For-Profit Education Regulation Failure

This article in the New York Times, illustrates how easy it is for black opps entrepreneurs such as Robert A. Berger, to weave their way through the blind spots between the for-profit regulatory triad which consists of state, federal and accreditors. There are many businessmen who see for-profit education as a way to make profits with no regard for the welfare of students or the quality of education. This is interesting in light of what is going on in California and the tug of war between the for-profits and consumer advocates over how much regulation is proper. Obviously, after reading this article you would be left with the thought that there wasn't enough regulation or the regulating bodies need to do a better job communicating with each other. The Department of Education can disqualify a school from receiving aid which is of course the lifeblood of these schools, however, it cannot close them, it leaves that to the states. A particularly pernicious operator can exploit the system and this man was quite willing to do that, even requesting financial aid in the name of other schools when his school no longer qualified.

This story also shows how difficult it is close a for-profit school down, ten years in this case, even with the regulation that we do have and even with the outlandish acts of the perpetrator of this fraud. Dozens of students swindled and the only recourse they have is to sue the school. In this case, not even the state can get several millions of dollars from the school or its operator so what there is not much chance of students getting their money back. These illustrates how a for-profit school is still one of the surest scams available.

Regulation Should Trump Profits

For-Profit Education, like all enterprises centered on profit abhor regulation and love to scream that the marketplace should be the arbiter of all. If some companies operate on the margin and some consumers get swindled, its unfortunate, pitiful but a necessary consequence of the success of others who benefit from a "usually efficient" system unfettered by regulation. In other words, free enterprise, with the emphasis on the free, and the resulting profits, are more important that the victims of those businesses who abuse the unfettered marketplace. Regulation may curb profits as it protects consumers. There is always a balancing act between the two, consumer protection should always trump regulation especially in a field which is not a luxury and is so important to the success and well being of any member of society, such as education. That is the crux of the issue the legislation is wrestling with in California and I trust that the right side will win out. Profits are useless if they come at the expense of consumers.

California Regulation of For-Profits and Why National Accreditation Does Not Stop Fraud

Per a Inside Higher Education article, California's Governator characterized the statute and regulations that created Bureau for Private Postsecondary and Vocational Education, which regulates for-profit vocational post-secondary schools, “fundamentally flawed,” in a message vetoing an extension of it. This will leave the state's for-profit, career, technical and vocational school industry unregulated if the legislation is not replaced by July 1, 2007. Actually the statute worked rather well until it was amended in 1997 by a Republican legislature in response to complaints from for-profit schools as explained by a 2000 article San Francisco Weekly which details the the history of regulation of for-profit trade schools in California. It is a must read for anybody wondering about how California vocational school regulation came to this somber state. The article details how California went, from its haven as a diploma mill in the early 1980s, to the passage of the Maxine Waters School Reform and Student Protection Act in 1989, which created the Council for Private and Postsecondary Education and which cleaned up the for-profit education. That act expired in 1997 and Governor Pete Wilson vetoed an extension of it. Then of course, the for-profit vocational schools lobbied to eviscerate it and the Republican legislature gave the for-profit industry its wish and diluted the protections in the original legislation not to mention reducing the contributions schools had to make to a tuition reimbursement fund. Thus here were are now..

The bill being argued before the California legislature would exempt institutions regionally accredited by the Western Association of Schools and Colleges, or WASC, from the state’s private college oversight system, which has always focused on unaccredited, or nationally accredited for-profit colleges. This is not new, the old law also exempted WASC. However, nationally accredited schools want the same exemption arguing that their accreditation is just as good as regional accreditation and is recognized by the Department of Education.

This is an argument these schools have been circulating for some time now, just like water in the toilet before it hits the drain. The schools who have a history of deceiving students are nationally schools, Crown College (Tacoma), Court Reporting Institute, Florida Metropolitan University, Brooks College, Bryman College and these are just the ones that come readily to mind. Did their accreditors do anything to stop them from deceiving students? That would be negative. Court Reporting Institute (CRI) was shut down by the Washington state licensing agency and finally filed for bankruptcy protection while the Accrediting Council for Independent Colleges and Schools (ACICS) did nothing and that isn't the first time this has happened. The Department of Education and New York State regulators shut down two ACICS accredited schools while ACICS stood idly by. If California is going to exempt nationally accredited career, technical and vocational schools from its regulatory scheme, why bother having regulations at all?

National accreditors have shown precious little inclination to regulate the schools they accredit. Accrediting isn't regulation I guess. I watched while educators and students sent extremely serious complaints to the ACCSCT about Crown College and yet they continued to deceive students and offer a sub par education. ACICS ignored the problems with CRI as the state finally shut them down. These accreditors time appears to be taken up more with lobbying for their schools and against regulating them.