Democrats Are not Proposing to Regulate Not For Profit Colleges, They Want to Put Restrictions on Government Student Loans and Aid

In an interview with Senator Tom Harkin (sorry, no link yet), Morning Edition host Renee Montagne managed to turn reality on its head. She repeatedly referred to restrictions on the type of schools where students could use government loans and Pell grants as interfering with the free market and imposing restrictions on the industry.

This is truly bizarre. Free market purists presumably would not want the government program at all. However, those who support the program would presumably want to ensure that money goes for its intended purpose, educating students and providing them with marketable skills.

Prohibiting students from using their government support at diploma mills that do not do either would be like prohibiting people from using food stamps to buy whiskey at their local liquor store. Few would describe such a restriction as interfering with the free market or government regulation of the liquor store industry.

In the case of liquor stores, they can sell liquor to whoever they want (above legal age), their customers just can't use food stamps for their alcohol purchases. Similarly, for profit colleges can sign up any student they want, these rules just prohibit students from using government support at these schools unless they have a track record of actually providing an education.

"Many Republicans see such colleges [for profit colleges] as a healthy free-market alternative to overcrowded community colleges, offering useful vocational training and education to working adults who will not attend more traditional institutions."

Of course the NYT has no idea how the Republicans "see" these colleges, they only know what they say about these colleges. It is entirely possible that many Republicans see these colleges as sleaze bucket outfits that give them large campaign contributions. If this is the case, they might be inclined to speak positively about not for profit colleges regardless of what they actually think about them.

Remember, reporters are not mindreaders, and those that claim to be are not reporters.

Typo?
written by Jeff McMahan, July 31, 2012 7:26

Do you mean for profit? Your title says 'Not for Profit'...

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written by Chatham, July 31, 2012 7:39

Government loans and pell grants are voucher programs. If voucher programs don't work for elementary and high schools, why do we think they'll work for college? And, given the rising college tuition, it looks like vouchers for colleges are just as problematic as people said they would be.

We need a well funded public higher education system. The private institutions can do whatever they like, but they shouldn't be doing it with taxpayer money.

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written by Last Mover, July 31, 2012 7:50

Next on NPR, how home schools, a bastion of free markets, were undermined by government interference on how they choose to use government funds.

rent seeking by some private schools....
written by pete, July 31, 2012 9:59

The problem begins with "college or fail" in our high schools. This leaves the "failures" very little upward mobility. Earlier training (medical tech, auto tech, culinary, other services) as a substitute for college or fail would be a better route. This is the new program in Texas, for example, with much more skill based high school experiences. For profit colleges essentially fill the vacuum created by poorly run el-hi (and JC) programs. The for profit drop out rate is very similar to that for lower level colleges, though this was not mentioned in the interview. In fact, no mention of cost/benefit was done, simply drop outs, defaults, etc, all of which could be at optimal rates.

Most important statement was Harkin admitting that the enforcement of some stricter rules would reduce competition. i.e., those few schools that quickly adopted restrictions on enrollment could raise their prices since the looser schools (think subprime) would be forced out of business by the elimination of loans and grants. Who's paying him, Phoenix, Strayer? Some of these going to benefit when competition dries up.

Bottom line will be a humongous increase in racial inequality. The poorest kids, predominantly African American already suffering from the worst education, will be excluded due to enrollment restrictions from getting some needed skills. 50% drop out= 50% survival. Some might try again and again, skewing the survival rate down. Silly analysis.

-1

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written by bmz, July 31, 2012 10:37

Chathem: government college loans and grants are not like elementary and high school voucher programs. All states provide totally free elementary and high schools.

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written by PeonInChief, July 31, 2012 11:15

These schools have been an issue since Robert Reich was Secretary of Labor! They train people to be medical assistants, at a cost of $30-40,000. The students don't realize that they won't make that per year as a medical assistant, and may not get a job at all from the "training." Reich should have nixed their subsidies in 1993. He didn't. It's time.

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written by Chatham, July 31, 2012 11:24

City University was free up until the 70's. I would have preferred every cent going to that school before one was spent on private institutions. We have community colleges at the local level. Which are often much cheaper, and pay teachers much more. We should be giving money on them, not to private institutions that blow the money on administrative overhead and a handful of overpriced tenured professors (while the non-tenured ones make a fraction). Perhaps one day we can even bring back free higher education.

I don't think anyone can look at the growth in tuition compared to what students actually get and not think there is a problem with the whole system we have.

on subsidizing higher ed.
written by pete, July 31, 2012 3:46

In any Rawlsian world, even the nationalistic ones favored by "progressives," public support of higher education is insane. Lifetime income is highly correlated with educational attainment. Scarce monies should not be spent subsidizing folks who are going to benefit disproportionately from that education. E.g., one year's income, financed, to pay for a lifetime of higher earnings is really not much. Resources would be better used for those folks who are unqualified for even these courses. Currently what, 25% real inner city unemployment. This is really heartless logic. And I say this as an educator who benefits from these loans and grants. It is always with mixed feelings when I hear them talk about more funding for higher ed. My pocketbook or what is best.

But if it is going to be done, as illogical as that is, let these private for profits compete for the money with everybody else. A better system would bind a worker to an employer for a couple of years in exchange for funding training. It is done now, with buyout clauses. Basically the employer pays for the school, and then if the employee quits too soon, they pay the employer back the money. A much better system.

-2

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written by liberal, August 01, 2012 6:55

pete wrote,

In any Rawlsian world, even the nationalistic ones favored by "progressives," public support of higher education is insane.

False.

It's in the national interest to have a pool of highly educated workers.

The market will not supply this pool, because unless we bring back indentured servitude, the value of investment in a worker's education cannot be capitalized. Hence such investment will be below the social optimum.

Thus, owing to this massive market failure, state subsidy of higher education is legitimate.

liberal..typical elitism...
written by pete, August 01, 2012 8:22

The problem is not enough are ready for college. And after all the financial illiteracy issues of the last decade, the NY Times runs and article saying kids need even less math. Oh boy. My point is that it makes little sense to subsidize uber-education of the upper and middle classes while leaving the bottom as the help. I find this to be horribly inefficient, and leads to leadership by an elite intelligencia, kind of like what we have now. Everyone is talking about helping the middle class. Have they driven through Southeast DC/Anacostia lately?

And calling the lack of slavery a massive market failure is just wild, but a good call! And it needn't be abusive. In Thailand often the masters send the "slave's" kids to school and so forth. Technically of course they are not slaves, but from what I have seen there is a frog's hair difference. Buddhism helps with slavery, since it is wrong to struggle.

But in the U.S., at least, there are these buyout clauses, one of my students got a fully paid masters degree through this process. The pay was the same as other gigs, but the company gets rewarded through loyalty. The buyout price declines as time passes, I think disappearing after 3 or 4 years. This could be encouraged and does not violate the constitution.

Healthy?
written by JLH, August 02, 2012 3:24

For-profit post-secondary education "as a healthy free-market alternative"--really? Most of those programs are very overpriced and the chances of finding jobs in those fields after completing them (if they are completed--many are "fast-tracked" and students have a hard time keeping up with them) can be non-existent.
Politicians are paid heavy lobby dollars by for-profit educational institutions in order to continue to qualify for federal student loans because those corporations have no chance of making a profit without them.

overpriced is subjective, so far as I have seen...
written by pete, August 02, 2012 9:18

We've got a horribly undereducated class of folks, say 18-30. The same educational nightmare that ensnares the el hi pretty much runs the JCs. With that as a background, these for profits with greater flexibility can respond quickly to industry needs, medtechs, computer geeks, and so forth.

If federal money is going to be spent on higher education, which I do think is a massive misuse of scarce resources, then it ought to be a free for all, not used to subsidize clearly inefficient JCs and state colleges.

Democrats Are not Proposing to Regulate Not For Profit Colleges, They Want to Put Restrictions on Government Student Loans and Aid

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