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mehaffydc on 2011-01-12"For-Profit Colleges on the Brink
January 6, 2011, 1:04 pm
By Peter Wood
The for-profit sector of higher education is in the political spotlight these days. Last year an Obama administration official launched an attack on the legitimacy of for-profit colleges and universities. Although that official subsequently resigned his position in the Department of Education, the measures he promoted took on a life of their own. Now the for-profits are faced with what could be an existential crisis. The legal challenges have driven down the stock prices of the publicly-traded institutions and a daunting new regulation is about to take effect.
The story has been well-reported in the Chronicle. The former official who got the anti-for-profit ball rolling is Robert Shireman, who served as deputy undersecretary of education, until his resignation in July. Shireman jawboned the accrediting associations to be tougher on for-profits; called for a new system whereby each individual state in which an online university does business would have the right to regulate the enterprise; and pushed for the now notorious idea that for-profit colleges and universities would have to show high levels of “gainful employment” for their graduates in the fields they studied. His animus against the for-profits didn’t seem to sit all that well with the rest of the Obama administration. On May 11, Secretary of Education Arne Duncan went to a policy forum held by the for-profit DeVry University and declared that the for-profits play a “vital role” in educating underserved populations.
Shireman had played a key role in the Obama administration’s successful effort to abolish the role of commercial lenders in making Title IV federally-guaranteed student loans and replacing that system with direct lending managed by the Department of Education. So his decision to head for the exit had more an air of victory than of forced departure. The Chronicle, however, ran an in-depth analysis pointing to a