“Romney’s Higher Education Plan”: A Giveaway To Wall Street Banks And Predatory Schools That Fund His Campaign
2012 presumptive presidential nominee Mitt Romney released his higher education plan Wednesday, decrying the nation’s “education crisis.” During a speechbefore the U.S. Chamber of Commerce, Romney blamed President Obama for rising tuition prices and increasing student debt.
Of course, tuition increases and growing debt are a phenomenon several decades in the making. And Romney’s plan would make the problem decidedly worse in two important ways, giving federal money away to Wall Street banks and predatory for-profit colleges, two industries to which Romney has extensive ties.
First, as he’s promised before, Romney intends to divert money away from student aid — instead giving it away to banks — by repealing Obama’s student loan reforms:
Reverse President Obama’s nationalization of the student loan market and welcome private sector participation in providing information, financing, and the education itself.
President Obama did not nationalize the student loan market. (Plenty of banks still make private sector student loans.) Instead, Obama and the Democrats cut private banks out of the federal student loan program, ending billions in subsidies that were needlessly going to banks for acting as loan middlemen. The money saved went into the Pell Grant program. Romney’s plan would entail taking away Pell money in order to pay Wall Street to service federal loans.
Second, Romney would remove regulations meant to protect students from predatory for-profit colleges:
Ill-advised regulation imposed by the Obama administration, such as the so-called “Gainful Employment” rule, has made it even harder for some providers to operate, while distorting their incentives.
This rule simply states that colleges leaving too many students crippled with debt and without good jobs lose their access to federal dollars. Many for-profit schools make nearly all of their revenue from the federal government — in the form of the various streams of aid used by their students — yet have much higher rates of student loan default than public schools. Only 11 percent of higher education students in the country attend for-profit schools, but they account for 26 percent of federal student loans and 44 percent of student loan defaults.
Romney is already intimately tied to the for-profit college industry. Inside Higher Ed noted that two of his advisers “have lobbied on behalf of the Apollo Group, the parent company of the University of Phoenix.” On the campaign trail, Romney has effusively praised Full Sail University, a for-profit institution. And it seems that his policy platform would be a boon to this industry which is, in many instances, extremely predatory.
By: Pat Garofalo, Think Progress, May 24, 2012
The Virginia Foxx Bill: “Protecting The Freedom Of For-Profit Schools To Suck Off The Government Teat Without Any Accountability Whatsoever Act”
Earlier this year, the U.S. House of Representatives voted to pass a bill with the impressive, everybody-can-get-behind-this title “Protecting Academic Freedom in Higher Education Act.” Sponsored by the ultra-conservative North Carolina Republican Virginia Foxx, the bill ostensibly took aim at an issue close to small-government-loving hearts: intrusive federal regulation of for-profit colleges — fast growing, highly profitable outfits like DeVry University or the online-only University of Phoenix.
Like so many of the bills passed by the House since Republicans gained the majority in the 2010 midterm elections, the bill was designed to repeal specific actions taken by the Obama administration. In this case, the issue at hand was the Obama administration’s efforts to ensure greater “program integrity” in the for-profit educational sector. Specifically, a new federal definition of what constitutes a legitimate academic “credit hour” and a new requirement that all online providers of post-secondary education be accredited in each and every state in which they do business.
Foxx’s bill repealed both measures. (The Senate has yet to address the measure.) According to Foxx, the new federal regulations threatened “innovation” in the educational sector. As reported by InsideHigherEducation, Foxx is on record as declaring that for-profit colleges do a “a better job of being mindful about efficiency and effectiveness than their nonprofit peers.” By, for example, flexibly providing online education when and where low-income working Americans want it, the for-profit free market delivers the kind of quality higher education that Americans so desperately need. The government should just stay out of their business.
I stumbled upon this story while researching the student loan crisis and at first I was perplexed. I didn’t understand why Republicans were opposed to higher academic standards for the for-profit sector, and I didn’t get the connection to student loans. But it didn’t take much research to discover what was really going on: an example of blatant hypocrisy sufficient to outrage even the most jaded observer of American politics.
The for-profit educational sector is an industry almost entirely subsidized by the federal government. Around 70-80 percent of for-profit revenues are generated by federal student loans. At the same time, judging by sky-high dropout rates, the for-profit schools do a terrible job of educating students. The Obama administration’s efforts to define a credit hour and require state accreditation were motivated by a very understandable desire: to ensure that taxpayers are getting their money’s worth when federal cash pays for a student’s education. In contrast, Foxx’s legislation is designed to remove that taxpayer protection. So here’s a more accurate title for her bill: “The Protecting the Freedom of For-Profit Schools to Suck off the Government Teat Without Any Accountability Whatsoever Act.”
The for-profit educational sector has been growing extraordinarily rapidly for the past decade: 12 percent of all post-secondary students are now enrolled in for-profit schools, up from 3 percent 10 years ago. But the main beneficiaries of the growth appear to be the shareholders and executives of the largest publicly traded for-profit schools, not the students.
- In 2008, for-profit schools registered a a graduation rate of 22 percent. (Public and private non-profits registered 55 percent and 65 percent respectively.)
- 54 percent of the students who enrolled in 2008-2009 in 14 publicly traded for-profit schools had withdrawn without a degree by 2010.
- The biggest player in the for-profit sector, the University of Phoenix, graduated only 9 percent of its B.A. candidates within six years.
The pathetic performance of the for-profit sector in delivering actual degrees becomes all the more alarming when you realize that most of the students who are dropping out paid for their educations with student loans that have to be paid back: According to a report released in the summer of 2010 by Sen. Tom Harkin, D-Iowa, “Emerging Risk?: An Overview of Growth, Spending, Student Debt and Unanswered Questions in For-Profit Higher Education,” in 2009, the five largest for-profit schools reported that government grants and loans accounted for 77.4 percent of their revenue.
The Harkin reports comes to a stark conclusion:
The Federal government and taxpayers are making a large and rapidly growing investment in financial aid to for-profit schools, with few tools in place to gauge how well that money is being spent. Available data show that very few students enroll in for-profit schools without taking on debt, while a staggering number of students are leaving the schools, presumably many without completing a degree or certificate.
It is precisely this situation that the Obama administration’s efforts to ensure “program integrity” were designed to address. Student loans are tied to credit hours: By requiring a more rigorous definition of credit hour, the administration was attempting to make sure that government money was paying for actual education. Similarly, the requirement that all for-profit schools must be accredited by the individual states in which they do business was a measure designed to keep fly-by-night online schools operating out of states with weak accreditation requirements from enrolling out-of-state students and ripping them off. The issue is not “innovation.” The issue is basic consumer protection.
One would imagine that Republicans, who theoretically oppose government involvement in the private sector, and are always looking for ways to cut government spending, would approve of efforts to seek greater accountability for taxpayer funds. Virginia Foxx, after all, was notorious for being one of only 11 members of Congress to vote against a federal relief package for victims of Hurricane Katrina, citing the “high potential for the waste, fraud and abuse of federal tax dollars.”
But as it turns out, Foxx herself is benefiting from the waste and abuse of federal tax dollars. Among the top 20 financial contributors to Foxx in the 2011-2012 cycle are the Association of Private Sector Colleges/Universities, the Apollo Group (owner of the University of Phoenix), and Corinthian Colleges. Since federal student loans comprise the vast majority of the revenues of those for-profit schools, it follows that their campaign contributions to Foxx are also made possible by U.S. taxpayers.
By: Andrew Leonard, Salon, April 16, 2012