As Public Schools Face Cutbacks, Federal Funds Flow to For-Profits

by
Watch College, Inc., FRONTLINE’s investigation into how for-profit universities are transforming the way we think about college in America, and Educating Sergeant Pantzke, our follow-up film about how the schools recruit veterans.

While state and local governments cut back funding to public higher education institutions, the volume of federal government subsidies to for-profit colleges and universities continues to increase, reports Floyd Norris in today’s The New York Times.

And community colleges — which, as we reported two years ago in College Inc., were already struggling to keep up with the number of students who want to take classes — are facing some of the most severe cutbacks.

“That trend has been welcome news to the proprietary colleges,” writes Norris, who cites Kevin M. Modany, the chief executive of ITT Educational Services, as describing an improving “competitive landscape” for the for-profits.

The Obama administration has written rules to keep loans from going to students at the most exploitative for-profit schools. The new rules, which were weakened after a furious lobbying fightrequire for-profits to meet at least one of the following three requirements to be considered able to offer “gainful employment” and qualify for federal aid:

  • At least 35 percent of former students must be repaying their loans, reducing the loan balance by at least one dollar.
  • A typical graduate’s estimated annual loan payment cannot exceed 30 percent of their income, or
  • A typical graduate’s estimated annual loan payment cannot exceed 12 percent of their earnings.

Schools will only be disqualified from federal student aid programs if they fail the debt measures three times in a four-year period, instead of losing eligibility immediately.

The Association of Private Sector Colleges and Universities, a trade group, has sued to block the new rules, arguing the Department of Education “exceeded its statutory authority” with the gainful employment regulations.

 

blog comments powered by Disqus

In order to foster a civil and literate discussion that respects all participants, FRONTLINE has the following guidelines for commentary. By submitting comments here, you are consenting to these rules:

Readers' comments that include profanity, obscenity, personal attacks, harassment, or are defamatory, sexist, racist, violate a third party's right to privacy, or are otherwise inappropriate, will be removed. Entries that are unsigned or are "signed" by someone other than the actual author will be removed. We reserve the right to not post comments that are more than 400 words. We will take steps to block users who repeatedly violate our commenting rules, terms of use, or privacy policies. You are fully responsible for your comments.

SUPPORT PROVIDED BY

FRONTLINE on

ShopPBS
Frontline Journalism Fund

Supporting Investigative Reporting

Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by The John D. and Catherine T. MacArthur Foundation. Additional funding is provided by the Park Foundation, The Ford Foundation, the Wyncote Foundation, and the FRONTLINE Journalism Fund with major support from Jon and Jo Ann Hagler on behalf of the Jon L. Hagler Foundation.
PBSCPBMacArthur FoundationPark FoundationFord Foundationwyncote

FRONTLINE   Watch FRONTLINE   About FRONTLINE   Contact FRONTLINE
Privacy Policy   Journalistic Guidelines   PBS Privacy Policy   PBS Terms of Use   Corporate Sponsorship
FRONTLINE is a registered trademark of WGBH Educational Foundation.
Web Site Copyright ©1995-2014 WGBH Educational Foundation
PBS is a 501(c)(3) not-for-profit organization.