We Are Still Waiting For Biden To Act On For-Profit Colleges

One of the most underappreciated policy changes in higher education the past five years was the gigantic giveaway from the Trump administration to for-profit colleges.

The scope of the largess was and has been appalling, as Trump and his appointees rolled back important safeguards for students, reversed policies requiring for-profit schools to prove they provided value and overtly interceded to rescue, resuscitate and rehabilitate predatory schools. The direct cost to taxpayers was in the billions, funds that went nearly directly to Wall Street investors. The indirect cost to students and the quality of our education system remains uncounted.

The impact of the damage caused by for-profit colleges – the often online, often predatory and loan inducing colleges that can afford to spend millions on advertising – is well documented.

And so, when Biden defeated Trump in 2020, higher education leaders expected his team to reverse the Trump reverses – redeploying some of the protections and quality measures that Obama had successfully and prudently implemented.

Most of us are still waiting.

Granted, we’re less than a year into Biden’s term and he has had other fish to fry, as the saying goes. But, so far, the needed recalibration we all expected has yet to materialize. Worse, what has materialized has been disappointing.

That is not to say Biden and his team have done nothing on for-profit colleges. In March and again in June, his administration did forgive the loans of students who attended some for-profit colleges. But these are loans that were already issued – the investors who ran the schools in question already got the money.

In truth, those loans should probably never have been issued. And Biden has done little, if anything at all, to stem the ongoing river of taxpayer dollars flowing to for-profit schools in the form of grants and subsidized student loans. That lack of action will only pile on the cases of loan forgiveness and add to student debt. In other words, forgiving the loans helped some past victims of for-profits but did nothing to limit it, now or in the future.

In October, Biden’s Federal Trade Commission did send stern warning letters to 70 of the big for-profit colleges such as DeVry University, Grand Canyon University, University of Phoenix and Walden University. The letters advised the schools they could be subject to fines and other penalties if they used false or deceptive ads regarding job prospects or employment demand.

That’s good too, but, yet again, it’s a warning. It’s not an actual change, not altering the landscape that for-profit colleges have learned to game or the environment that allows them to continue to scoop up tax-payer funded profit.

In another example, the ‘gainful employment rule’ – an Obama rule that made for-profit colleges prove their graduates could actually find jobs that justified attending their schools and enriching their investors – was rolled back under Trump. Also in October, Biden’s lawyers essentially said that Trump’s repeal of the rule, a massive boost for for-profit colleges, was fine.  

In an understatement, that’s not what many of us expected from Biden.

It’s disappointing because there are so many things Biden could do in this area – to limit the ongoing damage done by investor-run schools.

He could, for example, ask his agencies to regulate the troubling, cynical and deceptive practice of for-profit colleges trying to convert to and hide as non-profits. It’s a practice the Government Accountability Office describes as “insider benefit” deals and it says the 17 schools it tagged as potentially doing it received a staggering $1.8 billion in federal funds.

To help address the same problem, Biden could also ask the IRS to stop blindly approving applications from schools to become ‘non-profit.’ It’s confusing and litigious. The IRS can’t possibly tackle what is or is not a non-profit school, nor should they.

On the same problem, he can and should also have his Department of Education sit down with accrediting bodies – through officially independent, they get their power from the Department – and ask them to scrutinize and review these “insider benefit” deals and the colleges that are essentially run by for-profit companies while selling themselves as non-profits. Such colleges are generally referred to as captured non-profits.

And Biden should absolutely and immediately remove the accrediting authority of ACICS – the entity that “accredits” many of the country’s for-profits. Obama revoked their authority, citing a tragic history or complete largess. Trump reinstated it. Under Biden, ACICS is still operating.

Trying to be understanding of the other legitimate crises that Biden and his team are trying to address, keeping the pressure on these for-profits, the outlaws of legitimate education, may not feel like the top priority. And, in fairness, it’s probably not. But it is important. And most of what Biden could do, he can do without the aid or consent of Congress.

And so, while many of us wait, we wonder – are meaningful actions coming and just delayed? Or did we fool ourselves into thinking Biden would be at least as good as Obama at protecting students and ensuring the quality of colleges and the degrees they award?