Make the Department of Education Fair Again: An Open Letter to our Next Secretary of Education
The views, opinions or positions expressed by the author and those providing comments are theirs alone, and do not necessarily reflect the views, opinions or positions of Career Education Review.
By Glenn Bogart, J.D.
Dear Secretary-Designate DeVos:
I’m writing on behalf of the for-profit college sector. This is what they would say to you if they weren’t so fearful of the entrenched bureaucracy at the U.S. Department of Education. I can be frank without fear of reprisal, because I’m just an independent consultant who tries to help these schools. I don’t own a school the Department can destroy. And over the years, the Department has made it its business to ensure that they can destroy almost any college, at will.
I understand you know all about charter schools, K thru 12, and are all for them. Good for you. Obviously, people in the for-profit school sector believe in capitalism and competition, too. From what I have read about you, you may not know very much about federal college student aid, and how the government has been administering it. Let me fill you in.
Federal student aid (Pell Grants, Federal Direct Student Loans, and a few other programs) is available to students who attend most private nonprofit colleges and universities, state colleges and universities, state and locally-supported community colleges and tech schools, and what are called proprietary institutions or for-profit colleges. These last, the for-profit colleges, are always under attack to some degree. The others see such schools as “stealing” federal student aid from them. If the for-profits didn’t exist, there’s more federal money for the more traditional schools. That’s the way they see it. To some extent, it’s just business.
But as the years have rolled on, more and more it’s become a matter of political ideology. I started in the financial aid field as a program review officer for the old Department of Health, Education and Welfare, in 1978. I’ve been working in this field ever since. I’ve pretty much seen it all, for nearly 40 years. I hope you will at least consider what I have to say.
The war on for-profit colleges, chapter one
There has been an on-and-off war against our schools since about 1989. At around that time, the Department discovered that student loan defaults were costing about $2 billion a year. That was real money in those days. Further, they figured out that a lot of these defaults were for students who had attended for-profit schools. That is when the default rate hysteria began. The formulation was that if lots of students from a particular type of school are defaulting on their student loans, then the schools of that type must be substandard, and should be destroyed. But as in most complicated things, it was more complicated than that.
Simplistic formulations are easy to sell, politically, but they are almost never correct.
Ever heard of Florida Federal Savings and Loan? These were the days of the guaranteed student loan program, when the banks were the lenders and were also responsible for collecting repayments from the students. Anyway, it turned out the Florida Federal often never even sent out coupon books on these loans made to students at for-profit schools.
If I never get a letter from my student loan lender asking me to pay the money back, I will count myself blessed indeed, if I’m not very sophisticated. My default was charged to the school I attended, and many schools closed, because regulations held them responsible for high default rates. They were destroyed by the government and by certain banks which operated their student loan divisions as criminal enterprises. And this happened under a Republican administration, that of George H.W. Bush. Democrats are not alone in making for-profit colleges the whipping boys for poor government policy and incompetent administration. So, that’s chapter one.
Chapter two – the hatred of profit intensifies
Chapter two began when President Obama took office. I don’t have to tell you that the entire Obama administration was anti-capitalist. And capitalism in the field of higher education is worst of all, if you’re of the “progressive” persuasion. Here, it was not student loan default rates that were the excuse for destroying for-profit schools. Now, it is the very making of a profit that becomes the enemy. It is a rebuke to the state-supported schools and nonprofit schools that for-profit schools are able to offer a quality education at about the same overall cost, with higher graduation rates and higher job placement rates – and earn a profit, too!
We can’t have that. There’s nothing like success in the capitalist sphere to enrage the left. If anybody makes a profit, according to them, it can only be because of theft. You’ve heard that from opponents of charter schools. You’ll see even more of it in higher education. Textbook Marxism.
Before, it was student loan default rates that provided the smokescreen to hide the real goal – destroying an area of capitalism. Now, it’s “misrepresentation.” Accusations of misrepresentation have fueled the latest incarnation of the war on for-profit higher education. The school claims it places 80 percent of its graduates in jobs. Somebody screwed up on the statistics. It’s really only 70 percent. Nobody is proven to have relied on the incorrect statistic, but that doesn’t matter. A 70 percent job placement rate, or even a 40 percent rate, is still a lot better than what you’ll find at the local community college. Doesn’t matter. For profit = bad. It is an article of faith at the Department of Education. It was that way in 1978, when I started working there. And it has never changed.
You may have heard of the collapse of ITT Technical Institutes. They were accused of misrepresentation by numerous state and federal agencies. Their accrediting agency became alarmed and took some action. But after the agency decided to give ITT a little more time to show their compliance with accreditation standards, the Department of Education doubled the school’s letter of credit requirement, and that was it for ITT. Remember, ITT Tech was accused of many things – but there was never an adjudication of guilt. The Department of Education closed them down on the basis of accusations alone. They did it knowingly, without apology, and they did it without regard for the tens of thousands of students they were putting on the street.
We don’t mind being accountable. Now, being shut down through impossible letter-of-credit requirements, when nothing has been proven – that, we don’t like. To that, we object.
Chapter three – the Department doubles down, and what you should do about it
Recently, in its Borrower Defense to Repayment regulation, the Department expanded its power to impose letter-of-credit requirements with no proof of wrongdoing. This new regulation threatens all kinds of colleges and universities – not just for-profits. The first thing you should do as Secretary is to ensure that the portion of this regulation enhancing the Department’s power to destroy colleges is abolished. Nobody wants this rule except your Department. This may be the one policy matter on which all of higher education can agree.
Then, you should work to abolish what is known as “provisional certification.” Colleges are “certified” by the Department of Education for a few years at a time. Once the certification is nearing expiration, the school applies for re-certification. If the school’s financial statements are not strong, the school receives provisional certification for a few years.
During this period, if compliance problems come to light, the Department is not obligated to offer the school the opportunity to defend itself in a termination hearing before an impartial administrative judge.
No, they can just send a letter to the school saying, “We found some problems in a program review and you’re taking too long to review all your files for errors, so you are no longer certified. Don’t forget to submit your close-out audit, and have a nice day.” Politically-motivated career bureaucrats can easily destroy a school this way, with no right of appeal.
Funny thing is, though, they never seem to do that where a state-supported or private nonprofit school is involved. (A private nonprofit in Montgomery, Alabama “borrowed” federal funds to make payroll. They’re still around, as far as I know. If a for-profit school had done that, they would have been history in about five minutes. The Department of Education is notorious for uneven enforcement, based on the tax status of a school. If you’re nonprofit, there is almost no abomination you can commit that will cause the Department to shut you down. If you’re for-profit, it’s a little different. They’ll shut you down in a heartbeat.)
Sorry. I can’t help but digress sometimes, when I’m talking about the many injustices you can find at the Department of Education. Having toiled in the field of federal student aid compliance for more than 30 years, I never run out of stories of ED perfidy. There are so many…
Finally, you should go after the Gainful Employment regulations. These regulations are designed to eliminate occupational programs where graduates supposedly do not earn enough money in the early years after graduation to make their student loan payments with reasonable ease. Interestingly, the regulations apply only to career training programs. The Women’s Dance Therapy program at the local state university is perfectly safe, as are the Gender Studies, Social Justice Studies, Minority Grievance Studies, and all the other programs with “studies” at the end of their names. None of them prepare their students to earn a living, unless as a teacher in these phony academic fields or as a “community activist” subsisting from government grants and foundation contributions. But, no worries. There’s a law that allows these “nonprofit” workers to be forgiven their student loan balances after 10 years of small monthly payments based on their low incomes. Borrowers who work in for-profit sector and business, actually producing something other than unrest, need not apply. What a world!
Apparently the Department of Education under President Obama doesn’t care whether liberal arts graduates of traditional colleges and universities have the wherewithal to repay their student loans after they graduate.
This is an honor reserved for students who attend college to learn something economically useful. Wanna borrow $100,000 to get a Ph.D. in Liberal Studies Propaganda? Go for it. We don’t care whether you’re employable after that or not. But if you want to become a hairdresser, we’re going to put your school through hell to justify its existence, and we’ll shut it down unless the school meets certain arbitrary standards shown on the income tax returns of its graduates. Never mind that a lot of cosmetology graduates work under the table. That’s the school’s fault.
This goes way beyond going after schools for fraud or for a lack of administrative capability. If I decide to get an associate degree in early childhood education, I know I’m not going to become Diamond Jim once I take a position as a teacher at a day care center. I know that I am doing it for reasons other than money. And if I borrowed a lot of money for living expenses while I was in school (which, incidentally, the school cannot prohibit), then I know I’m likely to have some trouble paying it back. This is my school’s fault?
Suppose I study wind turbine technology (which is something one of my clients offers). Things in that field are great, right now. But if somebody figures out a way to make electricity from standing water, my degree becomes worthless. My school’s fault, right?
Or, just look at the economy in general. It goes up, it goes down. If it’s down, must schools be punished because their graduates, like everybody else, have a hard time finding jobs? Especially when, as in the past eight years, the government has been responsible for destroying jobs and preventing new ones from materializing in breathtaking ways. How many new jobs has “Obamacare” prevented, with the employer mandate? Is that my fault, if I operate a for-profit school?
Let the war cease
Federal student aid has become a fixture of American society. If you’re going to have it, it needs to be available on equal terms for all – regardless of the tax status of the school one decides to attend. If I am able to provide training or education that is worthwhile, my students should be able to receive the same federal student aid that Biff can get at Harvard. And “worthwhile” means graduates have a good chance of getting a job. Graduates of for-profit schools do have that good chance. You can look at the statistics and see that. And if these schools can make a profit while providing this needed product, what’s wrong with that? Nothing, unless you’re a Marxist. Then, it’s evil.
So let the war against for-profit colleges cease under the Trump administration. There is nothing wrong with earning a profit, as long as you earn it.
And if you don’t earn it, you will eventually find that students no longer enroll.
If a school seems to have messed it up, at least give it an opportunity for a hearing before destroying it and putting its students on the street. Don’t just pull the plug (denial of re-certification, or revocation of provisional certification, or imposition of a letter of credit requirement that is impossible to meet). That’s just not the American way.
Competition in higher education is a good thing, just as it is in K through 12. Our for-profit schools pretty much invented education via the internet. And long before that, we largely invented making formal education beyond high school available to the underprivileged, starting in the late 1800s. My mother attended Miss Brown’s School of Business in Milwaukee, and learned to be a competent secretary. Using that training, she helped put food on the table when I was young. Now, I have a law degree, my older sister became a registered nurse, and my younger sister has a Ph.D. in computer science. And in a way, it all started with Miss Brown’s School of Business.
Of course, in those days, Miss Brown’s did not have access to federal student aid. Nor did Harvard. That made it harder for people without money. Federal student aid evens it out.
I’m grateful the federal student aid that enabled me to finish my education. I couldn’t have done it without federally-subsidized student loans, and I don’t mind paying taxes so others can do the same thing I did. Although I am generally a political conservative, I can see the value of federal student aid programs. And if the government is going to offer that to me, it should offer it to everyone – not just to people who choose to attend private nonprofit and state-supported schools, as I did. People with more modest aspirations should be able to follow their dreams, too.
If you want to become a medical assistant and are suited to that occupation, I want to help you do that, and I want you to be able to get your training at the for-profit school down the street, if that’s your choice.
I get it back later, when you’re paying FICA to support my Social Security check every month, instead of living on food stamps, TANF, fuel assistance, etc.
We have federal student aid, and it’s here for good, like it or not. If so, we must ensure that students who choose to attend any higher education institution, regardless of tax status, are given aid if they’re eligible and are given the opportunity to attend their schools through graduation – not thrown out on the street because their schools have been accused – only accused – of wrongdoing.
In the America I envision, a party is considered innocent until proven guilty. It has not been that way for private, profit-making colleges for many years. Please do the best you can to restore us to the way it always should have been. It is a question of schools being allowed due process of law, and it is very important. That doesn’t just benefit the schools. It benefits their students.
Being a government contractor, which is what Title IV schools are, should not mean that the government can destroy you at will, on mere accusations. Indeed, if schools are held responsible through established administrative hearing procedures, and are not destroyed on the basis of unproven charges or less-than-optimal financial statements, we will have a chance to save schools that are worth saving, and to save the opportunities they provide to their students. The bad schools will fall of their own weight, more often than not. Competition takes care of that. Students don’t need the government’s thumb on the scale, ensuring that they are denied the opportunity to finish their chosen programs at their chosen schools before anything has been proven against those schools.
The Obama administration has worked hard to enhance its ability destroy for-profit colleges, simply because they hate anybody who makes a profit.
We hope we can count on you and Mr. Trump to reverse this, and make the Department of Education fair again.
As you do this, you will face a career bureaucracy that is steeped in hatred for for-profit schools. The political appointees you choose to help you need to understand that.
Most of your senior career employees in the federal student aid area of the Department – there’s no space between them and Tom Harkin or Dick Durban. They are true believers, and you can’t fire them, unfortunately. But somehow, you must force them to do the right thing. You must force them to treat schools equally. That will be the toughest part of your new job.
I can assure you, everybody I know in the for-profit career college sector, from presidents down to clerks, supported Donald Trump, and we will support you if you do the job that needs to be done. We are fully prepared to produce well-trained graduates, as we have always done. The more you can roll back unfair regulations and keep the bureaucracy in check, the better we can do that. And that’s not just good for us. It’s good for everybody.
Glenn Bogart, J.D. is a Title IV compliance consultant who specializes in school compliance reviews and Department of Education program review responses and appeals. A former ED program review officer, he holds a bachelor’s degree in government from Southern Illinois University, and earned the Juris Doctor degree at Western New England College in 1986. He resides in Birmingham, Alabama, but travels all over the U.S.
Mr. Bogart started his consulting business in 1992, after having served briefly as director of internal audit and compliance at Phillips Colleges, Inc., and prior to that as corporate vice president for financial aid for another large group of proprietary schools. Over the years, he has contributed frequently to these pages.