The Education Department is expected to issue a final rule this month against for-profit colleges such as Phoenix University and Strayer University. The move would reject loans for programs whose previous students have shown, via a rather arbitrary formula, a propensity to accrue debts higher than they can repay. The theory is that these pre-professional programs demonstrate their ineffectiveness by their students’ subsequent failures.
A more sensible and less heavyhanded approach would alert students about previous loan-repayment rates for the courses at issue but leave ultimate decisionmaking up to the individuals. Denial of the loans could deny an estimated 360,000 students of valuable educational opportunities.
Critics of for-profit schools say they’re trying to avert fraud identified in an August 2010 report by the Government Accountability Office, which highlighted 28 instances of questionable recruiting practices. On Nov. 30, however, GAO acknowledged errors in its account of 16 of those 28 examples. In other words, GAO identified fraud that didn’t necessarily exist. Six congressmen - including liberal Democrats Alcee Hastings of Florida and Carolyn McCarthy of New York - wrote a letter to the U.S. comptroller general suggesting “disciplinary action” might be needed to correct GAO’s mistakes.
National Urban League President Marc H. Morial, a former two-term mayor of New Orleans, opposes the Education Department’s proposed change. Loan default rates are higher at for-profit colleges because those schools serve a population of largely “at-risk students, including minorities, parents and full-time workers,” he wrote in Friday’s Washington Post.
“You need to do an analysis of the impact of this rule before you promulgate it,” Mr. Morial explained to The Washington Times. “If some of these schools are bad actors, go after them - but don’t overreact to the problem by throwing the baby out with the bath water.” Those who have the most to lose already have too few educational options.