In its announcement last month that Zenith Education Group finalized its purchase of roughly half of the colleges previously part of for-profit educator Corinthian Colleges Inc., the Department of Education noted that 50 college campuses were part of the package and that they would all be transitioning to non-profit tax status as part of the deal. Corinthian Colleges Inc. had come under investigation for alleged unscrupulous marketing tactics and predatory lending and, eventually, forced into closure after the Department, according to its release, placed Corinthian on an increased level of financial oversight that delayed its student aid funding.
The alleged wrongdoings of a handful of proprietary colleges have served as the cause célèbre for those pushing for the GE Rule and yet, a simple change in tax status means that any one of those same colleges would no longer be subject to the rule as applied to their degree programs. It’s nonsensical that such a change in status provides a free pass from federal oversight under the GE Rule, but that’s exactly how this regulation was designed. There is no similar easy “out” on the state level, which brings us back to the Corinthian Colleges transaction.
Corinthian Colleges had one campus in New York State, but it was not included in the sale. Two former locations in Arizona were left out as well. Inside Higher Ed reported the sale of these campuses is held up due to an ongoing approval process by state and regional accrediting agencies, which hold for-profit colleges to higher standards and greater scrutiny. That comes as no surprise to APC members, which know first-hand that New York benefits from some of the most stringent higher education regulations in the country.
Indeed, New York’s reputation as a tough higher ed regulator has kept more than a few of the questionable actors outside its state lines. Much of the credit for that goes to The New York State Board of Regents and the New York State Education Department, the primary governing bodies responsible for the general supervision of all educational activities within New York. Unlike the GE Rule, which seeks to apply a blanket regulation over all proprietary institutions regardless of their academic orientation and structure, New York’s regulators judiciously differentiate between career-training trade schools and degree-granting institutions in their oversight approach. (APC commentary on New York State regulators’ policies to transform proprietary colleges from “vocationally oriented training schools” into institutions with academically robust programs of higher learning can be found here, here and here).
The favorable results of New York State’s tough regulatory environment speak for themselves. According to the latest data prepared and published by the New York State Education Department, in 2012, students attending proprietary colleges graduated at a much higher rate than those attending public colleges and, in many instances at a higher rate than at non-profit independent colleges in New York. And, as statistics from the National Center for Education Statistics will attest, APC member colleges and others within the proprietary sector have been enrolling a higher number of older and minority students compared to the national average, and equally important, they also have better retention rates compared to national averages for the number of first-year students returning their second year. There is no question that the proprietary sector in New York State is serving the needs of its students — and serving them well.
And when it comes to default rates as measured on a two-year and three-year basis after students leave school, it’s worth noting that the average loan default rate for the New York State proprietary sector is lower than the national average for proprietary colleges, which is no doubt a reflection of the initiatives in place among APC member colleges — where 70% of the 79,000 students attending a proprietary college in New York State are enrolled — to improve students’ financial literacy so that they have the information they need to make better informed credit management decisions.
Without question, the New York State Board of Regents is decidedly the nation’s toughest and most stringent education regulator. It is the type of vigilant regulator that our students deserve, regardless of which type of program they attend. So, again, it comes as little surprise that our state is taking longer than others to fully vet any proposed sale of Corinthian Colleges’ locations — even if there is just one campus within its province.
How very disconcerting to know that, despite the Regents’ enviable track record and success, its role is being threatened now by aspects of the GE Rule that would enable the U.S. Department of Education to usurp the Regents’ authority over New York’s proprietary sector. Should that happen, it will invariably undo decades of its coordinated efforts with the Middle States Commission on Higher Education to ensure that our state’s students have access to a robust offering of academically sound programs from proprietary colleges that often best serve their unique needs. Just who would benefit then? One thing is certain: it won’t be the state’s minority and nontraditional students who are the ones who will be disproportionately impacted should the GE Rule go into effect.