March 20, 2014

Prof: New Proposal Is ‘Step in Right Direction’

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Though some Cornell professors say they support the Obama administration’s new Gainful Employment proposal — intended to prevent for-profit universities from causing students to accumulate large amounts of debts — they also say more needs to be done to help protect all students, especially low-income ones.

Seventy-two percent of graduates of from non-profit institutions did not earn as much as high school dropouts on average, according to a Department of Education report.

The Department of Education website states that the proposal — released on March 14 — sets standards that career-training programs at for-profit colleges and institutions need to fulfill in order to qualify for federal aid.

Prof. Travis Gosa, Africana studies, said the proposal represents a need for the United States to take further measures to protect all students — particularly black students — from being taken advantage of by not only for-profit institutions, but institutions of any kind.

“Obama’s proposal speaks to the need for us as a nation to regulate for-profit colleges that, too often, sell diplomas and false hopes to our country’s most vulnerable citizens,” he said. “Black and lower-class enrollments in for-profit schools have skyrocketed in recent years, though research shows that these students often leave without an actual degree, large debt and few op­portunities to move into better jobs or non-profit graduate and professional school.”

Echoing Gosa’s sentiments, Prof. Suzanne Mettler, government — who recently published Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream — said for-profit institutions tend to take advantage of low-income students seeking educational opportunities, leaving them with high debt and not enough money to pay them off.

“Nearly all of these students borrow, and they end up with far more federal student loan debt than graduates of other schools — and that’s not counting private loans,” Mettler said. “Nearly one in four [students] default on their student loans in three years. In other words, people who hoped that going to college would be a path to the American Dream end up in financial ruin.”

Although Mettler said that Obama’s proposal is a “step in the right direction,” she also said that more specifications are needed in order to prevent for-profit colleges from taking advantage of students.

“[A default rate of less than 30 percent is] a pretty low bar for programs that make large profits for their shareholders, use $32 billion in taxpayer money, and leave some of the poorest Americans worse off,” Mettler said. “Even maintaining the standards in these proposed rules will prove difficult for the Obama administration.”

The proposal’s standards will be measured through two metrics, debt-to-earning ratios and program cohort default rate — the percentage of a school’s borrowers who enter repayment on certain loans and default prior to the end of the next one to two fiscal years — according to the Department of Education website. If these standards are not met, the career-training program will be considered failing and will not be entitled to financial aid for three years, until the problem is fixed.

Failing programs include those with a student-debt-to-total-income ratio greater than 8 percent and an average alumni loan default rates greater than 30 percent, according to the Department of Education website.