The news for higher education seems to get worse by the day. More and more schools lack sustainable financial models, public institutions are losing billions of dollars in funding due to financial challenges at the state level, and financing for the Pell Grant program that is a key resource for lower income students is at risk. These challenges are amplified by changing demographics that do not support the traditional student model that most schools continue to exclusively rely upon, increased competition, and a heavy resistance to change on many campuses.
The aforementioned issues are even more pronounced for past, present, and prospective consumers of post-secondary education. Student loan debt now exceeds credit card obligations, our institutions are failing to graduate millions of students after saddling them with substantial student loan debt, and many students who are fortunate enough to graduate lack the skills needed by many of our employers. If all this is not enough, our education system continues to enable a pervasive college attainment gap based on socio-economic status. If you are an adult without a college education, poor, a Latino, or African-American, you are significantly less likely to gain access to a quality college education – even if you are college ready!
If there is any time higher education and its most important constituents – the students – need the leadership and support of the U.S. Department of Education (DOE), it is right now. Yet, the Department continues on what has arguably become an overzealous trek to rein in for-profit education despite the fact that almost every higher education policy expert acknowledges that these institutions play an important and necessary role in our post-secondary system that could not be replicated by non-profit institutions. With DOE’s ideas on so-called “Gainful Employment” regulations becoming more and more of a political impossibility, the Department continues to push other regulations that it feels will have a restrictive impact on for-profit schools. The most onerous and concerning is the requirement that institutions that offer distance education and online programs to students in states where the school lacks a physical campus be licensed with appropriate state authorities in each individual state that requires (or may require) such registration.
DOE’s position on this regulation is that schools that offer online programs to out-of-state students have always been required to be licensed where required. This is a cynical and disingenuous argument based on how both schools and states have operated as it relates to this issue. What is even more concerning is, in its attempts to make life more difficult for the for-profits, DOE has engaged in a “scorched-earth policy” that in reality will have very little impact on the major for-profits but have a tremendously adverse impact on constituencies that the Department purportedly wants to support – students and non-profit institutions! Perhaps just as ironic, this requirement will be just as difficult for many model smaller, niche for-profit schools that are providing outstanding educational experiences. For obvious reasons, these are schools that the Department should want to showcase.
The large for-profits have teams of lawyers, regulatory affairs staff, and other resources that can quickly interpret individual state mandates and meet them. In fact, of the for-profit executives I have interviewed about this issue over the past several weeks, most look at the state approval requirements as an annoyance but a cost-of-doing business. They are working as we speak to obtain their out-of-state licensing if they currently do not have the credentials. One for-profit official half jokingly told me she believes it will actually provide their school with “another competitive edge” over their non-profit counterparts.
On the other hand, I have had conversations over the past several weeks with at least 10 chancellors and presidents of private not-for-profit and public institutions – the majority of whom have no idea how they are going to comply with this requirement. These officials do not have the staff, available expertise, or the $ 100,000+ in disposable fund to license themselves in each state that requires such approval. As a result, many presidents and other school officials have alluded to me that they will simply not offer their programs in states that require registration or those states that have particularly difficult requirements.
If smaller non-profit institutions – many of which are new entrants to the online learning marketplace that offer higher quality and niche programs have to pull out of specific states, these schools will disproportionately suffer. Recruitment, revenue, and student diversity will all be impacted. This will especially be true of tuition dependent institutions that are experiencing a decline in traditional enrollment and need out-of-state enrollments to sustain their student populations.
While this is a real issue for the financial health and sustainability for some institutions, the larger travesty is if fewer online programs are offered in specific state markets, we are denying students choice and access to quality educational opportunities. In certain states that lack strong not-for-profit online offerings and have public institutions that have to cap other types of enrollment due to budgetary issues, a distance learning program offered by a for-profit may be a student’s only option (assuming one is available).
There have certainly been abuses at some for-profit schools that need to be corrected and taxpayers as well as students deserve a return on investment on our federal student aid programs. As well –intentioned as the Department might be as it relates to the state approval requirements, this policy will hurt the groups that desperately need DOE’s support right now – our non-profit institutions and most importantly our non-traditional learners as well as others that lack appropriate access to solid educational opportunities.
DOE has a statutory role in acting as a limited regulator and a responsible steward of our Title IV aid programs. Requiring schools to participate in up to fifty regulatory schemes is an overreach of the Department’s position in our system of institutional oversight. Otherwise, where will this end? Will a school in one state that recruits traditional students from another state to attend a campus program be required to also register in each state to have the privilege of enrolling those students?
While an imperfect system, DOE should allow our system of private accreditation that is designed to ensure that post-secondary institutions across our country meet minimum uniform standards to operate as intended – negating the need for this type of regulation. All the regional and major national accrediting agencies have implemented meaningful reforms over the past year and are best up for this job.