blog Access With Success.
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#1 Missing The Point
This writer, and the Obama administration, is missing the point. The point is that already there are hundreds of thousands, if not millions, of student loans that have been contracted through for-profit business schools that have defaulted and ballooned to insurmountable amounts of money for which there exists no relief whatsoever. While the for-profit businesses have the option of bankruptcy, the individual student who finds their earning capacity cannot match their federal loan obligations have no relief or options. Their wages may be garnished, if they find gainful employment. Their bank accounts may be frozen, at the discretion and whim of Sallie Mae, without a court order. Fraud runs rampant with no interference from Executive, Legislative, or Judicial government. Example: a defaulted loan may have false records of payments applied to keep it "active" so that it continues to accrue and earn interest. There is no limit or actual oversight of how Sallie Mae conducts its business--never mind the for-profit businesses.
What we have here is a racket that earns the Federal government money, and has immunity and power beyond even the scope of the IRS. The Fed will do nothing to stop it, because it is LUCRATIVE. Thus, the million of indentured drones that got suckered into the beehive to go out, work, and create honey for the Fed will never be released or set free from their bonds. It is slavery, pure and simple. And it's not going away, folks. It is absolute power, which will expand into every facet of society. This is not government by the people, for the people, or of the people. It's tyranny.
Welcome to the New World.