A “Glaring Loophole” Allows Failing For-Profit Schools To Game The System For More Federal Dollars By Enrolling Veterans

Wash. Post: "Loophole" Encourages For-Profit Colleges To “Aggressively Recruit Members Of The Military.” A June Wonkblog post explained a loophole in a federal financial aid regulation known as “the 90/10 rule,” which limits how much revenue for-profit colleges can garner from federal student aid, under the assumption that “a for-profit school with quality programs should have no trouble deriving at least [10] percent of its revenue from students willing to put up their own money.” As education reporter Danielle Douglas-Gabriel noted, the loophole allows for-profit schools to exceed the regulatory limits on how much federal aid they can receive by recruiting and enrolling veterans, whose federal student aid is exempt from this rule (emphasis added):

When it comes to enrolling veterans and their families, there is only upside for for-profit colleges. Men and women who serve in the military receive federal education funding that has become a stable source of revenue for many of the schools. And that money is exempt from a key federal rule that governs the way for-profit colleges are funded.

But a group of Senate Democrats are ready to put an end to that. Sens. Dick Durbin (D-Ill.), Tom Carper (D-Del.) and Richard Blumenthal (D-Conn.) introduced legislation Wednesday to close a loophole in the so-called 90/10 rule, which prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding. Money from the G.I. Bill, which provides veterans and their families with funding for college, does not count toward that threshold despite being federal aid.

As a result, lawmakers and consumer advocates say for-profit colleges aggressively recruit members of the military. About 40 percent of G.I. Bill tuition benefits have gone to for-profit schools in the past five years. Corinthian Colleges, the for-profit giant that filed for bankruptcy last month amid allegations of predatory lending and lying to the government about its programs, received $186 million in military tuition funding. [The Washington Post, Wonkblog, 6/25/15]

Senate Investigation: For-Profit Schools “Receive The Largest Share Of Military Educational Benefit Programs” But “Train Far Fewer Students Than Public Colleges.” A two-year investigation by the Senate Committee on Health, Education, Labor, and Pensions (HELP) found that for-profit colleges received a disproportionate share of military educational benefits, but trained “far fewer students than public colleges” because programs at for-profit schools cost more per student. The investigation also found that for-profit schools “put significant resources into recruiting and enrolling” servicemembers, veterans, and their family members, while “some recruiters misled or lied to service members as to whether their tuition would be fully covered”:

For-profit colleges also receive the largest share of military educational benefit programs: 37 percent of post-9/11 GI bill benefits and 50 percent of Department of Defense Tuition Assistance benefits flowed to for-profit colleges in the most recent period. Because of the cost of the programs however, they trained far fewer students than public colleges. Eight of the top 10 recipients of Department of Veterans Affairs post-9/11 GI bill funds are for-profit education companies.

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Servicemembers, veterans, spouses, and family members have become highly attractive prospects to for-profit colleges, and many schools have put significant resources into recruiting and enrolling students eligible for these benefits.

• Lead generation Web sites, specifically designed to attract members of the military and veterans, use layouts and logos similar to official military websites, but do not inform users that the purpose of the site is to collect contact information on behalf of the site's for-profit college clients.

• Internal documents show that some schools' pursuit of military benefits led them to recruit from the most vulnerable military populations, sometimes recruiting at wounded warrior centers and veterans hospitals.

• In addition to aggressively seeking military personnel, the investigation showed that some recruiters misled or lied to service members as to whether their tuition would be fully covered by military benefits. [U.S. Senate, 7/30/12]

The Atlantic: Senate Investigation “Revealed Just How Egregious ... Recruiting Practices Have Become.” In a June article in The Atlantic titled "'Dollar Signs In Uniform': Why For-Profit Colleges Target Veterans," education editor Alia Wong explained that findings from the 2012 Senate investigation have underscored the need to close the 90/10 loophole (emphasis added):

A two-year U.S. Senate investigation into the industry, led by the former Democratic Senator Tom Harkin, revealed just how egregious those recruitment practices had become. Among the 2012 report's 150-plus pages were subpoenaed correspondence among for-profit-college insiders discussing how to “leverage” military-spouse benefits and internal documents with strategies for enrolling veterans with access to Department of Defense aid.

“Servicemembers, veterans, spouses, and family members have become highly attractive prospects to for-profit colleges, and many schools have put significant resources into recruiting and enrolling students eligible for these benefits,” the Committee on Health, Education, Labor, and Pensions (HELP) report's executive summary said. The summary pointed to the existence of lead-generation websites that were designed to resemble official military pages, as well as efforts to recruit students at wounded warrior centers and hospitals. "This loophole creates an incentive to see servicemembers and nothing more than 'dollar signs in uniform.'"

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The report largely failed to prompt change in Congress, though. Legislation to close the loophole has been introduced a number of times since 2012; it's never even gotten a vote.

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For-profit colleges typically spend more money on marketing and recruiting than on actual instruction, the HELP report found. And, according to Senate research, in the past five years, 40 percent of post-9/11 GI Bill tuition benefits have gone to the for-profit sector.

So why has the legislation floundered? Why has veteran enrollment at the eight for-profits most reliant on their revenues “dramatically increased” in the years since the 2012 HELP report, while overall student numbers have shrunk? Why are taxpayers, as a follow-up report last year revealed, paying twice as much for a veteran to attend a for-profit college as they are a veteran at a public one? [The Atlantic, 6/24/15]

Iraq And Afghanistan Veterans Of America: “For-Profit Schools Remain Incentivized To Target Student Veterans.” A recent policy agenda from the nonpartisan Iraq and Afghanistan Veterans of America (IAVA) recommended closing the 90/10 loophole, preventing the use of “taxpayer dollars for marketing and recruiting veterans and service members,” and strengthening the Obama administration's new gainful employment regulations as ways to protect veterans and “defend the new GI Bill against fraud, waste, and abuse.” The veterans' advocacy organization wrote (emphasis added):

In recent years, Congress and President Obama took steps to protect student veterans from the practices of some predatory actors in the for-profit schools sector. Through the Improving Transparency of Education Opportunities for Veterans Act of 2012 and the 2012 Principles of Excellence for Military and Veteran Education Programs Executive Order, student veterans were given more resources to distinguish quality education programs--aligned to their career goals-- from poorer, abusive programs.

Despite these reforms, for-profit schools remain incentivized to target student veterans. A 2014 Senate Health, Education, Labor and Pension (HELP) Committee report found that eight of the 10 schools receiving the most revenue from Post-9/11 GI Bill benefits were for-profit companies, though they only educated 25 percent of veterans. Limitations in the regulations and in the reporting requirements prevent many poor-performing schools from being identified or disciplined. Congress must take bold action to prevent these schools from squandering veterans' educational benefits and jeopardizing their futures. [Iraq and Afghanistan Veterans of America, 10/27/15]

The Administration's “Gainful Employment” Rule Aims To Protect Veteran Students From Enrolling At Failing For-Profit Schools

Brookings: For-Profit Schools Account For “Most” Of The Rising Loan Defaults. In a recent report from The Brookings Institution, Treasury Department Deputy Assistant Secretary for Tax Analysis Adam Looney and researcher Constantine Yannelis concluded that the recent pattern of increasing student loan defaults can be largely attributed to the rise in borrowers at for-profit and non-selective institutions:

Most of the increase in default is associated with the rise in the number of borrowers at for-profit schools and, to a lesser extent, 2-year institutions and certain other non-selective institutions, whose students historically composed only a small share of borrowers. These non-traditional borrowers were drawn from lower income families, attended institutions with relatively weak educational outcomes, and experience poor labor market outcomes after leaving school. [The Brookings Institution, 9/10/15]

U.S. News & World Report: Gainful Employment Rule Is Designed To Protect Students From Programs That Saddle Them With “Umanageable Debt.” Education finance expert Betsy Mayotte wrote at U.S. News & World Report that the latest version of the Obama administration's “gainful employment” rule requires for-profit schools and community colleges with nondegree programs to show their graduates are generally earning enough to pay back their student debt, or else face the risk of losing access to federal aid. The regulation is designed to keep schools from saddling students with large amounts of debt and to insure they are adequately preparing students for the job market:

The gainful employment regulation requires vocational programs at for-profit higher education institutions and nondegree programs at community colleges to meet minimum thresholds with respect to the debt-to-income rates of their graduates. Programs that fail to meet these minimum requirements could lose access to all federal financial aid for a period, putting them at a higher risk of closing.

Proponents of the rule say it will weed out programs that saddle students with unmanageable education loan debt and lead to few quality job prospects. Critics of the rule argue that gainful employment will ultimately limit opportunity for students, especially those who turn to for-profit schools for flexible schedules as they juggle family, work and school.

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Higher education consumers who currently attend or plan on attending vocational or nondegree programs should pay particular attention to how the program fares under the gainful employment rules. Schools at risk of failing the requirements must disclose this to both current and prospective students. [U.S. News & World Report, 7/8/15]

Seven Military And Veterans Groups Have Advocated For The Newest Gainful Employment Rule. When the Association of Private Sector Colleges and Universities challenged the most recent version of the administration's gainful employment regulation in court, seven military and veterans groups joined a broader coalition to file a friend-of-the-court brief in support of the rule. The groups listed on the brief included the Air Force Sergeants Association, Military Officers Association of America, University of San Diego School of Law Veterans Legal Clinic, Veterans Education Success, Veterans' Student Loan Relief Fund, VetJobs, and the Vietnam Veterans of America. The brief detailed instances of predatory military and veteran recruitment by major for-profit education companies, including one instance in which a for-profit recruiter was “instructed to pose as a 'military advisor' affiliated with the Pentagon” in order to recruit veterans. [U.S. District Court for the District of Columbia, 3/6/15]

Fourteen Military and Veterans Groups Have Supported A Strong Gainful Employment Regulation. Fourteen military and veterans groups co-signed a 2014 letter to the president calling for a strong gainful employment regulation that cannot be weakened by the for-profit industry, writing that “your administration now has an opportunity to better protect taxpayers and students, including our nation's veterans, service members and their families, from predatory career education programs” through the gainful employment rulemaking process. The list of groups included the Association of the United States Navy, the Initiative to Protect Student Veterans, the National Association for Black Veterans, Inc., the National Guard Association of the United States, the National Women Veterans Association of America, the Paralyzed Veterans of America, the Student Veterans of America, Veterans for Common Sense, and many others. [WhiteHouse.gov, 2/4/14]

Several Prominent For-Profit College Chains Have Been Implicated In Predatory Recruitment Practices

Senate Report: “Seven Of Top Eight For-Profit Colleges Receiving Post-9/11 G.I. Bill Benefits Are Under State Or Federal Investigation.” A recent follow-up report to the Senate HELP Committee's 2012 investigation of the for-profit education industry found that eight of the 10 top recipients of military educational benefits under the post-9/11 G.I. bill are “large, publicly-traded companies that operate for-profit colleges,” receiving a total of $2.9 billion in taxpayer dollars from 2009-2013. The report also noted that seven of these eight companies - including Corinthian Colleges, the parent company of the University of Phoenix system, ITT, and DeVry - were currently under investigation for deceptive recruiting practices, and many of their schools would not pass the then-impending gainful employment rule (emphasis added):

Amongst the top recipients of Post-9/11 GI Bill benefits is Corinthian Colleges, Inc. Corinthian received $186 million in Post-9/11 GI Bill funds from 2009 to 2013, yet recently announced it was in such severe financial distress that it would close or sell all campuses. In all, seven of the eight companies are currently under investigation by state attorneys general or federal agencies for deceptive and misleading recruiting or other possible violations of federal law.

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Between 39 and 57 percent of the programs offered by four of the companies receiving the most Post-9/11 GI Bill benefits would fail to meet the proposed gainful employment rule, suggesting that the students who attend these institutions do not earn enough to pay back the debt they take on. [U.S. Senate, 7/30/14]

The State Of California Brought A Lawsuit Against Corinthian Colleges For “False And Predatory Advertising,” And “Unlawful Use Of Military Seals In Advertisements.” In 2013, California Attorney General Kamala Harris filed a lawsuit against Corinthian Colleges “for false and predatory advertising, intentional misrepresentations to students, securities fraud and unlawful use of military seals in advertisements.” From the Office of the Attorney General (emphasis added):

According to the complaint, CCI advertised job placement rates as high as 100% for specific programs when, in some cases, there is no evidence that a single student obtained a job during the specified time frame. The complaint further alleges that CCI runs millions of online and mobile ads offering ultrasound, x-ray, radiology, and dialysis technician programs at their California campuses--when, in fact, CCI does not offer those programs. CCI's call center agents are disciplined if they tell callers that CCI does not offer these programs. Additionally, according to the complaint, CCI includes official Army, Navy, Air Force, Marine Corps, and Coast Guard seals in mailings and on web sites without authorization and in violation of California law. [State of California Department of Justice, 10/10/13]

U. Of Phoenix On “Probation” With Department Of Defense, Suspended From Recruiting Military Students. The Apollo Education Group, the parent company of the University of Phoenix for-profit school system, made a securities filing explaining that its school system was “placed on probationary status” by the Department of Defense in October, suspending their eligibility for military aid from the Department of Defense's Tuition Assistance Program for active duty military personnel and preventing them from engaging in recruitment activities at military installations. The Department of Defense cited several ongoing investigations into the University of Phoenix's recruitment practices for the decision. From the recent filing disclosing the probation:

The DoD [Department of Defense] cited the following in support of its actions:

• Compliance issues identified in July and August 2015 regarding the use of “challenge coins” by University of Phoenix without receipt of the necessary trademark approvals, and the sponsoring by the University of various events at military installations without the specific written approval of the officer designated in the DoD MOU;

• The Civil Investigative Demand issued by the U.S. Federal Trade Commission to University of Phoenix in July 2015 seeking information relating to advertising, marketing, and sale of secondary or postsecondary educational products or services or educational accreditation products or services; and

• The Investigative Subpoena issued by the California Attorney General's office in August 2015 seeking information relating to recruiting of U.S. military and California National Guard personnel and related matters and the use of U.S. military logos and emblems in marketing. [United States Securities and Exchange Commission, 10/9/15]

U. Of Phoenix Parent Company Currently Being Investigated By Federal Trade Commission, State Of California Over Military Recruitment And Marketing Practices. The Federal Trade Commission and the California Attorney General's office have both launched recent investigations into the Apollo Education Group's recruitment and marketing practices, specifically requesting documents related to these efforts for military and veteran students. Inside Higher Ed reported:

Apollo Education Group said Friday that it is being investigated by California's attorney general, Kamala Harris. The inquiry relates to the University of Phoenix, which Apollo owns, and students who are veterans or members of the U.S. military or California National Guard, according to an Apollo corporate filing.

The investigation follows a broad information request last month from the U.S. Federal Trade Commission, which is scrutinizing allegations of deceptive marketing by Phoenix. That investigation also includes the recruitment of military students. [Inside Higher Ed, 8/10/15]

Center For Investigative Reporting: U. Of Phoenix “Sidesteps” Executive Order, Deceptively Recruits On Military Bases With Concerts, Chocolate Festivals, Fashion Shows. In June, the nonprofit Center for Investigative Reporting released an in-depth look at the University of Phoenix's active military and veteran recruitment practices, which included unauthorized use of military “challenge coins,” lavish events thrown on military bases, and visits to medical units to encourage enrollment by recovering service members. From the report at the Center's Reveal News site (emphasis added):

Military regulations adopted as a result of Obama's order “ban inducements, including any gratuity, favor, discount, (or) entertainment” for the “purpose of securing enrollments of Service members.” Recruiting activities are supposed to be limited to education fairs and other narrowly approved activities where every school would have equal access.

But the regulations say nothing about sponsoring events.

Internal University of Phoenix company documents obtained by Reveal [News] show that the Big Smo concert is part of a sophisticated recruitment strategy. At its heart is a deliberate effort to create the impression that the college is sanctioned and even recommended by the armed forces.

The goal, company documents say, is to “fulfill expectations” of “market penetration.”

The strategy has included engaging in recruitment drives disguised as résumé workshops, cultivating veterans' organizations and utilizing military insignias in school marketing without the required permissions. The strategy also has led the company to pay the military to sponsor hundreds of events on military bases across the country, from rock concerts to Super Bowl parties and father-daughter dances.

A Reveal survey of five large military bases found that the college paid the military nearly $1 million over the past five years sponsoring events there, ranging from briefings for soldiers newly stationed at Fort Carson in Colorado to an Easter egg hunt at Fort Hood in Texas.

Back at Fort Campbell, where Big Smo entertained the troops, the University of Phoenix has paid the military $250,000 to sponsor 89 events over the past three years, including a chocolate festival, a fashion show and “Brunch with Santa.” [Center for Investigative Reporting, Reveal, 6/30/15]

Marketing Company Fined For Advertising “Military-Friendly” For-Profit Schools On Misleading Websites. In 2012, QuinStreet, Inc., an Internet marketing company, reached a $2.5 million settlement after an investigation by 20 states into its use of misleading domain names such as GIBill.com, GIBillAmerica.com, ArmyStudyGuide.com, and 15 others to advertise for its for-profit college clients. QuinStreet's clients included the University of Phoenix, DeVry University, and other prominent for-profit education companies. Inside Higher Ed explained:

Jack Conway, Kentucky's attorney general and the leader of a multi-state investigation into the colleges' practices, announced a $2.5 million settlement between QuinStreet, Inc. -- a lead generation company --and 20 states over GIBill.com, a website set up to direct veterans to for-profit colleges.

Until recently, the website looked like an official outpost of the Department of Veterans Affairs and offered veterans advice on how to use their benefits under the Post-9/11 GI Bill, which pays for postsecondary education and can be used at any accredited college or university. But the site offered veterans a choice of only 15 colleges, most for-profit, including Kaplan University, the University of Phoenix, Strayer University, DeVry University and Westwood College.

For-profit colleges (and, increasingly, some nonprofits) pay companies like QuinStreet for the contact information of prospective students. As part of the settlement, QuinStreet will turn the website -- as well as 18 other domain names, including gibillamerica.com and armystudyguide.com -- over to the VA, which is seeking to trademark “GI Bill.” [Inside Higher Ed, 6/28/12]

A 2011 Senate HELP Committee Probe Found For-Profits Using “Pain” And “Fear” In Recruitment To Target Veterans and Active Military. A 2011 Senate HELP committee investigation found internal documents used in training recruiters at the for-profit ITT and Kaplan University that encouraged recruiters to appeal to feelings of “pain” and “fear” to boost enrollment. Another for-profit company's documents detailed “student profiles,” such as “welfare mom w/kids,” “pregnant ladies,” “military - active & retired,” “low self-esteem,” “experienced a recent death,” and “empty nest syndrome.” The Huffington Post reported:

The ITT training documents laid out a “Pain Funnel and Pain Puzzle” that describes a series of questions recruiters should ask prospective students in order to “poke the pain” and convince them to sign up for classes. “Level 1 Pain” questions focus on telling the story of a student's performance in high school or in getting a GED.

The recruiter is then instructed to continue probing, asking questions such as “What has not having a college education cost you?” and “What are you willing to change now, or have you given up trying to deal with the problem?”

A similar document from Kaplan University encourages recruiters to “Keep digging until you uncover their pain, fears and dreams” and to “Get to their emotions and you will create the urgency!” [Huffington Post, 2/8/11]

The Wall Street Journal Editorial Board Has Repeatedly Defended Failing For-Profit Schools Engaging In These Predatory Practices

WSJ Called Department Of Defense's Probation Of U. Of Phoenix A Regulatory “Drone Strike.” An October 21 editorial criticized the Department of Defense's decision to place the Apollo Education Group's University of Phoenix on probation, using an extended analogy likening the actions to a politicized “stealth attack” and a “drone strike,” and referring to Senator Dick Durbin (D-IL) as the “political general” “leading the charge.” The board concluded that the “casualties” of this crackdown would be service members themselves. From the editorial (emphasis added):

If only the Obama Administration conducted its foreign policy with as much vigor and purpose as it prosecutes for-profit colleges. Consider the White House's recent drone strike on the University of Phoenix.

Earlier this month the Defense Department cut off military tuition assistance to new students at the for-profit University of Phoenix, which enrolls about 9,300 service members at its 105 campuses nationwide. The Pentagon also prohibited Phoenix from sponsoring job training, career fairs or “any recruitment-type activities” on its bases.

Defense's reasons for discharging Phoenix are vague: A review “in response to allegations published by the Center for Investigative Reporting” in a June drive-by on the college found minor breaches in decorum.

[...]

In any case, as Defense acknowledges, “the University of Phoenix has responded to these infractions with appropriate corrective action at this time.” But political general Dick Durbin, the Illinois Democrat who is leading the charge against for-profits in the Senate, nonetheless commanded the Pentagon to “bar the company from further access to service members.”

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The Administration's ostensible goal is to discredit Phoenix and choke off veteran recruitment. But the casualties of its attack will be service members who will now have fewer educational options and opportunities. [The Wall Street Journal, 10/21/15]

WSJ: Clinton's Proposal To Strengthen Gainful Employment Rules Is An Effort To “Buy Young Voters.” In an August editorial critiquing Hillary Clinton's “New College Compact” student debt plan, billed as “10 ways Hillary tried to buy young voters,” the editorial board claimed Clinton's proposal to further strengthen the gainful employment regulation was “winning the stiff competition for worst provision” in the plan. The board also repeated a frequent right-wing talking point that for-profit institutions serve a nontraditional community, without acknowledging the evidence that many of these schools underserve these populations:

Winning the stiff competition for worst provision is Mrs. Clinton's promise to continue the Obama Administration's scorched-earth campaign against for-profit colleges. She vows to strengthen the Education Department's “gainful employment” rule, which requires only for-profit schools to live up to certain debt and income standards. Meantime, she'd plow cash into two-year community colleges, where the three-year graduation rate is regularly below 30%. For-profits are especially important for minorities and students who have to work. [The Wall Street Journal, 8/10/15]

WSJ: Since-Shuttered Corinthian Colleges Was “Held At Federal Gunpoint,” Read “Last Rites” Following Multiple Investigations Into Exploitative Practices. Again invoking a “drone strike” analogy, the editorial board wrote in an April editorial titled “Corinthian's Last Rites,” that the Department of Education held now-defunct Corinthian Colleges at “government gunpoint” in service of a larger political agenda to “put for-profit schools out of business.” The editorial, which claimed the shuttering of Corinthian was harmful to students and workers, began:

It's good that Education Department regulators don't oversee drone strikes. Behold how DoE's blunderbuss assault on the for-profit Corinthian Colleges has harmed thousands of students and employees.

On Monday the Santa Ana-based for-profit shut down its remaining 28 schools, which no buyer would purchase amid the government's regulatory ambush. The closure displaces 16,000 or so students--many mere months away from graduation--and 2,500 workers.

Last summer the Education Department began to drive Corinthian out of business by choking off federal student aid for supposedly stonewalling exhaustive document requests. The Department claimed to be investigating whether Corinthian misrepresented job placement rates as California Attorney General Kamala Harris alleged in a lawsuit. [The Wall Street Journal, 4/27/15]

WSJ Called Attorney General Kamala Harris A “California Job Killer” For Investigating A Corinthian Subsidiary's Recruitment Practices. In another April editorial titled “The California Job Killer,” the board admonished California Attorney General Kamala Harris for pursuing a legal case against Corinthian over misrepresenting job placement rates in recruitment efforts at their Heald College subsidiary, which it characterizes as “mostly trumped-up charges.” The editorial called Harris's refusal to drop the legal case against Corinthian “a case study in political revenge against an unpopular target” and accused Harris of using her power to “destroy more businesses and livelihoods.” The board suggested Harris's actions were meant to purposely lead to the closing of Heald campuses (emphasis added):

But ECMC [Educational Credit Management Corporation] declined to buy Corinthian's 20-some campuses in California because Ms. Harris refused to drop her legal claims against any new owner. The AG wants to burden any prospective buyer with Corinthian's alleged wrongdoings, which no sane company will take on. Under the federal government consent agreement, all campuses were supposed to have been sold by the end of last year.

Heald College President Eeva Deshon warned Ms. Harris in a letter this month that its 10 campuses in California would have to close if she didn't drop her prosecutorial offensive by mid-April. Nine thousand students could be thrown out of school and 1,500 staff would lose jobs.The Education Department intended to prevent such seismic collateral damage by allowing Corinthian to sell most of its campuses. The California AG's office then declared that “our approval is not required for the sale of the college,” as if a legal threat isn't incentive enough not to invest. [The Wall Street Journal, 4/19/15]

WSJ Used Misleading Figures To Declare Community Colleges “Inferior” To For-Profit Schools, Claimed Gainful Employment Rule Was “Harassing” For-Profit Industry. In a January editorial criticizing the Obama administration's free community college proposal, the board claimed the plan would “punish for-profits, then subsidize inferior public competitors,” and characterized the gainful employment regulation as an effort to “harass” for-profit colleges. The board concluded by invoking a misleading statistic on graduation rates to characterize community colleges as “inferior,” ignoring the reality that for-profit schools have lower employment and earnings rates for their graduates:

Yet according to the National Center for Education Statistics, the three-year college completion rate at community colleges is 21%, compared to 62% at two-year nonprofits and 63% at for-profits. The reason for the disparity is that many community colleges do a poor job of meeting the needs of non-traditional students who tend to be older and work while attending school. Enrollment at for-profit colleges soared over the last decade in part because students and employers could see that many community colleges weren't providing the skills they require.

And now the Administration is proposing to give inferior community colleges another competitive advantage with this new entitlement that bribes students with “free” tuition. So: Punish private schools, subsidize often inferior public schools, snatch regulatory control from states, and add tens of billions in new taxpayer obligations: The ObamaCollege plan is everything we've come to expect from this White House. [The Wall Street Journal, 1/11/15, Media Matters, 1/12/15]

WSJ: Corinthian Funding Freeze Was An Obama Administration “Drive-By Shooting,” “Contract Hit.” In a July 2014 editorial titled, “Obama's Corinthian Kill,” the editorial board claimed that financial problems at Corinthian Colleges leading to a liquidation were the intended result of several federal investigations into Corinthian's marketing practices for private loans, recruitment practices, and alleged misrepresentation of job placement and other student outcome figures. In response to concerns about Corinthian's finances, the Department of Education placed the for-profit company on a “heightened cash monitoring” status, which also included a federal funding freeze, eventually contributing to the liquidity crisis. The board alleged that this action on the part of the Department of Education amounted to a “contract hit,” arguing that “every sign suggests the Obama Administration targeted Corinthian with the intent to kill.” From the editorial (emphasis added):

For five years the White House has been tightening the screws on for-profit colleges. So it's curious that the Obama Administration is now denying that it deliberately drove Corinthian Colleges out of business, all evidence to the contrary. Shouldn't it be declaring mission accomplished?

Last month the Department of Education triggered a liquidity crisis at the Santa Ana-based Corinthian by cutting off federal student aid. Regulators then coerced the for-profit into an agreement to wind down 12 of its U.S. campuses and sell 85 others over the next six months. Last week, DOE appointed Chicago lawyer Patrick Fitzgerald, notorious for prosecutorial bullying, to oversee the liquidation. Corinthian's 72,000 students will be allowed to transfer, finish their degrees or withdraw with a full refund, but 12,000 jobs are in jeopardy.

The White House is putatively trying to avert a chaotic Chapter 7 bankruptcy like the one that transpired in 2001 after regulators abruptly yanked federal aid from the for-profit Computer Learning Centers. Congress lashed department officials for their heavy-handed response that threw 10,000 students out of school. Yet the drive-by shooting of Corinthian may be even more vicious.

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Yet department officials now purport to be wondering “what we missed” and have vowed to re-examine their financial monitoring mechanisms, as if Corinthian's collapse was the product of mere regulatory negligence. This was a contract hit, not accidental homicide.

Meantime, Education Secretary Arne Duncan is floating above this travesty as if it's someone else's job. This Administration dislikes so many industries and individual companies that putting one more out of business is barely news. [The Wall Street Journal, 7/25/14]

WSJ Called Gainful Employment A “Regulatory Assault” That “Has Made It Harder” For Students Of Color And The Poor To Attend College. In a March 2014 editorial criticizing an earlier version of the administration's gainful employment rule, the editorial board characterized the rule as “regulatory assault on some of America's most innovative and affordable schools,” including the University of Phoenix. The board also repeated the common conservative argument that for-profit schools serve a nontraditional student population, ignoring evidence that many of these schools do not sufficiently prepare students for the employment market (emphasis added):

With White House pomp, President Obama and the first lady in January launched their campaign to make it easier for minorities and the poor to go to college. Now his Administration has made it harder with a regulatory assault on some of America's most innovative and affordable schools.

Capping a five-year assault on for-profit colleges, the Department of Education last week tightened oversight over this--and only this--corner of higher education, claiming sweeping powers to close “poor-performing” schools based on its own abstruse criteria. Sound familiar? The people who gave the world ObamaCare think they also know the best educational options for students.

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This new rule is merely the latest front in what has become a White House war to kill for-profit private education. Apparently private schools that, unlike Harvard or Columbia, pay taxes and offer a non-elite education to regular folks offend their liberal sensibilities. Three years ago, a previous draft of the rule was struck down by a federal judge, who called one of the tests arbitrary. The new income and loan thresholds look arbitrary too.

The Administration says students at for-profits make up 13% of the higher education population but account for 31% of loans and nearly half of loan defaults. It fails to point out that for-profits serve a larger share of older, poorer and working people, who can't draw on family support and disproportionately rely on loans to pay for college. [The Wall Street Journal, 3/21/14]