Forbes. August 13, 2014. GUEST POST WRITTEN BY Kerri Toloczko.
Kerri Toloczko is a senior fellow at Frontiers of Freedom.
In 2012, Federal Judge Rudolph Contreras slapped down onerous regulations promulgated by the Obama Administration’s Department of Education designed to cripple America’s for-profit colleges and universities and the low income, minority students who attend them.
Cynically dubbed “Gainful Employment” regulations, these restrictions require graduates of “career colleges” to find employment within a certain timeframe and salary level in an economy where college graduates struggle to find jobs that don’t include repeating “whip or no-whip?”
Again undaunted by rulings from the judicial branch or perhaps hoping Judge Contreras forgot to file his decision, the Obama Administration is at it anew, ignoring the importance that schools like Kaplan, University of Phoenix and ITT Tech have to a population with no chance of attending traditional colleges and universities.
The first sin committed by these institutions that anti-private sector Obama regulators find offensive is they are for-profit enterprises. Their second offense – and an affront to President Obama’s stated position of “rewarding our friends”- is they hire non-union instructors.
Career college demographics make their importance clear. They have already graduated four million students with professional certificates, associate’s, bachelor’s and master’s degrees. Eighty percent of enrollees are mature students without parental support; many have jobs. Fifty-two percent have children, a stark contrast to 28% of traditional post-secondary students.
Career colleges serve more women than traditional schools. Two thirds of students are minorities. More than 325,000 military families (28%) use GI Bills at for-profit colleges, often to certify skills learned during service, turning them into employment opportunities.
Based on socio-economic profiles, most students require federal financial aid, and “Gainful Employment” is the Administration’s threat to withhold this critical assistance. Restrictions tie aid for current students to the ability of former students to find jobs and repay student debt at levels arbitrarily determined by the Administration in the worst jobs economy since Herbert Hoover.
According to the Bureau of Labor Statistics, the unemployment rate for 2013 graduates was twice the national average and the number of grads working at minimum wage is seventy percent higher than ten years ago. A recent study by employment economists found half of 2012 college graduates could not find jobs in their fields.
Recent data from the Federal Reserve of New York arrived at two findings tied to one cause: student loan debt tripled from $364 billion in 2004 to $955 billion in 2012 and the actual student loan delinquency rate is over 30 percent. Why? Graduates can’t find good-paying, full-time jobs in Obama’s economy.
Nearly 1.6 million students will graduate just with Bachelor’s degrees in 2014 and enter a labor pool of 10 million jobless workers. So far this year the economy added only 926,000 full-time jobs but 646,000 part-time. In June, full-time employment fell by 523,000 and part time employment increased by 800,000. All this while household income continues to drop and before the anticipated surge in part-time employment caused by Obamacare coverage mandates kicks in.
College, whether certificate or degree program, is still the best investment for future earning potential. Recruiting firms are reporting increases in employers taking advantage of graduate unemployment by upgrading low-skill jobs to “degree required” as graduates have already demonstrated skills and ambition by completing their studies.
Workers with high school diplomas have an unemployment rate of 7 percent – above the national average and much higher than the 5.4 percent for associate’s degrees and 4 percent for a bachelor’s. In 2013, high school-only graduates had a weekly median income of $651 but a bachelor’s degree provided $1,108. Over a lifetime, a bachelor’s degree is worth $1 million more than a high school diploma.
Obtaining a degree should never be discouraged, especially by government.
Political donations from educational unions representing Kindergarten teachers through the American Association of University Professors have gone by almost 100% to Obama’s Democrat Party. Donations come from dues and wield enormous power. For-profit colleges hire instructors often also still working in their fields and thoroughly uninterested in joining unions.
For a politician stuck on “fairness,” Mr. Obama hasn’t written any into his punitive rules for career college graduates. Demanding immediate employment in a weak economy created by his own bad economic policies and only for a targeted cohort of students is … well … disgraceful. And painfully ironic.
Public and private colleges rely heavily on taxpayer subsidies to keep the doors open; for-profit schools do not receive state or federal subsidies and depend on tuition, direct or through aid. When Obama slipped the federal takeover of student loans into Obamacare, he set the wheels in motion for his ability to control access to student loan funding.
Now we know why. And it must be stopped.
Kerri Toloczko is a senior fellow at Frontiers of Freedom, a public policy institute dedicated to promoting individual freedom, limited government and free enterprise.