Blog: The Educated Reporter

Keeping Track of For-Profit Colleges

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With a top advocate for for-profit colleges at her right, and a man leading the legal campaign against wayward for-profits at her left, Chronicle of Higher Education financial reporter Goldie Blumenstyk jokingly reassured her audience: “Despite what this looks like, it’s not going to be a debate.”

Instead, over the course of their panel discussion at EWA’s recent National Seminar in Chicago, Association of Private Sector Colleges and Universities President Steve Gunderson and Consumer Financial Protection Bureau Assistant Director Rohit Chopra directed their thoughts at the audience of reporters, urging two very different approaches to covering the world of for-profit colleges.

Gunderson, a former TV journalist and U.S. Congressman, doesn’t like the term “for-profit” to describe the industry he represents—“It’s not making any money!” he joked at one point—preferring “private sector” instead, or even better: “post-secondary education with a career focus.” It’s the career focus, not its corporate structure, that should define the industry, he said, and should drive the narrative journalists relate.

Gunderson framed for-profit schools as nimble innovators at the leading edge of the fast-changing higher education world. More jobs require some sort of post-secondary degree or certificate today than in the past, and just one third of students in higher ed fit the “traditional” mold of recent high school graduates living on-campus. Gunderson said the private sector is best suited to offer “as-needed, on-time education and skills for an increasingly diverse postsecondary student body,” and we all should “celebrate the diversity” of the higher ed institutions that existsworld we’ve got today.

There are—as reporters were quick to remind Gunderson—some spectacular instances of law-breaking and misbehavior in the for-profit world that are less worthy of celebration. (Moderator Goldie Blumenstyk, the moderator, charted the complex state of government actions against for-profits last year.) Blumenstyk asked Gunderson about the federal government recent decision to fine Corinthian Colleges $30 million for misleading students about their job placement prospects at its Heald College system. Gunderson was ready for this one. Waving a copy of the complaint over his head, he said he was “absolutely blown away by the vengeance” displayed by the U.S. Department of Education, in sending inspectors “to go through every needle in a haystack they could find.”

The intense language in the complaint and its detailed appendix of missteps, Gunderson said, mask the fact that Heald maintained a median placement rate of 66 to 70 percent. He seemed baffled by the Obama administration’s zeal for taking action against private-sector schools. Nowhere else has he seen such “ideological hostility,” he said. “They simply will not work with us on anything at any time.”

Gunderson suggested that it’s the government, and a handful of reporters, who’ve put for-profit colleges on the defensive, and made them wary of opening their campuses even to well-meaning journalists who’d like to visit. “We’re both the victim of a culture of ‘what can you do to get them’ inflammatory reporting of a couple of journalists at a couple of publications,” he said. He suggested contacting Noah Black, his group’s vice president of public affairs, for help getting a closer look inside the for-profit college world. “I can’t speak for any campus,” Gunderson said, “but you show me that you’re serious and open-minded, and I’ll work with you.”

Chopra, the outspoken CFPB ombudsman for student loans, didn’t have to debate Gunderson directly to suggest a far different story about for-profit schools The most important stories aren’t quite education stories at all, he said, but financial ones. “If you are not concerned by the student loan market, you are completely missing the warning signs,” Chopra said.

In today’s postsecondary education world, he sees parallels—“very, very grisly similarities”—to the housing industry just before the subprime mortgage crisis. Back then borrowers had access to home loans they could never really afford for homes that weren’t great investments; today borrowers can easily get student loans to earn a degree that’ll never be worth the cost. Under for-profit schools, he said, “the emphasis switches from success to growth.”

Think of the for-profit college industry in terms of the 2008 housing crisis, Chopra said, and suddenly that long complaint against Corinthian Colleges makes more sense—the government has learned to be more zealous about systemic irresponsible lending. (Corinthian Colleges filed for bankruptcy in May.)

As more colleges are dealt multimillion-dollar fines, and as more colleges face steep drop-offs in their enrollment, Chopra said reporters should be ready to follow the impact: what happens when big systems downsize dramatically or fold altogether. Reporters should approach this work as financial reporting, by talking to debt analysts, even outside the for-profit college world, to understand where programs are already teetering on the brink, and the implications of one corporate college taking over another as the student loan bubble deflates.

“This is not a matter of if but when,” Chopra said.



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