For-Profits Find an Unlikely Ally in the Fight Against Tighter Regulations

Finance
Posted By Terri Williams on May 26, 2015 at 11:21 am
For-Profits Find an Unlikely Ally in the Fight Against Tighter Regulations

The for-profit education industry has come under increased scrutiny recently for higher student debt loads, lower graduation rates, and lower job placement rates than traditional colleges and universities. And for-profit schools and universities are bracing for July 1, 2015. That’s the day they’ll have to meet new standards enacted by the Department of Education.

Under the new regulations, for-profit schools must ensure that their graduates earn enough money to begin paying back student loans. Specifically, a typical for-profit graduate’s annual loan repayments cannot exceed 8 percent of their total earnings, or 20 percent of their discretionary income. Schools that don’t meet this requirement risk losing millions of dollars in federal financial aid.

For-profits fighting back – with an unlikely ally

But for-profit schools are determined to fight against the new rules, and now, they have an unlikely ally. Many of the higher education lobbying groups are joining the resistance. In fact, the American Council on Education, which represents a variety of organizations, including the Association of American Universities, the Association of American Medical Colleges, the Council of Graduate Schools, the Council for Higher Education Accreditation, and the American Association of Colleges of Nursing, signed a recent letter to Congress supporting H.R. 970, the Supporting Academic Freedom through Regulatory Relief Act.

According to the letter, the new regulations “do nothing to advance the goals they were intended to serve. They fail to achieve their intended outcomes, yet impose significant costs and burdens on institutions.”

Similarly, a task force report called “Recalibrating Regulation of Colleges and Universities,” commissioned by the Senate in partnership with the American Council on Education, further critiques the new regulations.

Joining forces…

Traditional colleges and universities have had a long-standing adversarial relationship with for-profits, so GoodCall spoke with two higher education experts to discover why the two have decided to join forces.

The merger comes as no surprise to Ramin Sedehi, Managing Director of the Higher Education Practice at the Berkeley Research Group. “It is interesting but not unexpected that lobbying groups for traditional higher education institutions are using the opportunity afforded by having a Republican-controlled House and Senate to argue against unwanted regulations,” he said.

Dani Babb, an online instructor and founder and CEO of The Babb Group, explains it this way:  “For example, community colleges will be subject to gainful employment rules, and it’s believed many won’t score better than for-profits. While there is less debt to default on, under the proposed scoring requirements, the outcomes may not be much different.”

Babb also adds that many traditional colleges are just now creating and moving forward with their online programs. “For-profit colleges are generally online,” she notes, “and if the public has a negative perception of for-profit education, there may be assumptions that online programs are the issue.” Babb says that sentiment could very well carry over to traditional colleges’ online programs as well.

However, don’t expect for-profits and the higher education establishment to join hands and start singing Kumbaya anytime soon. Sedehi says their common goals on this issue create the opportunity to join forces as a matter of convenience and timing, but warns that “this is not necessarily a sign of a thawing of relationships or common view points on education.“

He says that both groups are arguing for a reduction in both the volume and the complexity of regulations, which are seen as burdensome and costly. “However,” he adds, “I suspect that at the end, each group (and their sub-groups) has very specific policies it wishes to impact and will lobby separately for them.”

Terri Williams
Terri Williams graduated with a B.A. in English from the University of Alabama at Birmingham. Her education, career, and business articles have been featured on Yahoo! Education, U.S. News & World Report, The Houston Chronicle, and in the print edition of USA Today Special Edition. Terri is also a contributing author to "A Practical Guide to Digital Journalism Ethics," a book published by the Center for Digital Ethics and Policy at Loyola University Chicago.

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