Achieving the (almost) impossible: Consensus on for-profit education

Few issues are more contentious than the role of for-profit colleges in higher education, write Sandy Baum and Jorge Klor de Alva. But they say consensus is both necessary—and possible.
Sandy Baum

Few issues are more contentious than the role of for-profit colleges in higher education, even in today’s polarized climate. Unscrupulous predators, or seedbeds of innovation? Poor-performing and shady, or an essential resource, particularly for less-advantaged learners? Almost no one is neutral, and the resulting political standoff has become a recurring obstacle to higher education reform. 

But consensus is possible. We know because we spent the past two years in a working group that brought skeptics and defenders of for-profit colleges together to look for common ground. The challenge we set for ourselves was to develop a policy framework that could protect students and taxpayers without penalizing colleges—proprietary or not—that produce positive results for learners.  

Jorge Klor de Alva

What made working together possible was our common commitment to the idea that all colleges—regardless of whether they are public, nonprofit, or for-profit—should be accountable for student outcomes, including whether a program reasonably leads to a family-sustaining job. Additionally, we all agreed that for-profit institutions face unique incentives that warrant heightened scrutiny, backed by effective sanctions. 

The Biden administration has launched its own effort to make policy on for-profit colleges—a process of negotiated rulemaking expected to drag on for many months. Because negotiators will likewise include skeptics and supporters, sound policies are likely to come only if student success is the shared goal. Our experience over the past two years—and the joint statement and report it produced, Accountability in Higher Education: For-Profit Colleges and Beyond—shed light on potential common ground. 

Members of our group, a diverse collection of thinkers from across the ideological spectrum, brought strong opinions, pro and con. For some, the urgent issue was fraud and abuse—colleges preying on students by misrepresenting likely employment outcomes and skimping on instructional inputs to pay for marketing. From this perspective, the problem isn’t necessarily that individuals with bad intentions are in charge. But for-profit institutions face incentives, such as enrollment growth and profits, that even in the best of circumstances can lead to questionable practices. 

Others in our group focused on what they see as the contribution that for-profit colleges have made to American higher education. Proprietary schools have pioneered a broad of array of innovations, from online learning to high-touch student supports to a greater focus on graduates’ work readiness. Proponents of this view see for-profit colleges as among the first to prioritize access for underserved students—midcareer adults, low-income learners, and students of color. 

Still, despite these gaping differences in emphasis, our group came together around a set of proposals to drive accountability not just at for-profit colleges but at all institutions of higher education, regardless of their governance structure. 

High dropout rates, graduates ill-prepared to succeed in the labor market, and programs that prepare students for low-wage jobs that do not justify the cost of training—these risks are present to differing degrees at many types of colleges, and all students are entitled to the same protections afforded to students in proprietary colleges.

“Our group agreed,” the most important paragraph of our report states, “that the for-profit business model creates unique incentives for proprietary institutions. Some regulations should be tailored to their special circumstances, and our proposal includes provisions to address these unique challenges. But we also agreed that governance structure alone is a poor proxy for student outcomes, and in the long run we hope to see our approach applied to all institutions, regardless of their business model.” 

Among the report’s principal recommendations: 

  • Program-level disclosure requirements—debt-to-earnings ratios, completion and repayment rates—at all institutions for all programs where feasible and appropriate
  • Minimum debt-to-earnings and completion standards for all programs at all institutions
  • For proprietary institutions, a series of escalating sanctions for poor debt-to-earnings outcomes as determined by both minimum acceptable outcomes and a relative rather than absolute standard—for example, by comparing colleges to similar institutions with comparable shares of Pell-eligible students
  • For all institutions, a series of escalating sanctions for poor completion rates, also determined on a relative scale
  • For all institutions, increased scrutiny and potential consequences for unusually rapid growth or decline 

As the nation emerges from the pandemic, millions of Americans will need new skills to get a job or a better job, often in an unfamiliar industry. We need all the resources we can bring to bear—an assortment of institutions offering career-focused education, in addition to high-quality institutions offering broad education for students from all backgrounds. We must have policies that address the particular risks associated with the for-profit business model, but we shouldn’t penalize effective institutions solely on the basis of their business model or mode of delivery.

Effective public policy should hold all institutions accountable for student outcomes.

Sandy Baum is a nonresident senior fellow at the Urban Institute’s Center on Education Data and Policy. Jorge Klor de Alva is president of Nexus Research and Policy Center and a former president of the University of Phoenix.

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