Obama, Romney divided on for-profit colleges

It hasn’t gotten much attention on the campaign trail, but President Obama and Republican front-runner Mitt Romney are sharply divided over one of the most controversial issues in higher education today — the growth of for-profit colleges.

While the Obama administration has cracked down on the burgeoning sector, the former Massachusetts governor has held it up as one answer to the wild growth of college tuition.

“They hold down the cost of their education by recognizing that they’re competing,” Mr. Romney said recently on the campaign circuit.

Many Democrats, on the other hand, have spent the past several years targeting for-profit institutions, labeling them frauds and pushing for federal measures to rein them in. The Obama administration responded last year with its “gainful employment” rule, which penalizes for-profits if their students can’t find work and begin repaying federal loans within three years of graduation.

As its justification for the rule, the Education Department has estimated that 26 percent of all student-loan money and 46 percent of all student-loan dollars in default come from for-profit programs, despite those schools claiming only about 12 percent of college students nationwide.

The gainful-employment provision hasn’t yet become an issue in the presidential race, but some congressional Republicans have argued that it unfairly singles out one sector of the higher education realm while ignoring public universities also struggling with low graduation rates and poor work prospects for alumni.

While for-profits continue to divide along party lines, some traditional-college leaders have also begun to speak out against the sector, claiming it gets a disproportionate amount of federal financial aid and puts their schools at a competitive disadvantage.

“Their success rates, their completion rates, they’re all abominable,” said Daniel J. Carey, president of Edgewood College, a private, nonprofit liberal arts school in Wisconsin.

Mr. Carey made his comments to a packed house earlier this week at the annual conference of the National Association of Independent Colleges and Universities. His colleagues erupted with applause, and others in attendance also spoke of the need to deal with a for-profit sector that some in the college arena view as a threat.

Organized labor, a critical component of Mr. Obama’s base in the 2012 election, has also mounted an all-out assault on for-profits. The Service Employees International Union recently launched ForProfitU.org, a website dedicated to exposing “the dangers of for-profit colleges.”

But proponents of the sector say market competition, not government regulation, should be the deciding factor in whether for-profits succeed or fail. If and when the issue arises in the presidential race, a Republican response to for-profit critics may be that the nation, at a time of stubbornly high unemployment, needs as many institutions of higher education as it can get.

“Under every projection, in the next 15 years we’ll need somewhere between 8 [million] and 23 million additional workers with post-secondary education. Public universities literally do not have the resources to expand to meet that need,” said Steve Gunderson, a former Republican congressman from Wisconsin who this week took over as president of the Association of Private Sector Colleges and Universities, which represents the for-profit sector.

“Our only hope to meet that need is to give opportunity through the private sector, finding the capital and giving students more opportunities,” he said. “I think there are some who have been uncomfortable with both competition in education and private delivery in education. That may have been a rational decision 20 years ago, but not today.”

If allowed to compete in a free market, Mr. Gunderson said he believes for-profits will continue to flourish, regardless of who is in the Oval Office next year.

“You will see private-sector delivery of higher education growing all over the world,” he said.