The future of the for-profit college industry is looking rather dismal these days. Maybe that’s not such a bad thing.
Some of the industry’s biggest players have made headlines in recent years for their poor performance, exorbitant pricing, and exploitation of vulnerable, low-income students. And the feds are now poised to ramp up oversight amid larger efforts to reform the country’s besieged higher-education system.
As part of his recently released 2016 budget plan, President Obama wants to eliminate a notorious loophole that allows for-profit colleges to capitalize on financial-aid benefits afforded to U.S. veterans, a move that could severely weaken some of the industry's biggest schools. In particular, Obama intends to change the parameters of what’s known as the "90-10 Rule"—a federal law that bars these schools from receiving more than 90 percent of their revenues through federal student aid, including loans and grants. As it stands the stipulation excludes funding earmarked for veterans, namely financial aid through the GI Bill and the Department of Defense’s tuition-assistance program, but the White House proposes including these veterans’ benefits on the 90-percent side.
The 90-10 proposal intensifies a crusade against the for-profit education industry. That effort has included a series of high-profile lawsuits and investigations—including a federal criminal probe—into many of its colleges and, as The Atlantic reported last September, serious threats to the accreditation of institutions such as for-profit law schools, whose students pass the bar at notoriously low rates. These schools are exactly what they sound like: higher-education institutions that pay taxes and operate as businesses. And they tend to offer vocational instruction targeted at unconventional students, from working parents to returning veterans, at above-average tuition rates.