Hillary Clinton’s Appointment of Chopra Confirms Tough For-Profits Stance
Posted By Donna Fuscaldo on September 21, 2016 at 9:30 am
To our readers: This is the second of three articles examining the future of for-profit education and the effects of increased scrutiny on education outcomes. Click here for Part 1.
For-profit colleges and universities that collect federal financial aid have faced greater scrutiny under the Obama Administration, and if Hillary Clinton’s appointment of Rohit Chopra to her transition team is any indication, a Clinton presidency would mean more of the same. Chopra is the former student loans ombudsman at the Consumer Financial Protection Bureau, where he was a vocal opponent of the for-profit industry as well as student loan servicers. He works for the Department of Education, the same agency he has repeatedly criticized for its handling of student loan debt borrowers.
“It certainly sounds likes Clinton is going to continue the Obama Administration’s policy of developing regulations that either specifically targets or have an impact on for-profit higher education,” says Kevin Kinser, a professor of education at Penn State College of Education. “Things like gainful employment and continuing regulatory intervention like we’ve seen recently with ITT will continue in her administration.”
When it comes to for-profit schools, it’s a tale of two cities. Most observers consider the mom and pop institutions that only enroll a handful of students each semester toserve a real need. Then there are the huge, publicly traded for-profits – some have faced allegations that they are in the business of enrolling as many students as possible regardless of their outcomes. It is the latter group that piqued the interest of regulators and the White House, which has been increasingly holding them accountable.
Government cracking down on higher education
Take the gainful employment rule for starters that took effect last July. Aimed at holding for-profit schools accountable for putting their students on the path to success and protecting consumers from fraud, it requires for-profits and certificate programs to prepare students for gainful employment or risk losing financial aid.
In order for a program to lead to gainful employment, the annual loan payment of a typical graduate can’t exceed 20 percent of his or her discretionary income or 8 percent of the graduate’s earnings. The rule received a lot of pushback from the for-profit industry and ended up wrangled in a court fight for a few years before being placed on the books.
But gainful employment isn’t the only way the government has sharpened its for-profits stance. More recently, it set its sights on ITT Educational Services. In August, the Department of Education suspended ITT Educational Services from getting financial aid dollars for incoming students. U.S. Undersecretary of Education Ted Mitchell said the suspension was prompted by multiple state and federal investigations during the past year that found at least two instances where ITT violated accreditation standards. That prompted ITT Education Services in September to shut down all of the ITT Technical Institutes operations, ending classes for around 40,000 students.
It’s not only for-profit universities the current administration is going after. It’s also calling student loan services to task, recently fining Wells Fargo for what it said was deceptive student loan servicing practices. While Chopra wasn’t at the helm of the CFPB when the fines were levied against Wells Fargo and ITT Educational Services, he did predict the demise of ITT and is a strong advocate for student rights and not shy on his for-profits stance. “Clinton has specifically promised to crack down on abusive practices of for-profit colleges that defraud tax payers and burden students with debt and don’t have any real education value,” says Mark Smith, a senior policy analyst, higher education policy & practice department for the National Education Association, which endorsed Clinton for president. “Rohit being named to the transition team confirms that position.”
Controversy may hurt Clinton’s credibility on for-profits stance
Supporters of Clinton ticked off a laundry list of ways she’s helped students and student loan borrowers, but her education for-profits stance isn’t completely free of controversy, particularly when it comes to for-profits. Reports have surfaced that after Clinton became secretary of state, husband and former president Bill Clinton got $17. 6 million in payments from Laureate International Universities, a for-profit university that has close to one million students largely in Latin America.
An organization connected to Laureate International Universities also received close to $90 million in grants from an agency that falls under the State Department umbrella, according to media reports. Laureate has five schools in the U.S. and has been the subject of investigations in Brazil amid student allegations they didn’t get what they paid for. In the U.S. students have also complained and three of the U.S. schools are now under the Department of Education’s heightened cash monitoring, which means it’s keeping an eye on the school’s ability to manage its finances.
Although Clinton hasn’t been accused of any wrongdoing, her tough for-profits stance if she is elected will smack of hypocrisy to some. That’s not to say Republican opponent Donald Trump is scandal-free when it comes to the for-profit industry given his involvement with Trump University, but Clinton tends to take more of a beating when scandals erupt.
Supporters of Clinton say it’s her known for-profits stance and overall track record that matters – not the connection her husband had to Laureate. “People have to look at her overall body of work and her commitment to students and borrowers and not take one example and say it dilutes her message on for-profits,” says Kevin Fudge, director of consumer advocacy and the ombudsman at American Student Assistance. “I don’t think it’s a credibility issue at all. It’s why movies with superheroes that are flawed resonate with people. It’s not a binary good guy and bad guy thing.”
Up next in our series: A study on education outcomes for both for-profit colleges and nonprofit public and private universities finds some similarities.