Part 1: Good Bye ACICS? Watch Out, Private Colleges
June 16, 2016
It’s been a rough week for many for-profit colleges. On Monday, the U.S. Department of Education (ED) proposed regulations targeting the for-profit sector, including requiring colleges to post public warnings about poor student loan outcomes and to set aside money to pay for loan-forgiveness claims. Two days later, career ED staff recommended what is essentially the elimination of a national accrediting agency — the Accrediting Council for Independent Colleges and Schools (ACICS) — that makes hundreds of for-profit colleges eligible for billions of dollars in federal student aid. As Senator Dick Durbin (D-IL) noted, these protections “will be President Obama and Secretary King’s higher education legacy.”
We couldn’t agree more. A year ago, we reviewed President Obama’s higher education record over the past seven years and noted that he was the first president to expand the federal higher education policy framework to consider not only traditional issues of access and affordability, but also issues of college quality and student outcomes. For-profit colleges – the most predatory and egregious of all college actors – deservedly received priority and action.
The underreported story though is that another set of colleges may be rising to become the next tier of low-hanging fruit ripe for reform: small, private non-profit colleges. Like the two major for-profit companies that have either shut down or shuttered many of its campus locations this past year, many small, private nonprofit colleges have exhibited signs of similarly troubling practices that for-profits have used to exploit students. Whereas for-profit colleges may have been driven by the quest for higher shareholder earnings, small, private nonprofits may have been driven by the quest for prestige, or even simply, financial solvency. Either way, as financial pressures build, these small colleges – that don’t have access to unlimited capital as their for-profit peers do – may quickly face a do or die situation.
We saw this play out most publicly with Sweet Briar College last year before alumni rescued the school from the brink of extinction. A small women’s college in central Virginia, Sweet Briar enrolled a decent percentage of low-income Pell recipients: 30 percent (for reference, nearly half of all public colleges in Virginia are engines of inequality, enrolling less than 20 percent Pell students). At the same time, however, Sweet Briar’s net price charged to its lowest-income students after all grant and scholarship aid was still nearly $20,000 a year. Worse, these students had less than a 50-50 chance of graduating.
Or consider Franklin Pierce College in New Hampshire. The New York Times recently profiled the school for its dependence on student fees to pay more than 95 percent of its operating costs. For years, Franklin Pierce has faced financial crises with a huge $39 million debt, a junk bond credit rating, and dwindling enrollments. It miraculously managed to hang on for another year after reviving a political polling center during this election year. That’s great for the college – but how do students at Franklin Pierce fare? Franklin Pierce enrolled nearly 40 percent Pell recipients, but charged them a net price of over $26,000, and only one-third of those students graduated within six years. Even when looking at all students, still less than half of Franklin Pierce students graduate within six years of initial enrollment.
And therein lies the crux of the existential question that Neil Swidey of the Boston Globe magazine posed to Massachusetts private nonprofit college leaders last month:
[Are these struggling, small private colleges] actively recruiting these low-income students for reasons of open-the-door altruism or keep-the-lights-on capitalism? … Is there a better way for struggling colleges to remain afloat than by sinking poor students further into debt?
So here’s what you’ve got: A number of colleges charging very low-income students high tuition and fee prices; targeting poor students for their federal Pell Grant or GI bill dollars; urging students from the poorest families to load up with heavy federal student loans and often times expensive private student loans on top; and generating low graduation rates . . .
Doesn’t this sound somewhat familiar to the for-profit college critics?
Sweet Briar and Franklin Pierce have managed to bounce back so far, but other small private colleges haven’t been so lucky. Burlington, the Vermont college Sen. Bernie Sanders’s wife ran in the past recently closed. Dowling College in Long Island, New York closed earlier this month. Victory University in Tennessee changed from a nonprofit into a for-profit to seek investor funding and added athletics and online programming but still ultimately closed. Sojourner-Douglass, an HBCU in Baltimore lost its accreditation and closed.
Guess what all these colleges had in common? High price, high Pell enrollment, and terrible outcomes for students.
The expensive, poor performing for-profit colleges are still today’s low-hanging fruit for higher ed accountability hawks. But there are plenty of rotting apples one tier up. Watch out, private colleges.
Chart source: Most data comes from the 2013-14 college submission to the U.S. Department of Education. Pell graduation rates were from the 2012-13 school year as collected by the Education Trust.
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