Secretary of Education Betsy DeVos recently put as many as 80,000 students who live in California but attend an out-of-state public or nonprofit postsecondary school in peril. But it wasn’t her fault! A federal court earlier this year ordered the U.S. Department of Education to enforce an Obama-era law on state authorization for online programs despite the Trump administration’s repeatedly stated concerns with the rule’s unintended consequences and attempts to pause implementation of the rule until next year to rewrite it.
The department’s state authorization rule, which became effective in May, requires a state to have a complaint process in place for their residents who are enrolled in online programs that originate from a postsecondary institution in another state. Alternatively, a state could participate in a reciprocity agreement that would satisfy this requirement, though California has decided to be the single holdout state to participate in such a compact.
In its continuous effort to single out for-profit colleges, California created a complaint process aimed solely at for-profits that enroll California residents. The law does not apply to out-of-state public and nonprofit schools. As a result, under the state authorization rule now in effect, the department has said public and nonprofit schools located outside California are no longer allowed to provide federal financial aid (like Pell Grants and federal student loans) to California residents who are enrolled in online programs. It remains unclear whether the department intends to claw back from these public and nonprofit colleges the millions of dollars they provided to their California students from when the rule took effect.
No one wins in situations like this. But there is an important message here for all policy makers, especially those in California, as they seek to resolve this difficult situation. Higher education policy is complex on its own merit. But when policy makers begin creating and imposing rules for only one sector of higher education, they risk creating the kind of situations these colleges and students now face. In some ways, it is the greatest of irony that the for-profit sector complies with the state authorization rule and can theoretically serve students online from anywhere in the nation while the public and private nonprofit schools no longer can do so and award federal financial aid to their California students.
California has a great and diverse higher education delivery system made up of public, nonprofit and for-profit institutions. But California’s policy makers in Sacramento have consistently attacked the proprietary sector, most of which are family-owned colleges providing postsecondary career education and not liberal arts degrees.
Current Education Department data show that no fewer than 329 for-profit institutions in California served 342,345 students in 2016-17. The current California Legislature has considered multiple legislative attacks on these colleges. In essence, some legislators want to impose on California for-profits laws that are now being eliminated for similar institutions in all other states. Unfortunately, a small group of policy makers want the for-profit sector eliminated — no matter how good their programs and outcomes might be. For example, The Chronicle of Higher Education’s College Completion website shows that California’s two-year for-profit colleges have a 67.5 percent graduation rate, while the state’s two-year public schools have a 26.2 percent graduation rate.
For some time, the nation’s — and California’s — for-profit colleges have advocated for one set of rules for all of higher education. Our sector is willing to comply and compete with any other college on an equal and fair basis. Today, every state Legislature and the U.S. Congress should be establishing minimum outcome metrics for every program in every college, regardless of the corporate tax structure. A poor-performing program does not serve the students or the taxpayers well — irrespective of the institution’s tax status.
Today, we see the negative impact of selective governance in the state authorization rule. If California’s Legislature had established a complaint process for all students enrolled at any postsecondary school, there would be no problems for these 80,000 students. But selective regulation — based on ideology alone — results in unfair and inconsistent policies and unintended consequences that harm students.
Now is a good time for all parties and all sides in higher education to set aside the ideological debates of the past and establish a common set of rules for all colleges — and for all students they serve. If California had done so, thousands of students now losing access to millions in federal financial aid could focus on their studies rather than whether they can even afford to attend college.