But amid the flurry of opinion polling data, predictions about the 2010 midterm elections and commentary on President Barack Obama’s falling approval rating, there is one number that the administration should be genuinely concerned about: A September poll of Bloomberg subscribers showed that more than 75 percent of American investors think that Obama is too anti-business. This presents a serious challenge, since, over the long term, businesses are the engines of democracy, providing jobs, growth, income, wealth and taxes.
A full-on commentary on the business sector is way beyond the scope of this page. There is, though, one particular industry facing ramped-up government regulation that is relevant to Princeton students: the for-profit college industry. Institutions like Kaplan University, DeVry University and University of Phoenix have come under fire in recent weeks for misleading potential customers, driving up debt levels and failing to prevent students from dropping out.
Incontrovertibly, for-profit schools aren’t holding up their end of the bargain. But given the tone of recent rhetoric from lawmakers like Sen. Tom Harkin, D-Iowa, there is a serious danger that that the federal government will over-regulate them or stigmatize them to such an extent as to damage their utility. The for-profit college industry presents a great opportunity for Obama & Co. to show that they’re business-friendly while still making real progress for consumers.
To begin with, many of the most alarming statistics about the for-profit education industry have good explanations. It’s essential to view these schools in the context of the students who choose them: A recent report by the National Center for Education Statistics showed that more than 50 percent of students enrolled at for-profit institutions are the first members of their families to attend college. That number is barely more than 20 percent for private, not-for-profit schools like Princeton. Students at for-profit colleges are also disproportionately more likely to be from failing high schools and disadvantaged backgrounds.
Second, the for-profit education sector is a boon for government — both local and federal. Last year, according to Forbes Magazine, DeVry University paid $133 million in income taxes. University of Phoenix’s parent organization, the Apollo Group, paid more than $400 million. While Princeton, as a nonprofit institution, pays no property tax on most of its buildings — opting instead to voluntarily donate to local governments — for-profit schools bear the full burden of property tax rates.
Third, the for-profit education sector’s focus is much broader than just undergraduate, liberal arts instruction. Many for-profit schools offer training in specific vocational trades, as well as development classes for professionals who already have graduate degrees. There are frightening statistics about how quickly the skills current undergraduates are being taught will become irrelevant with continual technological advancements. The for-profit education industry, then, can be a check against structural unemployment — unemployment created by a mismatch of employees’ skills and employers’ demands — by helping to retrain workers long after they’ve finished formal schooling.
What, then, is the solution? The for-profit education sector makes 85 percent of its income from federal student financial aid, and so it has an obligation to taxpayers to provide a return on public investment. Admittedly, too few students who enter online degree programs graduate from them. Some regulation is essential. But the plan proposed by the Department of Education goes too far.
Particularly worrying is a “gainful employment” clause, which cuts federal funding from schools whose students can’t pay back their loans within a certain period. The real answer for the Department of Education and Congress lies somewhere in the middle: Crack down on unfair advertising practices, mandate that students who drop out of for-profit schools be given multiple chances to go back and develop a debt-forgiveness program. But over-regulation helps no one.
Obama has set an ambitious goal: By 2020, the United States will have the highest proportion of college graduates of any country in the world. That goal will be impossible to achieve without a strong contribution from for-profit schools. And if the statistics are true, we need all the help we can get: 20 percent of Americans think we never actually landed on the moon. And 31 percent believe in astrology.
For the record, I’m a Leo.
Charlie Metzger is a Wilson School major from Palm Beach, Fla. He can be reached at cmetzger@princeton.edu.
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