Cost of Education, Domestic, For-Profit, Legislation, Not-for-Profit, Regulatory, Required, Students, University & College - Written by on Monday, February 20, 2012 6:00 - 1 Comment

Washington Watch: Obama’s Education Budget Request Excludes For-Profits

John Lauerman at Bloomberg News writes about President Obama’s attempt to expand education funding, particularly for community colleges and not for for-profit colleges:

Feb. 13 (Bloomberg) — President Barack Obama asked for almost $70 billion in education spending, a 2.5 percent increase over last year, while he cut several other agencies’ requests.

Obama’s 2013 proposal includes a three-year, $8 billion plan to shore up career programs at community colleges that would be co-administered by the Education and Labor departments. The proposed budget would also keep interest rates on federal Stafford loans for college students from doubling to 6.8 percent, according to White House documents released today.

Obama is asking to expand education programs as Republican presidential candidates call to abolish or shrink the Education Department. The budget request, which includes cuts in the Defense, Agriculture and Justice departments, indicates that education and job training remain high on the list of the administration’s priorities.

“Education and lifelong learning will be critical for anyone trying to compete for the jobs of the future,” Obama said today in the budget documents. “That is why I will continue to make education a national mission.”

Via Bloomberg

Brian Stewart writes on CampusProgress:

For-profit colleges and universities are not being targeted for new job-training funds under President Obama’s fiscal 2013 budget, a bold move from the administration to crack down on the often high-priced and low-quality institutions.

A key portion of the president’s budget is a proposed $8 billion investment in job training at community colleges over three years, leaving other institutions, like for-profit colleges, with little chance of securing any of that pool. In addition, Obama is calling on Congress to allocate more money to the Perkins Loan Program and create a $1 billion “Race to the Top” style program for higher education.

The Obama administration began cracking down on for-profit colleges last year, which serve just 10 percent of students but rake in more than 25 percent of federal student aid. Students at such institutions are also less likely to graduate on time (or at all) and far more likely to default on student loan payments than their peers. In July, the Department of Education released a “gainful employment” rule, though it was weakened dramatically by the $16 million in lobbying by for-profits.

And now, for-profit institutions likely won’t receive access to new funding, including the “Race to the Top” initiative and the $8 billion in job training funds.

Via CampusProgress

In other Washington-related education news this past week … A report by the National Bureau of Economic Research suggests that federal aid may drive up college costs because for-profit colleges taking financial aid from students charge about 75% more for tuition that schools that don’t take financial aid.
Paul Fain at InsideHigherEd Reports:

While the reasons for higher tuition levels at aid-eligible for-profits are hard to pin down, those colleges “may indeed raise tuition to capture the maximum grant aid available,” wrote Stephanie Riegg Cellini, an assistant professor of public policy and economics at George Washington University, and Claudia Goldin, a professor of economics at Harvard University, the study’s authors.

The two economists say their research lends credence to the so-called “Bennett Hypothesis,” a difficult to measure theory attributed to William Bennett, Ronald Reagan’s second education secretary, who alleged that federal financial aid disrupts the higher education marketplace. But unlike Congressional Republicans or Bennett, who have pointed to nonprofit colleges when making that argument to bolster attempts to cut aid programs, the researchers focused on for-profits.

As a result, commonly cited figures from the U.S. Department of Education that for-profits enroll 1.8 million students, or about 10.7 percent of all college students, leave out an estimated 670,000 students who attend for-profits that cannot receive federal aid. That group accounts for 61 percent of for-profit institutions, according to the study, and 27 percent of the sector’s students. Most of the colleges in this group are small, which explains their relatively high numbers and smaller percentage of students.

The non-aid-eligible colleges are typically independent operations that skew heavily toward health profession, culinary and transportation programs. Cosmetology schools are the largest group. “There are a lot of students at these institutions and we just don’t know that much about them,” Cellini said.

For-profits that do participate in federal aid programs either pocket the extra tuition money, spend more on advertising and student recruitment or rack up additional costs, according to the study. Those costs might include complying with accreditors, administering grants and more spending on student services.

Via InsideHigherEd

The Chronicle of Higher Education writes:

The paper, which claims to provide the “first comprehensive estimate” on the overall size of the for-profit sector, draws on data from five states to conclude that the total number of for-profit colleges is double the official count (which includes only aid-eligible institutions) and the number of students they serve is one-quarter to one-third higher. The aid-ineligible colleges do not tend to cycle in and out of eligibility, the paper says, and they often compete for students with their aid-eligible peers and community colleges.

With the Education Department increasing oversight of aid-eligible for-profit colleges, notably through the recently imposed “gainful employment” regulations, some of those colleges may lose their ability to receive federal student aid. If that happens, the paper suggests, students may give the aid-ineligible colleges another look.

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Feb 22, 2012 18:00

No employee of a for-profit is surprised that the government’s proposal excludes us. Funding community colleges is not a bad idea in principle. But state appropriations for public and community colleges have declined significantly over 30 years (U of Michigan was once 70% state-funded. Now it’s less than 10%) Last year’s $12 billion proposal was cut to $2 billion. $8 billion just delays what seems like an inevitable trend toward funding divestiture. We need to figure out who should pay for education–state subsidies or private citizens–and make it work quickly. The current uncertainty risks harming America’s greatest achievement.

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