School’s out forever

For-profit ITT Tech loses federal funding, and everything else

By Sarah Sidlow

The back-to-school season was even more stressful than usual for one big group of students this year. Recently, the company that operates one of the country’s largest for-profit chains of colleges, ITT Technical Institute, announced it was closing the school’s doors across the nation. The shutdown was the result of a recent checkmate by the U.S. Department of Education, which banned ITT from enrolling new students who required financial aid. The ban was a deathblow for the for-profit university, which relies significantly on taxpayer funds in the form of student loans and Pell Grants—as much as $1.1 billion annually.

It isn’t the first time ITT has come under scrutiny: it’s been investigated or sued by the Securities and Exchange Commission, the Consumer Financial Protection Bureau, and the attorneys general of New Mexico, Arkansas, Arizona, Connecticut, Idaho, Iowa, Kentucky, Missouri, Nebraska, North Carolina, Oregon, Pennsylvania, and Washington. Why the full dance card?

Many believe ITT, and other for-profits like it, deserve a bad rep. They say the industry engages in coercive and deceptive recruiting and shady student loan practices. Many students of for-profit universities have publicly condemned their almas, claiming they can’t land the big jobs they were promised, and now can’t afford to pay their school expenses.

For many, the biggest issue is this: the for-profit college industry makes its money by recruiting students who are overwhelmingly poor and working-class and, thus, much more likely to qualify for federal funding. They argue the colleges are taking advantage of an already marginalized population of students, charging exorbitant tuition, and then expecting their students to pay back the loans without being able to nail the high-paying jobs they’ve been promised.

Although for-profits enroll just 12 percent of the country’s college students, they suck up nearly 25 percent of the federal government’s student-aid budget. Fewer than half of their four-year students graduate, and a good number of them default on their loans. And, the fact that these institutions are being funded by taxpayer money leads many to believe they shouldn’t be allowed to receive another cent of federal funding.

But others eschew the merits of for-profit universities. They say educating the poor and the working class is something to be encouraged, not scorned, particularly in an age where most jobs require a college education. They claim for-profits provide an attractive alternative to students who are turned off by expensive state university systems or crowded community college classrooms. Moreover, they provide options for students who already have full-time jobs—exactly the sort of population the vocation-oriented for-profits target.

And in today’s constantly evolving educational arena, there are many (like William G. Tierney and Brian A. Rodriguez at University of Southern California’s Pullias Center for Higher Education University) who say there are strategic advantages to opting for the non-profit route. For example, they say for-profits have a pretty straightforward incentive to provide a quality education and get their students jobs: because if they didn’t, the customer wouldn’t buy their product. They also argue for-profits might have stronger networks of potential employers.

Other for-profit supporters argue banning for-profits from accepting federal student aid would be downright discriminatory against an already vulnerable population. If the federal government isn’t willing to fund an education for someone who otherwise wouldn’t be able to attend college, they say, then what good is a student-aid budget anyway?

The ITT shutdown will affect about 35,000 students who were preparing for the start of classes this month. It will also cost more than 8,000 employees their jobs.

The Education Department has said that those students and others who left the school within the last 120 days would be eligible to have federal loans for their ITT education forgiven, if they want to start over at another school.

Locally, advisors at Wright State University’s Transfer and Nontraditional Student Center reached out to ITT students and graduates to let them know about transfer options.

Reach Dayton City Paper forum moderator Sarah Sidlow at SarahSidlow@DaytonCityPaper.com.

 

Debate forum question of the week: Should federal aid be accepted at for-profit colleges?

For—naught

By Patrick Bittner

Throughout the history of this great nation, a balancing act has slowly developed. This delicate dance pits the interest of the people against the interests of businesses, a conflict that can reach no compromise as long as the profit motive clouds the judgement of decision makers. This constant struggle is glaringly evident when considering the issue of federal funding or aid being used at for-profit educational institutions.

With the recent bankruptcy and subsequent closure of the chain of for-profit schools, ITT Tech, a serious concern has come to light: should educational institutions that are run in order to make a profit, rather than educate students, be afforded the same amount of aid that a traditional, nonprofit college or university is? Without a doubt, the answer to this question is a resounding negative.

This contrast between public and private institutions can be seen throughout everyday life in recent years. Your community may have outsourced waste collection to a private company who claims to be able to do the job at a lower cost than the municipality would pay to do it itself, your school system may have decided that privatizing school bus services was in the best interest of its community, or in this particular case, your government may have seen fit to not only allow the existence of profit-driven educational institutions, but pushed the funding for such organizations. While many private citizens may have bought into the privatization of government, the reality of the situation is that privatization of public industries will never do as good of a job providing services to the public if they are privatized.

As mentioned above, the most prevalent example of this failure of private industry in recent memory is the bankruptcy of the ITT Tech educational company. And while this is a highly publicized case in an otherwise underpublicized issue, the problems that faced ITT and its students are rampant throughout the industry. Various studies and countless individuals have given their testimony and both federal economists and experts from academia have concluded that private for-profit college and universities result in nothing but negative outcomes for the students they claim to serve. Students who graduated from for-profit institutions were found to be no better off in finding a career than had they not attended such a school. Such students were more likely to earn less than their counterparts who attended a traditional community college or equivalent program. For-profit alumni were more likely to have higher debt, and default on that debt, than non-profit graduates. Certificates and licenses are less likely to be earned by the for-profit students than their nonprofit counterparts. Perhaps the most disturbing statistic of the for-profit college sham is the fact that there is a substantiated claim by several federal agencies that current members and veterans of our armed forces are specifically targeted by recruiters of these institutions.

Why then, if there is only evidence to condemn these corporations, do we allow our tax dollars to go to funding them? Truly, we must examine the lobbying system of this country, however that is another question for another day. What is exceedingly clear, though, is that we must demand better from our government and our educational system. Firstly, thorough investigations and subsequent regulations need to be implemented to curb the damage these for-profit institutions are inflicting onto the most vulnerable of our students. These should include oversight from state education boards to ensure that students that choose to attend profit-driven educational institutions are given the product they paid for, as well as limiting federal aid, especially GI Bill dollars, from going to these companies. Ultimately, corporations that place profit above educational results need to be completely phased out and prevented from ever returning to the American educational landscape.

The best option for the future of the higher education system is to utilize the community college network to pick up the slack of organizations such as ITT Tech. If Tech can educate a student to become a network analyst, a community college should be able to do it more thoroughly. This is true for the gauntlet of for-profit education companies and the services they offer. We owe ourselves a better option than the one we have now. We owe our students a better future than the one that they can purchase at a for-profit school. We owe our country a better outcome than the one that these organizations can offer. It is time to act to make the higher education system of this country serve its people like it should: better.

 

Reach DCP freelance writer Patrick Bittner at PatrickBittner@DaytonCityPaper.com

 

Who’s minding the classroom?

By Tim Smith

Recently, it was announced that ITT Tech was closing all of its campuses due to a loss of federal funding, impacting some 35,000 students and 800-plus employees nationwide. Around the same time, Carousel College of Beauty and Regency Beauty Institute also announced that they were shutting their doors due to funding issues.

By definition, a for-profit college is any postsecondary institution that is registered with the IRS as a profit-making company. Examples include a beautician school or a flight school. These schools are regulated nationally because the government subsidizes tuition through grants and student loans.

Private for-profit colleges fill a needed niche and appeal to people who might not be able to commit to a typical schedule at a traditional learning institution. It is especially attractive to those wishing to pursue a career in fields such as cosmetology, electronics, auto mechanics, or in the health care industry. Many students typically work at other jobs and the flexibility afforded them at private colleges suits their lifestyle—federal assistance helps them achieve their goals.

The National Center for Educational Statistics notes that, from 2000 to 2014, enrollment in degree-granting postsecondary institutions increased from 13.2 million to 17.3 million. They predict that by 2025, this will grow to 19.8 million students. This increase occurred at a faster rate at private for-profit colleges than at public institutions. With a growing demand for skilled workers in the labor force, there is clearly a need for private for-profit colleges to help fill this void.

Yanking federal aid stacks the deck against people who are trying to make a better life for themselves and their families. However, there is a need for stricter oversight. Taxpayer-funded colleges and universities are routinely subjected to review, and their funding is often based on a suitable debt-to-income ratio. Loosely translated, this asks if graduates found gainful employment in their chosen field.

But these recent closings beg one question: who’s minding the classroom?

The nation’s largest accreditor of for-profit colleges is the Accrediting Council for Independent Colleges and Schools (ACICS). The ACICS accredits over 200 institutions and gives them the approval they need to receive federal aid, but their track record appears to be less than impressive. According to the Center for American Progress, last year, the ACICS named institutions to their “honor roll” at the same time these schools were under federal or state investigations.

I’ve had experience with recruiters from for-profit colleges during my career: first, when I worked for another mismanaged federal program called the Job Corps, and more recently, I’ve been assisting co-workers facing a layoff who want to change careers. Recruiters are typically paid a bonus for each student they enroll, and there is often pressure to meet a quota. The first question many of them ask isn’t “What’s your grade point average?” It’s “What’s your average annual income?” They paint a beautiful picture of a career in health care or as a beautician to the stars. Promises of placement assistance upon graduation are also touted along with the sense of accomplishment the students will feel when they get that diploma. Performance bonuses for these folks are not tied to outcome, but to the number of students they sign up. If they qualify for federal or state aid, so much the better.

For-profit colleges are run by companies that function under the demands of investors and shareholders, unlike public colleges and universities, which receive much of their funding from state and local taxes. In an interesting side note to the ITT debacle, it was noted that one of their executives sits on an accreditation board that provides oversight to private for-profit colleges. Can anyone say “conflict of interest”?

Last year, the federal government pulled accreditation and funding from another for-profit, Corinthian Colleges. It was discovered that they were padding their statistics by placing graduates with temp services or in fast food jobs and claiming they were gainfully employed. Because of this, the Obama administration proposed legislation requiring for-profits to provide proof that their graduates found gainful employment. A majority of the House of Representatives balked at the idea, but it was eventually enacted.

One of our past presidential candidates has made affordable college education part of their platform, including increased accountability. In the “no surprises” department, our president-elect is against it, probably because his own for-profit college faced the same scrutiny that brought down ITT. It’s all about the money.

The bottom line is that it’s your money, and as a taxpayer, you have the right to know how it’s being spent. It’s foolish for us to hand over a blank check to a private for-profit college and say, “We trust that you’ll use this responsibly. You will do that, won’t you?”

Tim Smith is an award-winning, bestselling author. Reach DCP freelance writer Tim Smith at TimSmith@DaytonCityPaper.com. 

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Sarah Sidlow
Reach DCP editor Sarah Sidlow at SarahSidlow@DaytonCityPaper.com.

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