Career colleges targeted by ‘biased’ Biden bureaucracy with loss of student aid

The Biden administration has taken action to cut off federal aid to 35 postsecondary schools in the last three years, but don’t expect to see Harvard or Columbia on that list.

Newly disclosed data shows that the nation’s for-profit schools have landed in the crosshairs of the Department of Education’s Office of Enforcement within Federal Student Aid, the agency that was reestablished shortly after President Biden took office.

Of the 35 institutions facing the loss of student aid, 23 are for-profit colleges with specialties such as cosmetology, information technology and medical administration, according to the list of actions on the StudentAid.gov/enforcement hub launched last month.

Five of the remaining schools are international programs in Europe and Australia, meaning that only seven U.S. public universities and private nonprofit colleges are facing what for American schools is a virtual death sentence.

The disclosures buttressed what the agency’s critics have long suggested — that the Office of Enforcement might as well be named the Office of For-Profit Enforcement.

“I think this proves what we’ve been saying all along: that the Office of Enforcement has a singular biased focus,” Thomas Jones, president of the American Accountability Foundation, told The Washington Times.

“Apparently the Biden-Harris Administration thinks the greatest problem in America’s higher education is at the Ogle School of Hair Skin and Nails,” Mr. Jones said in an email, “not the fact for example that the AVERAGE student loan debt at Cornell is $41,124 and by their own reporting only 67% of the students in the college of arts and science have a job after graduation.”

The administration’s for-profit crackdown comes with the elite universities wrestling with rising antisemitism on campus, prompting the department’s Office for Civil Rights to launch a flurry of Title VI investigations, which should in theory jeopardize their access to federal student aid.

Adam Kissel, former deputy assistant education secretary in the Trump administration, said there’s little chance of that happening.

“Nobody on the nonprofit side ever loses their federal funding. Title IX violation? You don’t lose it. Title VI violation? You don’t lose it. Free-speech violation? You’re not going to lose it,” Mr. Kissel said. “Only for these for-profit colleges do you actually lose it.”

Overall, 87 enforcement actions were taken against 85 colleges. The most common penalty was fines levied for various infractions. The split between for-profit schools and nonprofit schools for all offenses was roughly even.

“As the data provided indicates, FSA has taken actions against a variety of types of schools, including public, private non-profit and for-profit schools,” the department said.

What the data also shows is that for-profit schools are more likely to be penalized than their nonprofit brethren, given that for-profit schools are outnumbered by their nonprofit brethren — including public four-year universities, community colleges and private colleges — in terms of numbers of institutions and enrollment.

Department figures show 3,646 nonprofit colleges operating versus 2,270 for-profit institutions in the 2020-21 academic year, the last year for which figures are available.

In terms of enrollment, for-profit schools aren’t even close. In 2021, 14.6 million students were enrolled in nonprofit institutions versus 0.8 million in the for-profit sector, which includes tiny beauty and barber schools with fewer than 100 students.

The department said the office has been charged with investigating schools “that are suspected of wrongdoing and take action to hold schools accountable when it finds evidence of wrongdoing.”

“We believe that holding schools accountable and protecting students and taxpayers is a nonpartisan issue,” the department said.

Schools may be deemed ineligible for Title IV student financial aid for a number of reasons, including fiduciary mismanagement, loss of accreditation and making “misleading representations” to students, as shown in the Office of Enforcement’s letters to the institutions.

One performing arts school in Texas had its application for recertification denied after it moved and was unable to obtain a fire-inspection certificate at its new location.

The department’s enforcement mechanisms include a tip line and undercover “secret shoppers,” a unit unveiled last year that seeks to “crack down on institutions that lure students with lies.”

Kristen Donoghue, the FSA’s chief enforcement officer, told Inside HigherEd that the office will “always go where the facts take us and take action where we think it’s appropriate.”

As critics point out, the crackdown also comes with the FAS under fire for botching the Free Application for Federal Student Aid rollout, blowing the deadline to deliver financial aid paperwork to students for the second year in a row.

FSA Chief Operating Officer Richard Cordray resigned in June amid the fallout, capping a fiasco that Mr. Jones linked to the office’s focus on political priorities.

“The fact that he got pushed out the door after making a hash of the FAFSA update really shows you where they were looking,” Mr. Jones said. “They weren’t focusing on their core mission, they were focusing on this ancillary stuff, and they missed these problems developing with FAFSA. It just became this national disaster, and Cordray had to pack up and go.”

The delayed rollout has been blamed in part on the Biden administration’s focus on student loan forgiveness, which includes canceling student debt to now-defunct for-profit schools such as the Art Institutes.

“I don’t think they designed the FAFSA failure, but it’s what happens when you don’t have your eye on the ball,” Mr. Jones said. “The prioritization was clearly on targeting the for-profit system. It wasn’t on the blocking and tackling that they should have been doing.”

In his recent report, ’Higher Ed Shakedown,’ Mr. Jones outlines how Arnold Ventures, a philanthropic group, funds multiple advocacy groups that have helped drive the Department of Education, the Consumer Financial Protection Bureau and state attorneys to target for-profit schools.

Back to Obama

Carl Barney, an education entrepreneur whose CollegeAmerica for-profit schools were forced to close in 2021, traced the animus against for-profits to the Obama administration, which took on the career colleges as they surged following the 2008 recession.

“Since President [Barack] Obama took over, what’s happened over the last 15 years is that half of the for-profit colleges are out of business,” Mr. Barney said. “If you look at the number of students, it’s less than half today than it was 10 years ago.”

The number of for-profit postsecondary schools dropped from 1.7 million in 2010 to 770,000 in 2021, according to department figures, a decline that advocates attribute to opposition from nonprofit advocacy groups, Democratic state prosecutors and federal regulators.

“This has been a massive campaign to close any for-profit colleges they could, using any excuse that was given to them,” Mr. Barney said.

In October 2021, Mr. Biden restored the Office of Enforcement, which was waylaid during the more for-profit-friendly Trump administration, but he didn’t stop there.

The Biden administration also has toughened up the regulatory climate by instating the 90/10 rule, which says schools can receive no more than 90% of their funding from federal aid, and the gainful-employment rule, which requires for-profit and non-degree programs to show that their graduates earn more than the average adult who didn’t go to college.

“These protections are about ensuring career college programs live up to higher education’s promise as a pathway to a better life,”  Education Under Secretary James Kvaal said in a September 2023 statement.

David Halperin, an attorney in Washington and leading critic of for-profit colleges, praised the department for going after bad actors.

“The Department of Education under the Biden-Harris administration has appropriately taken action regarding schools that engage in fraud with taxpayer dollars, abuse of students or other violations — whether they are for-profits like Florida Career College, nonprofits like Liberty University, or hybrids like Grand Canyon University,” Mr. Halperin said.

The editor of Republic Report, Mr. Halperin said his “main concern is that the Department is not moving fast enough to address egregious misconduct.”

“Many colleges remain in business that use deceptive marketing and recruiting to sell poor quality educations at sky-high prices,” he said. “Students — veterans, single parents and others — often end up worse off financially than when they started.”

Mr. Kissel, a visiting fellow with the Heritage Foundation Center for Education Policy, said the Education Department should show the same forbearance to for-profit schools that it offers to nonprofit colleges when they run afoul of federal rules.

“The department should say, just like with everybody else, we’re your friend, we’re trying to help your student succeed, we’re not going to try to put you out of business, we’ll help you come into compliance, and if you’re still out of compliance in two years, then maybe we have to close you down, but we’re going to give you a lot of cushion to figure yourself out,” he said. “Come into compliance and then we’re friends again.”

Unfortunately, Mr. Kissel said, “that’s the opposite of what they’re now doing with for-profits.”