NCPA - National Center for Policy Analysis

College Dilemma

August 19, 2011

President Obama is passionately committed to improving higher education, but seems mightily confused about how he plans to do so, says Frederick M. Hess, a resident scholar and director of Education Policy Studies at the American Enterprise Institute.

Putting a fine point on his dilemma, just last week Obama's Justice Department filed a multibillion-dollar fraud suit against the Education Management Corp. (EMC), the nation's second-largest for-profit college company, charging that it was not eligible for $11 billion in state and federal aid.  For the first time ever, the federal government sued a company based on claims that it violated federal law by paying recruiters based on students enrolled.

  • Between 2000 and 2009, for-profit institutions increased enrollment by 300 percent, while public colleges and universities grew by 27 percent.
  • For-profits have rapidly grown in capacity and customized services for nontraditional students, even as public colleges and universities have shown little appetite for revamping established routines.

On one hand, the president has told Congress, "Every American will need to get more than a high school diploma."  This calls for getting more students into post-secondary education.  On the other hand, there's the EMC lawsuit, the Department of Education's push for "gainful employment" regulation that threatens to stifle for-profit institutions whose graduates don't earn enough, and the administration's public relations offensive against for-profit providers.  All of these moves seemingly have targeted those colleges and programs that have fueled the growth in undergraduate enrollment during the past decade.

Secretary of Education Arne Duncan has voiced concerns that too many students are enrolling in for-profit colleges or taking loans to pursue degrees they won't finish.  Duncan's stance gives these colleges good reason to start getting much pickier about whom they serve, says Hess.

Source: Frederick M. Hess, "Obama's College Confusion," American Enterprise Institute, August 17, 2011.

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