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Rick Hess Straight Up

Education policy maven Rick Hess of the American Enterprise Institute think tank offers straight talk on matters of policy, politics, research, and reform.

Money & Finance Opinion

Obama’s College Confusion

By Rick Hess — September 16, 2011 4 min read

President Obama is passionately committed to improving higher education, but seems mightily confused about how he plans to do so.

Putting a fine point on his dilemma, just last month, Obama’s Justice Department filed a multibillion-dollar fraud suit against the Education Management Corp., the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal aid. For the first time ever, the federal government sued a company based on claims that it violated federal law by paying recruiters based on students enrolled.

On the one hand, the president has told Congress, “Every American will need to get more than a high school diploma.” This calls for getting more students into postsecondary education.

On the other hand, there’s the EMC lawsuit, the Department of Education’s push for “gainful employment” regulation that threatens to stifle for-profit institutions whose graduates don’t earn enough, and the administration’s public relations offensive against for-profit providers. All of these moves seemingly have targeted those colleges and programs that have fueled the growth in undergraduate enrollment during the past decade.

Between 2000 and 2009, for-profit institutions increased enrollment by 300 percent, while public colleges and universities grew by 27 percent. For-profits have rapidly grown capacity and customized services for nontraditional students, even as public colleges and universities have shown little appetite for revamping established routines.

One of the more intriguing for-profit ventures is Burck Smith’s StraighterLine, the provider of introductory college courses profiled in Kevin Carey’s terrific Washington Monthly cover story two years ago. Just last month, StraighterLine announced the results of an independent survey conducted by the evaluation outfit Hezel Associates. Hezel reported that 79 percent of students surveyed deemed StraighterLine courses were at least as rigorous as other options for getting college credit, 72 percent said it was more convenient, and 73 percent reported that it cost less.

Yet Obama ally and Senate education committee chairman Tom Harkin has blasted for-profit growth, charging, “The vast majority of for-profit schools have prioritized growth over education ... So it should not surprise us that educating students is taking a backseat to just getting more bodies in the door.”

Secretary of Education Arne Duncan has voiced concerns that too many students are enrolling in for-profit colleges or taking loans to pursue degrees they won’t finish.

The Obama-Harkin-Duncan line gives these colleges good cause to start getting much pickier about whom they serve. That’s all well and good...unless your goal is to get more students into college. Indeed, some for-profits are starting to express more interest in turning away students who look like bad risks--you know, like applicants with spotty work histories, or those from communities with lousy labor markets. That’s kind of at odds with Obama’s “post-sec for all” goal.

One reason the for-profits don’t post great stats when it comes to persistence and completion is that they serve a nontraditional population, made up disproportionately of students lacking the academic credentials sought by four-year institutions. For instance, black and Hispanic students make up 28 percent of undergraduates nationally, but represent nearly half of students in the for-profit sector. Fifty-four percent of students in for-profit two-year colleges are classified as “high-risk,” compared to 36 percent in traditional community colleges.

Nonetheless, despite Harkin’s claims, for-profits on the whole appear to serve needy students relatively well. U.S. Department of Education data show that graduates of private-sector college programs that last two years or less report a 50 percent increase in annual incomes, from about $14,700 before enrollment to $22,500 after graduation.

One solution that would seem to make our President happy would be if everyone would just attend public community college, avoiding the need for for-profits. Unfortunately, the community colleges in many places are busy cutting capacity and complain that they can’t afford to accommodate more students without additional state dollars. Where for-profits are being attacked for rapid growth, community colleges are routinely turning away students. In California, for instance, the community college system turned away 140,000 potential students this year.

Why would financially pressed community colleges turn away students? After all, the Department of Justice’s complaint is that some for-profits may be pursuing students too aggressively. What’s going on?

Well, while community colleges are often thought to be cheap, they’re only cheap in terms of the tuition they charge--not in terms of how much they cost to educate a student. For instance, California’s community colleges cost students only $1,080 per year, but they cost taxpayers another $5,000 in subsidies. (StraighterLine, on the other hand, has a total cost of $399 per course). When those state subsidies aren’t forthcoming, community colleges slam the doors on would-be students.

It’s the for-profits that have a selfish, practical incentive to find ways to add students, even those with families, obligations and unpredictable schedules. Of course, this aggressive competition can result in unseemly, unsavory or outright fraudulent behavior--but you’d think a president championing post-secondary access would be a lot less willing to toss out the baby along with the bathwater.

Obama’s current stance amounts to an unfortunate assault on the only institutions eager to help fulfill his grand ambitions. If you’ve ever tried to drive a car with one foot on the gas and one foot on the brake, you have an idea of the problem with the president’s higher education agenda.

(By the way, you can find a slightly shorter version of this piece at The Daily.)

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The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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