Monday, August 23, 2010

For-Profit Schools and You

The Department of Education published proposals to change the rules by which for-profit secondary and vocational schools are eligible for student aid. It’s crucial because for many institution, this eligibility is their bread and butter—no federal aid, no students. The feds have been concerned about the low federal loan repayment rate from students of these institutions (at about 36%, even though the rate for nonprofit and state institutions are not anything to write home about, either—barely more than half). Even worse is a report by the Education Trust, in which they reported that for profit schools have a six-year graduation rate of about 22%.  More to the point, the feds feel that students are oversold on expensive courses of study that will not result in equally high-paying jobs, leaving the Department of Education on the hook for those loans. Under the proposed rules, institutions would have to have a track record of fairly decent repayment among their graduates, and/or their graduate would have to make money that makes them “gainfully employed,” (with a student debt/earning ratio of 12% of their total income, or 30% of their discretionary income. Schools that fall in-between may have restricted eligibility for student aid. The final rules are expected by November 1st.
In the meantime: how do you protect yourself from acquiring an overpriced, worthless piece of paper?
1) Check all the schools in your area for programs in which you are interested. See which ones may be less expensive. See which ones offer different types of aid. How much of the expenses does that aid cover? And, if the aid is in the form of a loan, it’s still not at all worthwhile unless you graduate and make the money to cover it. Could you study the same thing more cheaply at another school in your area? If your library has it, look at the College Blue Book's volume on occupational education, and the volume on college majors to find all schools that carry a particular program.
2) Check out the occupation that you want to enter. Does it require accreditation or graduation from an accredited program? Is the institution you are considering accredited? If not, your education may be entirely wasted, and your job prospects dim. Go to your library and find some national professional organizations for that profession and see if they give accreditation (for instance, the American Library Association accredits library schools. In many places, only graduates of these programs are considered for higher-ranking or even entry positions.)
3) Watch out for the hard sell and misleading information. This problem was featured prominently in the GAO report. If a person from the institution says the occupation is high-paying, there are ways of checking this out. Above all, don’t sign anything right away. If the school is a good deal, it will still be a good deal after a couple of day’s investigation. Also, use sources like the online Occupational Outlook Handbook to see what the job outlook is for that profession, and what you can reasonably expect to make.
4) Does your state require a license to practice that occupation? If so, what are the requirements? Would this school help you obtain them? A good place to start is Govspot. Click on your state and find the part re: licensing. See if your occupation needs a license. Call the state licensing board for that occupation and find out what their requirements are.

***Update***: the U.S. Department of Justice and the states of California, Florida, Illinois and Indiana have filed a massive fraud suit against Education Management, claiming that the second largest for-profit higher education company in the country: "...consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid."  Stay tuned.

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