The Government’s Assault on Private-Sector Colleges and Universities - The Objective Standard

Private-sector colleges and universities, also known as career colleges or for-profit colleges, educate more than three million people annually in the United States. These colleges—which include the University of Phoenix, ITT Technical Institutes, Kaplan University, Strayer University, Capella University, and Monroe College—provide vital services to Americans seeking to improve their lives. Programs in career colleges range from information technology and business administration, to commercial art and interior design, to allied health care and nursing, to accounting and finance, to criminal justice and law. These highly focused, career-specific programs enable people to achieve their occupational goals and to become productive, self-supporting, prosperous, and happy. These colleges are, for many people, pathways to the American dream.

Unfortunately, certain individuals and agencies in the U.S. government are seeking to cripple and destroy these schools via an assault that includes fraud, collusion, and defamation. Before turning to the details of this assault, however, let us take a closer look at the enormous life-serving value provided by career colleges.

The Nature and Value of For-Profit Colleges

Career colleges are businesses that provide career-specific educational programs. They cater to “nontraditional” students—those who do not attend traditional postsecondary schools such as state universities (e.g., UCLA) or private nonprofit colleges (e.g., Williams College).

Career-college students have demographics similar to community-college students, but are on average a few years older. They are predominantly working adults seeking to improve their lives through educational programs that are directly related to their career goals. Many are employed full-time while enrolled; most have rent or mortgages to pay; many have families and dependent children to care for; and many have served in the military. These students choose career colleges because these institutions meet their needs better than the alternatives—whether traditional postsecondary schools or community colleges.

Among other factors, whereas state universities and nonprofit colleges offer courses, programs, and degrees that have little or no value in the marketplace (e.g., “Tree Climbing,” “The Joy of Garbage,” “Queer Musicology,” “Feminist Studies”), career colleges provide streamlined, career-focused training that is specifically designed to be of value to employers in the marketplace. Career colleges have no sports teams, fraternities or sororities, or the like, just market-oriented educational programs for people seeking to start, enhance, or change their careers.

In contrast to community colleges, which are not profit driven and rely heavily on direct subsidies from government, career colleges are profit driven and receive no direct subsidies. Thus, whereas budget deficiencies are requiring community colleges to turn away would-be students or place them on waiting lists for as long as three years,1 the profit motive incentivizes career colleges constantly to innovate and expand to meet market demand. Thus, career colleges usually have no waiting lists and can start new students within a month of enrollment. And whereas both traditional schools and community colleges offer what is, for many people, insufficiently flexible scheduling, career colleges provide highly flexible scheduling—days, evenings, and weekends—that enables students to integrate career-enhancing education with their busy adult lives. . . .

Endnotes

Acknowledgment: I wish to thank Alan Germani for his helpful comments on an earlier draft of this article.

1 For example, “In California, with a budget cut of 8 percent across the board, the community colleges turned away 140,000 students last year [i.e., 2009]. In Colorado, the waiting lists for nursing programs at some of the state’s community colleges have grown to as long as 3.5 years. In May, New York’s community colleges stopped accepting applications for the fall semester and added students instead to a waiting list.” Peter Whoriskey, “Community Colleges Are Getting an Education in Tough Economics,” Washington Post, November 27, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/11/26/AR2010112605035.html. And: “California’s Community Colleges Will Enroll 400,000 Fewer Students Next Fall and Slash Thousands of Classes to Contend with Budget Shortfalls”; Carla Rivera, “California Community Colleges to Slash Enrollment, Classes,” Los Angeles Times, March 31, 2011. http://www.latimes.com/news/local/la-me-0331-community-colleges-20110331,0,7036490.story.

2 Kara M. Cheseby, “Class Conflict: Gainful Employment Proposal Penalizes At-Risk Student Populations and Hurts the Economy,” Competitive Enterprise Institute, March 2011, http://cei.org/sites/default/files/Kara%20Cheseby%20-%20Class%20Conflict%20Gainful%20Employment%20Proposal.pdf.

3 Jean Marie Falk, “‘Gainful Employment’ Rule Would Punish Students,” http://savestudentchoice.org/blogs/gainful-employment-rule-would-punish-students.

4 Obviously career colleges do not enjoy a fully free market; the government improperly and coercively imposes itself on this sector, as it does to varying degrees on all sectors of the economy today. The government also uses taxpayer money to indirectly fund this sector, as it does to fund the sectors of medicine, insurance, investing, and so on. But the government’s coercion is not what makes career colleges a value. What makes them a value are the educational services they voluntarily produce and trade with those who seek to improve their lives.

5 Matthew Denhart, “Federal Overreach into American Higher Education,” Heritage Foundation, November 4, 2010, http://thf_media.s3.amazonaws.com/2010/pdf/bg2486.pdf.

6 Denhart, “Federal Overreach.”

7 Denhart, “Federal Overreach.”

8 Coalition for Educational Success press release, May 3, 2011, http://www.ed-success.org/press-release-coalition-statement-on-gainful-employment-regulation-delivery-to-omb.php.

9 See “Proposed Rule Links Federal Student Aid to Loan Repayment Rates and Debt-to-Earnings Levels for Career College Graduates,” July 23, 2010, http://www.ed.gov/news/press-releases/proposed-rule-links-federal-student-aid-loan-repayment-rates-and-debt-earnings.

10 See Daniel de Vise, “House Approves Huge Changes to Student Loan Program,” Washington Post, March 22, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/03/21/AR2010032103548.html.

11 If taxpayers disapprove of the government issuing grants and loans to college students (and they should), then taxpayers should demand that the government get out of the student grant and loan business. But so long as the government does issue student grants and loans, there is no moral justification for forcing taxpayers to support students attending traditional or community colleges but not those attending career colleges. Insofar as the government continues to offer student grants and loans, it morally must permit students to use the funds at schools of the students’ choice.

12 “Higher Education at a Crossroads,” Apollo Group, Inc., August 2010, http://www.apollogrp.edu/Investor/Reports/Higher_Education_at_a_Crossroads_FINALv2%5B1%5D.pdf.

13 “Higher Education at a Crossroads,” Apollo Group.

14 “Background Questions and Answers,” Association of Private Sector Colleges and Universities, http://www.career.org/iMISPublic/AM/Template.cfm?Section=About_Career_Education&Template=/CM/HTMLDisplay.cfm&ContentID=23196.

15 “Proprietary Schools: Stronger Department of Education Oversight Needed to Help Ensure Only Eligible Students Receive Federal Student Aid,” U.S. Government Accountability Office, August 17, 2009, http://www.gao.gov/new.items/d09600.pdf.

16 Background Questions and Answers,” APSCU.

17 “Higher Education at a Crossroads,” Apollo Group.

18 Cheseby, “Class Conflict,” (emphasis added).

19 Cheseby, “Class Conflict.”

20; Mark Hyman, “Assault on Career Colleges,” American Spectator, October 6, 2010, http://spectator.org/archives/2010/10/06/assault-on-career-colleges#.

21 Coalition for Educational Success v. United States of America, lawsuit filed February 2, 2011, http://ed-success.org/pdf/CES_GAO_Complaint.pdf.

22 Coalition v. United States of America.

23 Coalition v. United States of America.

24 Coalition v. United States of America.

25 Coalition v. United States of America.

26 See “Timeline of the ‘Gainful Employment’ Rule,” Coalition for Educational Success, http://www.ed-success.org/timeline.php.

27 “U.S. Senator Lashes Out at For-Profit Education,” Reuters, August 4, 2010, http://www.reuters.com/article/idUSN0421762120100804.

28 Coalition v. United States of America.

29 Although insider trading should not be illegal unless it involves fraud, breach of contract, or the like, insider trading that involves the government providing short-sellers with advance notice of regulations that will cripple a particular industry is patently immoral and properly illegal. This case appears beyond any reasonable doubt to be a conspiracy to use government regulations to thwart a market and line the pockets of short-sellers who helped craft the regulations, substantially dictated their content, and were provided by government agents with advance notice of their timing.

30 Letter available at http://www.intered.com/storage/deptofed/CREW_RobertKhuzamiSECLetter2-9-11.pdf.

31 Coalition for Educational Success press release, March 24, 2011, http://www.ed-success.org/FOIA-release.php.

32 PDF of slide available at http://www.ed-success.org/pdf/3.pdf.

33 PDF of email available at http://www.ed-success.org/pdf/5.pdf.

34 PDF of email available at http://www.ed-success.org/pdf/5.pdf.

35 PDF of email available at http://www.ed-success.org/pdf/7.pdf.

36 PDF of email available at http://www.ed-success.org/pdf/8.pdf.

37 See http://www.ed-success.org/FOIA.php.

38 Email available at http://www.ed-success.org/pdf/12.pdf.

39 Coalition for Educational Success press release, May 9, 2011, http://www.ed-success.org/press-release-coalition-urges-sec-to-investigate-possible-insider-trading-by-short-sellers-who-obtained-material-non-public-information-from-us-department-of-education-officials-in-violation-of-department-ethics-rules.php.

40 Coalition for Educational Success press release, March 24, 2011, http://www.ed-success.org/FOIA-release.php.

41 Coalition for Educational Success press release, May 9, 2011, http://www.ed-success.org/press-release-coalition-urges-sec-to-investigate-possible-insider-trading-by-short-sellers-who-obtained-material-non-public-information-from-us-department-of-education-officials-in-violation-of-department-ethics-rules.php.

42 Jonathan Strong, “Coburn: Education Department ‘Tipping Hedge Funds’ on For-Profit Colleges,” Daily Caller, March 3, 2011, http://dailycaller.com/2011/03/03/coburn-education-department-tipping-hedge-funds-on-for-profit-colleges/.

43 Mark Kantrowitz, “Summary and Analysis of Gainful Employment Final Rule,” June 2, 2011, http://www.intered.com/storage/deptofed/Kantrowitz_20110602gainfulemployment.pdf.

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