It is no secret that a college degree is an essential
qualification to succeed in today’s economy. Proving workplace value is at a
fever pitch and applicants are looking for ways to garner a competitive edge,
many through furthering their education. These types of potential students
require nontraditional avenues to learning such as online courses, fast-track
degrees and the flexibility that is often unavailable at traditional four-year
During the past six months, media outlets, politicians and
education advocates have begun to take a stance on what is called the “for-profit
education sector.” For-profit universities—the kind of trade/career colleges
often turned to by those looking to advance their career without taking on four
additional years of education—have come under fire. High tuition prices coupled
with an alarming rate of students defaulting on their loans (around 20 percent,
nearly double the rate at traditional universities according to the U.S.
Department of Education) have the federal government questioning the
effectiveness of these educational programs and whether students will be able
to pay back debt incurred from tuition and other related expenses. In fact,
some critics have gone so far as to compare these loans and subsequent defaults
with the next subprime mortgage meltdown.
The for-profit industry has grown by more than 225 percent
during the past 10 years. These institutions, which typically train students
for careers in areas like health care, computer technology and culinary arts,
have seen enrollment soar as people anxious about weak job prospects look to
expand their opportunities and potentially break into the middle class with a
new set of higher-paying skills.
These students are traditionally working adults who rely on
student loans to gain access to necessary education, but they’re running into
an economic roadblock upon graduation and aren’t getting the jobs necessary to
repay their loans.
In early 2010, the Obama administration challenged the
nation to have the highest percentage of college graduates in the world by
2020; however, in July of this year, the United States government proposed a
ruling that will crack down on for-profit schools receiving federal aid if
graduates’ loan repayments are greater than 8 percent of their starting
salaries. This “gainful employment” rule has quickly become counterproductive
to Obama’s charge by denying students educational access and increasing
Naturally, this situation has direct consequences for Puget
Sound employers. According to a study released by The Workforce Alliance (TWA)
and the Skills2Compete-Washington campaign in October 2009, nearly 470,000
“middle-skill” jobs—those that require more than a high school diploma, but
less than a four-year degree—are projected for Washington by 2017. The state
needs to invest in training and education to fully realize the economic
benefits of these job openings.
Examination of for-profit schools and their practices is
welcome. This scrutiny is a reasonable reaction to increasing loan default
rates. As taxpayers, we should be encouraged that the government is examining
the programs it funds. The current scrutiny will cause short-term disruption to
the postsecondary ecosystem, but will improve performance in the long term.
Yet, calls to regulate for-profit institutions to create a
sustainable way to retrain our nation’s workforce are especially polarizing.
Some extreme opinions include doing away with the entire for-profit education
system altogether. However, a new study published by the Georgetown University
Center on Education and the Workforce shows that the United States may soon
face a shortage of 3 million qualified workers. Though the unemployment rate is
at 9 percent and there appear to be plenty of people to fill those jobs, there
won’t be enough educated people trained for the positions that need filling.
For-profit schools are one of the primary ways to train our workforce.
Regulators would be wise to not overreact and deny motivated
students the chance to move into rewarding careers. Failing to provide the
educated workforce that businesses will need in the future will constrain the
Doug Brown is president and CEO of All Star Directories, a
publisher of online and career school directories matching prospective students
with the schools that meet their educational needs.