IE 11 is not supported. For an optimal experience visit our site on another browser.

For profit, non-profit schools fight for funds

Community college leaders are crying foul over a proposal in Congress to create a “single definition”  of higher education institutions, which they say will allow for-profit colleges to siphon off millions of dollars in federal funding.
/ Source: The Associated Press

To Alice Letteney, the community college she oversees 30 miles south of Albuquerque, N.M., has little in common with the big chains of profit-making schools whose radio and TV ads blanket the airwaves over much of the country.

As Letteney sees it, her mission is providing essential skills to students in Valencia County, where per capita income is two-thirds the national average. The for-profits’ mission is earning money for shareholders.

Which is why Letteney and many of the community college leaders gathering in Boston for their annual convention this weekend are incensed over a proposal in Congress to create a “single definition” — in the federal government’s eyes — of higher education institutions.

Grant money at stake
The change would allow many for-profit education companies to compete for potentially hundreds of millions of dollars in federal grants currently reserved for nonprofit schools.

“Do you really think that the American taxpayer wants to siphon these funds to the for-profit institutions?” Letteney asked. “As a taxpayer, I would say no.”

Supporters say the change would benefit students. They say the for-profit schools that more and more students are attending should enjoy an even playing field when it comes to federal support.

“My job as a public policy-maker is to provide access, and that access comes from a lot of different sources,” Rep. John Boehner, the Ohio Republican who chairs the House Committee on Education and the Workforce, told a group of community college leaders at a meeting in Washington in February where he was peppered with hostile questions about the proposal.

Since 1972, students have been free to use federal student aid funds like loans and Pell Grants at for-profit schools that meet certain requirements.

But for-profits have not had access to a wide variety of other government programs such as National Science Foundation and Homeland Security grants, and some programs targeting disadvantaged students.

Heavy liftingNow, language in the reauthorization of the Higher Education Act — expected to be taken up by Congress this year after much delay — would lump the schools together to compete for those grants, though for-profits would still face stricter limits on how they could spend any money they were awarded.

The bill would also eliminate the “90/10” rule requiring for-profits to generate at least 10 percent of their revenue from sources other than federal financial aid.

Supporters call the proposal a recognition that for-profits are doing more of higher education’s heavy lifting. According to the Career College Association, they now constitute 38 percent of the 2,500 higher education institutions where students can spend federal aid, and enroll 1.8 million of 23 million U.S. college students.

And they are growing rapidly — unlike cash-strapped community colleges struggling to accommodate increasing demand. For-profits claim that their model, sculpted in marketplace competition, works (65 percent earn a degree or certificate within six years, compared with 25 percent beginning at public two-year institutions, according to CCA). They also claim to serve a higher percentage of minority and low-income students.

“If our institutions are doing a better job, particularly working with at risk-students, why should our students be denied the benefits of these competitive grant programs?” said Nancy Broff, the CCA’s general counsel.

Competitive disadvantageCommunity colleges say they are at a competitive disadvantage. They point to the huge marketing and lobbying budgets of the for-profits (Boehner received more than $102,000 from for-profit colleges in 2003-04, according to a database compiled by the Chronicle of Higher Education).

And, they say, if for-profit colleges want to expand their programs, they should turn not to taxpayers but to their shareholders. The parent company of the University of Phoenix alone earned $278 million last year.

“We are the institutions that serve the disadvantaged, the first generation immigrants, the minorities, the refugees, and we really need those funds,” said Priscilla Bell, president of Highline Community College in Des Moines, Wash., and a board member of the American Association of Community Colleges, the group meeting here. “I frankly don’t want to see those funds diluted by expanding the field to for-profit institutions.”

One thing both sides agree on: The change would represent a turning point in higher education policy.

“Symbolically, it’s a recognition that we’re not the stepchild any more, that we are an equal participant in the overall higher education universe in this country,” the CCA’s Broff said.