SLATE: You Are Making the CEO of the University of Phoenix Rich

Career College Central Summary:

  • Is Corinthian Colleges’ recent bankruptcy a sign of the end times for the for-profit university industry? As the Washington Post recently put it, proprietary institutions everywhere are currently “buckling under government lawsuits, regulatory scrutiny and depressed student enrollment.” So, provided that the Obama administration makes clear that Corinthian’s victims are entitled to debt relief, will purveyors of legitimate education start to feel like we’ve been raptured up to a heaven bereft of predatory education?
  • Maybe. Since 2014 (well, really since 2009, but more on that in a minute), the Obama administration has taken a relatively hardline stance on the least scrupulous of the for-profits. As Secretary of Education Arne Duncan told me in a recent conversation, these institutions lobby aggressively on “both sides of the aisle”; the industry has enough friends in Washington that Congress was able to block regulations that President Obama attempted to instate in 2009. These regulations stipulated, among other things, that proprietary institutions that claim to provide career training need to furnish proof that their graduates found “gainful employment,” defined in terms of a reasonable debt-to-income ratio and the ability to repay loans on time. The regulations were finally enacted—among much protest from for-profits—last year.
  • Corinthian was discovered gaming the gainful-employment requirement by, say, hiring its students out to temp agencies for two days or counting Taco Bell as relevant employ in the field. Thus I can see why the industry fought the regulations with such vehemence. Now the Obama administration wants to add to for-profits’ tribulations by closing loopholes in the current “90/10” rule, a federal law mandating they receive no more than 90 percent of their funding from federal student aid programs.

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