Will Clinton or Trump Retreat from Obama’s Stance on For-Profit Education?

Election 2016
Posted By Derek Johnson on October 13, 2016 at 8:57 am
Will Clinton or Trump Retreat from Obama’s Stance on For-Profit Education?

It’s fair to say that the Obama administration has treated the for-profit education sector more harshly than public and private nonprofit schools and even community colleges that produce similarly low student outcomes. This is especially true when compared with the records of previous presidents, many of whom praised college attendance of any kind and pushing laws to expand student borrowing.

Former President George W. Bush’s top higher education achievement listed on his archived White House page is the  “record level of assistance” provided to students in the form of student loans, grants and work-study programs. His second listed accomplishment is increased Pell Grant funding, of which a disproportionate amount goes to students pursuing for-profit education. Bill Clinton expanded access to student loans, pushed for more direct lending and created the first income-driven repayment plan.

For decades, expanding college access has been the top priority for Washington policymakers – and increasing access to student loans was one of their main tools. As long as you were going to college, most politicians didn’t much care where you went or how much you borrowed. This “traditional college at all costs” mentality endures, despite the fact that the cost of college has risen to the point where it may be useful to ask whether attendance is the best financial decision for everyone.

A ‘new normal’ for the for-profit education or a blip

The current occupants of the White House have identified the for-profit education sector as ground zero for many of the ills that plague the current higher education landscape: exorbitant costs, uncertain returns and a near total reliance on borrowing and debt to pay for it. Over the past year and half, a tougher stance by the Education Department has led to the closure of two major for-profit college chains, an end to the largest for-profit accreditation agency, and hundreds of investigations into private sector institutions for a variety of behaviors and outcomes.

It’s worth asking whether this shift – brought on by mounting student debt and pressure from consumer advocates to protect college-goers – is the new normal or whether things will return to the previous status quo after the 2016 election. Both Hillary Clinton and Donald Trump have publicly stated the importance of reigning in student debt and limiting federal student aid to colleges and degrees that produce good outcomes. But both are dealing with a pair of higher education-related scandals that indicate they may be friendlier to the for-profit sector than Obama.

Hillary Clinton is facing questions after reports came out last month detailing her role in personally requesting a representative from for-profit Laureate University be invited to a private State Department dinner on shaping the future of higher education policy. Less than a year later, her husband and former President Bill Clinton would be named as “honorary chairman” for that same university and signed to a $17.6 million contract. Laureate founder Doug Becker is a big Democratic donor, contributing to both Obama and Hillary Clinton’s presidential campaigns as well as making millions in donations to the Clinton Foundation, a nonprofit international philanthropic organization started by the Clintons after Bill left office. Becker is also chairman of the International Youth Foundation, which saw a major spike in State Department grant funding that coincided with Hillary Clinton’s tenure as Secretary of State. It declined sharply after she left in 2013. Both Laureate officials and the Clintons have said that grant funding for the foundation was awarded before Clinton joined the State Department.

It should be noted that a Washington Post investigation found no evidence of a direct quid pro quo between Hillary Clinton and Laureate and that a State Department ethics panel cleared Bill Clinton’s contract with the school. Still, critics have wondered why the Clintons would so closely align themselves and their charitable foundation with a for-profit company with schools that have been investigated in Chile for questionable practices such as a high student-teacher ratio and in Brazil for high costs and low outcomes.

Within the United States, Laureate’s record is more mixed. One of its schools, Walden University in Minnesota, received generally positive marks during a 2012 Senate investigation into for-profit colleges but is currently on the Education Department’s list for “heightened cash monitoring” which requires additional financial oversight for schools that may have compliance issues with federal regulations.

On the campaign trail, Hillary Clinton has promised to be tough on for-profit education, and her New College Compact contains many ideas for improving college quality and holding poor performing colleges accountable. However, many of the proposals listed would require new legislation from Congress, which is unlikely given current Republican control and the increasing use of the filibuster by whichever party finds itself in the minority. Obama waged his war on the for-profit sector largely through executive fiat, using stricter interpretations of current federal regulations and the investigative arm of the Education Department to cut off repeat offenders from accessing federal student aid.

Will Clinton do the same? According to the Center for Responsive Politics, Clinton was the fourth-highest recipient of for-profit higher education campaign contributions in 2015-16 and the highest recipient among Democrats, with just under $47,000.

Trump U tactics and campaign contributions

As is the case with many higher education issues, Trump’s views on regulating for-profit education are a mystery (education adviser Sam Clovis took a pass when asked about for-profit schools in an interview with Inside Higher Ed in May). What little detail his campaign has released on his higher education platform suggests he favors free-market solutions and his business history with the unaccredited Trump University suggests he has a low standard for what constitutes adequate return on investment for an education.

Trump charged as much as $35,000 for real estate seminars that eventually led to a pair of class-action lawsuits from more than 5,000 former customers who alleged they were misled and got little to no benefit from the experience. The inaccurately named Trump University was not licensed or accredited as a school, though it did use sales and marketing tactics that are popular within the for-profit sector.

Trump maintains courses at Trump U were “fantastic” and that most of his customers reported receiving “terrific” educations, but the company was hounded by state regulators before eventually shutting the venture down in 2010. New York Attorney General Eric Schneiderman opened up a lawsuit against the education company on behalf of his constituents, calling the seminars “straight up fraud.” Now, it appears that Trump may have contributed to Florida’s Attorney General Pam Bondi’s reelection campaign in 2013, right around the time she was considering a similar action against Trump University. Trump claims the donation, which actually came from his charitable foundation, was made in error. Schneiderman has since opened up another investigation into the Trump Foundation.

Trump’s advisers have indicated that he favors restricting student loans to majors and disciplines that lead to good paying jobs in the marketplace. However, that would do nothing to address the quality of those programs at individual schools or prevent for-profit and nonprofit schools from offering degrees in popular disciplines while delivering poor individual outcomes.

Both Clinton and Trump’s scandals play into well-worn narratives that have plagued them with voters throughout the 2016 campaign: Hillary Clinton as an untrustworthy establishment insider who trades influence for money and Trump as a con artist who manipulates the system to his financial advantage and leaves others to pick up the bill. The real question: Will either candidate hold the for-profit sector accountable after being sworn in next January?

Derek Johnson
Derek Johnson is a writer, journalist and editor based out of Virginia. He received a Master’s degree in Public Policy at George Mason University and a bachelor’s degree in Communication from Hofstra University.

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