For-Profit Colleges Face Tighter Aid Rules

Two days ago, I told management I wouldn’t pursue the opportunity to work my current job remotely when I move to Minneapolis. The prime reason is I didn’t want to be holed up in our one-bedroom apartment for 40 hours per week. I know myself — that would turn into cabin fever real quick.

A day later, perhaps as a sign I should leave, the U.S. Department of Education announced plans to roll out stricter regulation for federal aid at for-profit universities. My job, specifically, is to help students persist and graduate from a for-profit university, so these regulations will certainly impact our client operation and future partnership.

(Again, I’m sorry for the ambiguous language, but I don’t want to name names.)

Eric Gorski, covering the story for the Associated Press, wrote:

“A study in April by the College Board found that 53 percent of for-profit-college students finish with more than $30,500 in debt, compared to 12 percent of students at four-year public schools.

And for-profit students are much more likely than other students to default on student loans. According to federal data released in December, about 21 percent of for-profit-school students defaulted within three years on loans they began repaying in fiscal year 2007; the figure for all student borrowers was just 12 percent.”

It’s hard to dispute numbers like these, but I can say, straight-faced, I support the mission and opportunity for-profit schools provide. As public universities become more strapped for cash, they are required to up their admissions standards to ensure they’re  getting students who will start and finish. Public schools are also raising tuition every year. For-profit schools, on the other hand, have an open-door policy (in most cases) and allow access to those who would be otherwise denied from public or private schools.

Of course, the students going to for-profit schools fall into that at-risk demographic where foreclosures, defaults and bankruptcy is all part of the game. Still, they see college as their chance to breakthrough. Every student I talk to knows they’re making a huge investment, but not taking a chance would be just as risky.

I imagine these changes will drive more students from for-profit schools to community colleges, where many probably benefit most, anyway. The programs are shorter and often more practical to the current job market. Not to mention, their tuition is much cheaper.

What are your thoughts?