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One thing is certain about the coronavirus pandemic: It has roiled every facet of American life with uncertainty. For tens of millions of current and prospective college students, the virus has forced a massive rethinking of longstanding education plans.
To minimize disruptions, colleges are moving online at a breakneck pace while policymakers quickly clear legal and regulatory hurdles. Allowing students to continue their learning in this new era of social distancing is crucial. Policymakers should beware, though: Unless they tread carefully, a perfect storm is brewing for a rip-off revival to parallel the predatory for-profit college boom of the 2000s. And the most vulnerable students will inevitably pay the heaviest price.
Our current public health crisis is accompanied by perhaps the sharpest and most severe economic contraction since the 1930s. A recession is inevitable. The only question is how long it will last. Americans’ interest in higher education is countercyclical. When the economy stalls and unemployment rises, more students enroll. History teaches us that pairing increased demand with lax regulation creates a toxic blend for students.
In the wake of the 2001 recession, President George W. Bush’s Education Department — stocked with officials who had close ties to the for-profit college industry — dramatically deregulated for-profit colleges. In particular, they loosened restrictions on online colleges and poked regulatory loopholes in Congress’ ban on paying recruiters and admissions personnel based on the number of students they enrolled.
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With enrollment growing, the 2008 recession threw gasoline on the flames. By 2010, for-profit college enrollment was more than triple its 2000 level. The sector’s growth was often powered by false promises and other fraudulent recruiting tactics, leaving many students, including some of the most vulnerable, worse off financially than they were before enrollment. A 2018 analysis of federal data by Judith Scott-Clayton of Teachers College, Columbia University, found that for-profit students default on their loans at nearly four times the rate of public community college students. (The Hechinger Report is an independent unit of Teachers College.)
As the economy recovered and the Obama administration aggressively worked to rein in abuses, for-profit enrollment began to decline. Defaults fell, and many for-profit colleges worked to improve the value of the education they offered students.
But prescient policymakers should see the obvious risks ahead. Once again, key Education Department roles are filled with industry insiders. And once again they have unwound crucial consumer protections.
Now, as colleges rush to go digital, it makes sense to remove certain roadblocks that would keep them from moving quickly. However, states, accrediting agencies and the federal government should be tracking closely any changes being implemented. Safeguards like careful review processes should only be temporarily postponed, not eliminated. Not all programs translate well to online formats. It is the job of overseers to ensure that programs are priced appropriately, educating effectively and delivering value to students. Programs that cannot meet these criteria online should not be allowed to go virtual.
Related: How the last recession affected higher education. Will history repeat?
While many traditional colleges are rushing to teach students online, some of the biggest concerns are colleges that are already online. Many of the most established online colleges in the United States routinely leave students with debt they struggle to repay, especially within the for-profit sector. For-profit colleges make up half of the nation’s 10 largest online schools. Barely more than a quarter of students who borrowed to attend these for-profits are paying down their debt three years after leaving. Compare that figure to nearly half of borrowers for public or nonprofit online offerings.
All of this means that as the economy inevitably contracts — and the ranks of the jobless swell — the for-profit college industry is poised to make a killing at the expense of students.
By virtue of being closest to the ground, state governments are often best-positioned to monitor developments closely and prevent the exploitation of students. As the Trump administration has created a vacuum of federal leadership, state attorneys general have led the fight to defend students, and the role of states as overseers is increasingly critical.
Oversight of online programs can be tricky. An increasingly online higher-education marketplace means a more national one, challenging states’ abilities to protect their residents when students enroll in schools based elsewhere. That’s because most states have handed oversight responsibilities to the states in which the schools are located, making it harder for the state in which a student lives to detect or remedy any abuse. If public college and university funding is slashed as it was in the last recession, this will only enhance the already-fertile ground for predatory for-profit schools.
Hard times inevitably create hard choices, and policymakers are right to help minimize interruptions to students’ higher education. They cannot, however, let the rush to act blind them to foreseeable and preventable harm. Otherwise, even well-intentioned efforts to support students might only further their exploitation.
This story about for-profit colleges and the coronavirus was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up here for Hechinger’s newsletter.
Aaron Ament is president and cofounder of Student Defense.
Debbie Cochrane is executive vice president of The Institute for College Access & Success.
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