US higher education enrollment has been declining slowly and consistently since 2011. The downturn has been significant but small enough for the media and many people outside of higher education to miss this phenomenon.
Enrollment is down about 5 million students a year from its peak.
Source: US Department of Education, National Center for Education Statistics
In 2026 and 2027 we expect a more precipitous drop: a result of declining fertility rates during the 2008-2009 recession.
So where does US higher education enrollment go after 2026? And will more people notice?
Overall, it doesn't look good if we take a look at state-by-state projections for high school graduates from the Western Interstate Commission for Higher Education (WICHE). Florida, Nevada, Idaho, DC, Maryland, Texas, South Dakota, South Carolina, and Utah may see few if any future declines. But 20 states are expected to have additional enrollment loses of 10 percent or more. Here's a list of the states that may be hardest hit in coming years.
Source: WICHE
These enrollment declines are in addition to the enrollment declines of 2011-2023 that all of those states experienced.
Enrollment declines after 2038 may also appear, a ripple effect of the Covid pandemic. Other future headwinds include climate change, internal and external conflicts, and economic disruption. Skepticism about the value of higher education has been growing for years. Crushing student loan debt has also fueled this skepticism.
With a few notable exceptions, enrollment losses have been restricted to
community colleges, for-profit colleges, small private universities and
regional public universities. At the moment, it appears that more elite schools will not be affected, and may actually profit from the decline of other schools. And as competition for good jobs increases, graduating from elite universities may carry more prestige value--at almost any price.
*The Higher Education Inquirer would like to thank Nathan Grawe for his assistance in this article.
Editors note: The Higher Education Inquirer thanks Hank Kalet for allowing us to reprint his substack Channel Surfing as a record of the Rutgers strike. Hank is a lecturer at the Rutgers University School of Communication and Information. We encourage you to subscribe to his substack and visit the Rutgers AAUP-AFT and Rutgers Adjunct Faculty Union twitter pages.
Post-Strike Diary: A Step Back and Some History The Fight Here at Rutgers Is Not Over, Nor Is It an Isolated Battle
I want to get back to first principles. Put the strike at Rutgers into the broader context of higher ed and contingent worker right. Connect it to the larger currents in the labor movement.
The 40 years starting with Ronald Reagan’s election were awful ones for labor unions. Union activity had already peaked when Reagan fired striking air-traffic controllers and signaled to business that the era of labor peace on the employer side was over.
I worked in a factory in Trenton that summer. There were whispers that union organizing was taking place, but it wasn’t gaining much traction. Factory jobs were leaving the state and the Northeast and there was fear that management would close shop and move to Georgia, Alabama, or another anti-union state. Reagan’s action was the final straw, dooming the efforts, and setting in motion a frenzy of union busting we are still struggling to understand. (I’m working on a play about this moment.)
The 40 years that followed were mostly dark for the union movement, with some victories. Some of this darkness was brought on by the unions themselves, many of which had calcified and were either corrupt or overly cozy with management and politicians. Grassroots energy was dismissed and reform efforts short-lived.
The Covid pandemic shifted the terrain. Donna Murch, a union colleague and associate professor of history at Rutgers, has been making the case that Covid laid bare the vulnerabilities of all faculty members and all workers at Rutgers. Covid forced classes online with little assistance and no compensation for the work needed to make that happen. It put clinicians and lab workers in peril, requiring them to work through the pandemic often without proper PPE. It disrupted grad students’ research, even as their funding clock continued to tick.
This precarity was evident throughout society, a realization that led to union drives at Amazon, Starbucks, and other companies that relied on short-term and/or low-paid workers. Warehouse workers — many immigrants, some undocumented— often faced the worst conditions.
Those of us with a level of economic privilege were able to pay folks in the gig economy to do our grocery shopping and provide needed services, allowing Im us to stay home.
Unemployment shot up, wages stagnated with the economy, and the fascistic wing of the Republican Party — those most aligned with then-President Trump and opposed to vaccines, masks, and those who violently responded to the Black Lives Matter protests that spread after the state murder of George Floyd — cracked down and continue to crackdown on efforts to expand opportunity and inclusion.
This is the backdrop against which we have to judge the current wave of organizing and strikes — a movement that is gaining traction in ways we have not seen in a long time.
Seventy-one percent of Americans now approve of labor unions. Although statistically similar to last year's 68%, it is up from 64% before the pandemic and is the highest Gallup has recorded on this measure since 1965.
Union density remains an issue, though this is likely because of the legal impediments erected over 40-plus years of aggressive anti-union activity from both parties, abetted by a media infrastructure that has lost its connections to workers.
News coverage of labor is lagging badly behind this surge of organizing. The loss of labor as a beat has created a structural coverage deficit that, in practical terms, means reporters are reporting and writing stories with at best a limited background on labor issues and dynamics, including how labor law works and just how much power the bosses have accumulated over the years. The upshot is a series of stories throughout the press that boils nearly every labor dispute down to money, or that filters these disputes through an earlier lens in which each dispute is a singular event unrelated to the larger American economy.
The reality, as we discussed in my class today, is that the current wave of organizing is about more than money. It is about life conditions, workplace conditions, about safety and scheduling, and long-term job security. Starbucks workers want more control of their schedules, more regularity, so they can plan their lives. Amazon workers and others working in the new mostly unregulated warehouse industry want safety rules, regular breaks, sick time. The rail workers, who were thrown onto the tracks by President Joe Biden, want an end to the kind of scheduling that results in exhaustion and dangerous conditions — one of the many factors that resulted in the deadly East Palestine crash.
Adjuncts and grads at Rutgers and other institutions of higher education want raises. But we also want respect. We want job security — big raises mean little if we can be fired or laid off easily. We want a shift in values in higher ed away from the current model, which is more focused on creating a profit (big reserve accounts and endowments that can be invested to generate bigger reserves and endowments), on building sports empires, on turning faculty into grant chasers or replaceable cogs.
The framework in place at Rutgers is a start, but this contract fight is far from over. And even when this one ends, we know there will be more work to be done. This is the beginning of the transformation of higher ed, not the conclusion.
Post-Strike Diary: Rutgers Unions Fight On Historic Gains But Work To Be Done.
The strike is off, for now. But the efforts to remake Rutgers continues.
As I wrote Saturday, the unions representing striking workers voted to accept a contract framework in exchange for pausing the strike before it entered its second week. We paused to let students get back to classes. To let them finish their semester, their careers at Rutgers.
The framework includes a 14% raise over four years for full-time faculty, a 33% pay increase for grads over four years, a 25.5% bump for post-docs, and a 48% increase for adjuncts; multi-semester contracts for adjuncts, presumptive renewal of contracts, recognition of graduate fellows as grad workers, changes in grievance and evaluations procedures, and five-year funding for grads. The framework also includes elements of the “Bargaining for the Common Good” agenda: a $600,000 recurring Community Fund and the end of the university policy that prevents students from registering for classes or getting transcripts or diplomas due to unpaid fines and fees, and a Union-University-Community table.
Much of this is historic, but it’s still a work in progress. The clinicians, researchers, and professors represented by BHSNJ-AAUP have nothing from administration, and more needs to be done for grads, for students and the community, and for adjuncts.
That was the message Monday afternoon as about 100 picketers gathered and chanted, reminding the community and the press that the battle to end the corporatization on higher ed continues — both here in New Jersey and nationally — continues.
Picketers carried strike signs with the word “suspended” stapled above “On Strike.” We marched intro of Scott Hall on College Avenue chanting, “The strike may be suspended. The struggle hasn’t ended.” We did his despite the cold win blowing own College Avenue as students looked on. We have more actions planned this week, part of a rolling set of protests designed to keep our issues in front of the public and to maintain pressure on an administration that failed to take us seriously until we walked and the governor got involved.
I told NBC New York that we could reinstate the strike if management fails to play ball. A threat? Idle talk? I’ll leave it at that. But we’re not going away. We’re not backing down.
RU Strike Diary, Day 5 Ends With a 'Framework'
We have a framework for a deal and are pausing the strike that has shut down Rutgers University for the last five days. I’m being careful of the language. We don’t have a deal and we have not ended the strike. We have a framework. There remain a lot issues to address, but most of the big ones are settled. The framework takes us a long way toward our demands of equal pay, job security, better pay for grads, and making Rutgers a better neighbor. It is not a perfect deal. We wanted more. But I think we moved the ball far down the field. This is not the final battle, but part of a larger movement.
Cliches. Platitudes. Bromides.
But still accurate.
I think the deal is good for the workers and students involved, but I can’t say much about the details. The journalist in me bristles at this, but my role as a member of the adjunct faculty union executive board prohibits me from saying much more. This is in line with the week for me, a week in which I found myself on the other side of the reporter’s notebook. I’ve talked with more reporters this week than in my entire adult life.
I teach journalism at Rutgers as an adjunct. I became involved in the union effort in 2021 and have become more and more active. The more active I became, the more I learned about the inequities of higher ed. The more I learned about these inequities, the more I became involved.
This was the same for just about everyone I talked with all week. I spent five days on the lines in New Brunswick. It was hot. It was exhausting. It was thrilling. Turnout fluctuated and the size of the pickets on College Avenue varied from day to day. We probably hit 1,000 picketers on Tuesday afternoon, when the folks from Cook/Douglass and Livingston and Busch joined in a march up George Street to the administration building on the Old Queens campus (a small subsection of the College Avenue campus) and joined the College Avenue contingent in an emotional and forceful show of solidarity. Wednesday featured a wake-up tour of campus, while Friday offered a festive feel, even as talks were heating up in Trenton.
The larger experience was one of joy and unity. That does not mean everyone is happy, but we made massive gains and I think we need to acknowledge that.
The message I would offer to the public at this point is that academic workers are tired of being pushed around. We are tired of the corporate bent of higher ed, angry that universities have been coopted by big-time athletics, corporate-style governance and funding models, and that what should be their primary missions — education and research — have been sold off to funders who only care about how they can monetize their scientific discoveries.
We have watched as more and more teaching and research jobs have been remade as contingent, easily replaceable labor. We have watched as the humanities are decimated in favor of incredibly important STEM courses and programs, not because of academic need, but because STEM generates grant revenue.
Rutgers, like most American universities, operates as a corporation. Senior administrators, who often have a Master of Business Administration degree (MBA) with little or no experience in higher education, along with sports coaches who have the potential to earn the university money, are highly compensated while thousands of poorly paid educators and staff are denied job security and benefits. Adjunct faculty and graduate workers are often forced to apply for Medicaid. They frequently take second jobs teaching at other colleges, driving for Uber or Lyft, working as cashiers, delivering food for Grubhub or DoorDash, walking dogs, house sitting, waiting on tables, bartending and living four or six to an apartment or camping out on a friend’s sofa. This inversion of values is destroying the nation’s educational system.
This is why we have seen academic workers strike across the country, from California to Illinois to New York. The strike at Rutgers is part of this movement and, because of the university’s size and the fact that all three of its faculty unions walked out of class, might be the most important of these efforts. The University of California strike was larger, but as with all other walkouts it only featured mainly graduate students. The strike at The New School was about adjunct wages. At Temple, it was just grads. At Rutgers, I walked along side non-tenure-track professors, full professors, graduate students, undergraduates and allies from the area.
The framework — again, not a tentative agreement or a contract — goes some of the way toward addressing these issues at Rutgers and, if it is ratified, could stand as a model and the largest victory so far in the battle for the soul of the American university system.
RU Strike Diary, Day 4
Day four was a tougher haul. The heat had a draining effect on many of us, but we were out on the lines and we are committed to remaining out for as long as it takes to win the transformation we are demanding.
There are three unions on strike — AAUP-AFT, the Rutgers Adjunct Faculty Union, and BHSNJ-AFT. We are negotiating together. Fighting together.
Our demands:
*Equal pay for equal work and job security for adjuncts like me; *A living wage and longer guaranteed funding for grad workers; *Recognition of grad fellows as workers who should be part of the union; *Job security for non-tenure-track professors; *Protections for academic freedom; *Control of schedules; *Wages that keep up with inflation; *An end to onerous fines on students and the practices of withholding class registration and transcripts and the sale of student debt to collection agencies; *A rent freeze on Rutgers-owned properties; *A community hardship fund; *Health care for all workers; *And numerous other changes in the way Rutgers operates.
Thursday featured numerous targeted pickets, which may have left the impression on College Ave that there were fewer people out. But we made joyful noise on Voorhees Mall and in front of Scott Hall, marched through the streets of the city to show solidarity with the community, marched on President Jonathan Holloway’s mansion in Piscataway, and on the homes of several members of the university Board of Governors.
Our pressure has had an effect. As our bargaining team has reported, the administration has been pushed significantly — by us and because of pressure for Gov. Phil Murphy. I’ve been critical of his public statements, but it’s clear he has contributed to at least some of the progress.
Make no mistake, however. We are winning this because we’ve out organized management, showed our commitment, and made the public case that we are engaged in a moral cause to bring equity to high ed, a message that is resonating beyond our campuses.
Day
3 went much like Day 2, with massive pickets and a powerful rally in
front of Winants Hall — home to Rutgers President Jonathan Holloway
offices. There were drag queens, music, and a festive atmosphere — but
hanging over it all was the specter of negotiations.
On Sunday
night, Gov. Phil Murphy summoned both sides to Trenton, using his office
to try to avert the strike — didn’t happened — and possibly get the
dispute settled quickly. We walked, knowing this was the backdrop and
brought hundreds upon hundreds of people into the streets — faculty,
staff, community members, and students.
The rest of this post will be
filled with photos, which should remind everyone how much energy and
unity there is and to help keep our spirits high as this stretches into
the fourth day.
A Good Exhaustion Prevented Me From Getting This Out Yesterday
The
word from the table is progress. It’s slow, but it’s happening, driven
by the power we’ve assembled on the streets of New Brunswick,
Piscataway, Camden, and Newark.
More than a thousand strikers
across the campuses is not something you ignore. And we’re planning to
grow our already robust pickets every day until this strike ends.
Several images stood out for me from Day 2:
The
massive picket that marched up College Avenue and circled the campus,
led by students and faculty carrying a banner declaring “Equal Pay for
Equal Work” — which has been the central fight of the adjunct union. Our
demands were centered in this amazing march, as was a push for equity —
for adjuncts, grad workers, students, and the community.
Rutgers
functions like a corporation in too many ways, chewing up and spitting
out vulnerable workers and the community in which it’s situated. It’s
real estate practices — buying up properties across the city and either
raising rents or gentrifying— are making New Brunswick unaffordable.
It’s why we’re calling for a rent freeze on Rutgers’ properties, an end
to predatory student fees and punitive actions when those fees and fines
go unpaid, and a community fund to help our neighbors.
We’ve been saying that this strike is about faculty and students and the university’s largely poor and immigrant neighbors, and we mean it.
Later
in the day came the mass convergence, when all of the New Brunswick
picketing marched to the entrance gates of Old Queens, the origin point
of Rutgers. Picketers from Cook and Douglass were joined by their
colleagues from Busch and Livingston and marched down George Street
through the center of town. They were joined by the Mason Gross School
of the Arts and Edward Bloustein school and marched to meet the College
Ave crew, creating a sea of picketers as we marched to Voorhees Mall and
a not-quite impromptu party/rally.
I’m not one for hyperbole or sentimentality, so when I say it gave me chills the reader should understand I mean it.
More
important, though, was the impact on the bargaining table. Our
colleagues there were buoyed by our show of strength, our joy, outer
commitment. And they are using it to their advantage. Management appears
to be buckling, and we plan to keep this up until we win a better
Rutgers, a kinder less corporate Rutgers.
RU Strike Diary, Day 1: The Inevitable Happens
This
is where it’s been leading since the beginning. A historic strike at my
alma mater. A school where I’ve taught journalism for 10 years. That I
think is one of the best and most underrated institutions of higher
learning in the country. From the beginning.
This is not what
anyone wanted, but it’s what had to happen. Higher ed is in crisis.
Rutgers is in crisis. We’ve been taken over by the corporate power
structure. Had a change in mission crammed down our throats. Higher ed
has become just another cog in the American oligarchy and Rutgers,
despite its proclamations to the contrary, has been doing its part.
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I
was at UBS Arena last night watching Bruce Springsteen when we — our
union’s executive boards — voted. I voted by proxy. It was unanimous. I
listened and shouted and sang as the man known as The Boss tore through a
catalogue of songs about working people. And the irony was not lost on
me. Springsteen singing of working class dreams as he allowed
Ticketmaster to drive up prices and BMW to offer exclusive parking.
Still,
as my phone was blowing up with texts about the now very real strike,
he broke into “Wrecking Ball” and the lines “So hold tight on your
anger, you hold tight on your anger / Hold tight to your anger, don't
fall to your fears” hit me like a truck.
We are angry. Tired of being disrespected. Tired of the neoliberal model of higher ed reducing everything to profit.
We’ll hold tight and fight. We’re going to win this.
The Silicon Valley tech downturn has been creating reverberations in other parts of the economy and in other areas of the US.
Edtech, a small subset of the tech industry that overlaps with higher education, is facing major headwinds as skepticism about higher education and the economy grows. Even two industry insiders, Noodle CEO John Katzman and Kaplan executive Brandon Busteed have been critical of the short-term thinking and questionable outcomes of edtech. Katzman has called some companies in the space "more adtech than edtech," implying that some do little more than marketing and advertising for colleges and universities.
Ultimately, it's US consumers who are feeling the greatest pain as
participants in online education--a mode of instruction that for millions of people may have more risks than
benefits--within an increasingly dysfunctional economy that produces expensive education and fewer good jobs.
Significant problems that were observed in large subprime colleges like University of Phoenix, Corinthian Colleges, ITT Tech, DeVry University, Colorado Tech, and the Art Institutes more than a dozen years ago have resurfaced in edtech. And other problems unique to edtech have emerged.
Chegg is an edtech company based in Santa Clara, California, and provides homework help, online tutoring, and other student services. The company's value grew more than 300 percent in 2020, during the Covid pandemic, but has faced headwinds for the last two years. This includes allegations that Chegg enables students to cheat on homework and other assignments. Derek Newton has chronicled this problem in the substack The Cheat Sheet.
[Chegg shares grew in 2020 during the Covid pandemic. Source: Seeking Alpha]
Coursera is a publicly traded MOOC based in Mountain View California. Shares started trading in April 2021. The company has under-performed as a profit making enterprise. Massive Open Online Courses were once seen as a wave of the future in adult education but their popularity has waned.
[Coursera has underperformed since its IPO in April 2021. Source: Seeking Alpha]
2U (based in Lanham, MD) and Guild Education (based in Denver) and are two edtech companies based outside of Silicon Valley.
2U is a publicly traded Online Program Manager (OPM). The company services major universities such as the University of Southern California and University of North Carolina with support for some of their online degree programs. 2U has received an enormous amount of funding from Cathie Wood, a major Silicon Valley investor, and has continued to receive support despite a long record of financial losses.
Some 2U investors have grown tired of persistent losses--and it has shown in the declining share price. The company also faces increased scrutiny in DC for recruiting consumers unable to recoup the cost of education for high-priced masters degrees in areas such as social work. 2U acquired edX, the Harvard-MIT MOOC in 2021 and its profitability remains to be seen.
In 2023, 2U sued the US Department of Education for attempting to require more transparency between OPMs and their clients. This strategy is similar to the defensive strategy that subprime colleges have used to stop gainful employment regulations, and more recently, borrower defense to repayment rules.
[2U shares have dropped more than 90 percent over the last 5 years. Source: Seeking Alpha]
Guild Education is a privately held corporation that grew to an estimated $4.4B evaluation in a few years. Guild serves businesses by administering online education benefits for large corporations such as Walmart, Target, and Macy's. While its work may help companies with their bottom line, they appear to do little for their workers.
At least ten of Guild's investors are based in Silicon Valley, including Silicon Valley Bank and venture capital firms in San Francisco, Palo Alto, and Menlo Park, California. Valuations.fyi reports Guild's estimated value at $1.3B, a 70 percent drop from its peak in June 2022.
[Image above: Guild's valuation in Billions from valuations.fyi]
The Higher Education Inquirer will continue to observe changes in edtech as the College Meltdown advances.
The Higher Education Inquirer has made a number of Freedom of Information Act (FOIA) requests to the US Department of Education. Here's our current list.
23-01436-F
The Higher Education Inquirer is requesting copies of the current contracts between the US Department of Education and Maximus (including but not limited to subsidiaries such as AidVantage). If this is not possible we would like the reported dollar amount for each contract. This request is part of a larger effort to assess the student loan debt portfolio. (Date Range for Record Search: From 01/01/2010 To 04/03/2023)
23-01426-F
The
Higher Education Inquirer is requesting the dollar amount of student
loan funds issued to for-profit colleges each year from 1972 to 2021.
We will accept interim or partial data. (Date Range for Record Search:
From 01/01/1973 To 04/03/2022)
23-01369-F
The
Higher Education Inquirer is requesting an estimate of the number of
student loans in the student loan portfolio that originated (1) before
1978, (2) before 1983, (3) before 1988, and (4) before 1993. This is
part of a larger effort to understand the estimated $674B in
unrecoverable student loan debt. (Date Range for Record Search: From
01/01/2023 To 03/28/2023)
23-01324-F
The
Higher Education Inquirer is requesting a count of the number of
Borrower Defense to Repayment claims against South University and the
Art Institutes, in the Consumer Engagement Management System (CEMS) up
to January 1, 2023. We would also like to know if their parent company,
Education Principle Foundation (EPF), is listed as the owner of both
schools in the CEMS computer database. (Date Range for Record Search:
From 01/01/2023 To 03/22/2023)
23-01263-F
The
Higher Education Inquirer is requesting a list of all the
variables/categories in the Consumer Engagement Management System
(CEMS). CEMS is mentioned in FOIA 22-01683F filed by the National
Student Legal Defense Network. (Date Range for Record Search: From
01/01/2023 To 03/16/2023)
23-00865-F
We
are requesting an accounting of US Department of Education Borrower
Defense to Repayment (BD) claims against the University of Phoenix.
Specifically, we are asking for the (1) number of BD claims, (2) the
number processed, and (3) the number approved. The date range is from
February 20, 2016 to January 26, 2023. If there is a reasonable way to
estimate the total dollar amount in a timely manner, we would also like
that. This request is similar to FOIA request 22-03203-F, and is a
result of discovering that the University of Arkansas System has been in
negotiations to acquire University of Phoenix through a nonprofit
organization. (Date Range for Record Search: From 02/20/2016 To
01/26/2023)
Hello, my name Erica Gallagher and I am a graduate of the University of Southern California’s online Masters of Social Work program. Or to put it more accurately, I am a graduate of 2U’s online Masters of Social Work diploma mill.
2U is the Online Program Management or OPM company that runs USC’s online MSW program. When I decided to attend USC, I had no idea that the online MSW program was actually run by 2U.
I didn’t know that my classes were going to be taught by instructors who were hired specifically for the OPM classes, rather than USC professors, or that they would be using outdated materials to teach me.
I didn’t know that OPM employees were the ones assigning us field placements, many of which had nothing to do with our experiences.
I didn’t know that the admissions representatives and the counselors I was emailing on a day-to-day basis were actually OPM employees, and not actual USC staff. That’s because they went to great efforts to make students believe this was fully a USC program, even arming 2U employees with USC email addresses.
If I had known, I would have never enrolled.
From the moment I looked into the program until the moment I graduated, I was lied to. I was promised a USC education that would open doors for me, and that’s not what I got. Instead, I got a shady, but equally as expensive, version of USC’s on-campus MSW program.
It’s so important for people to realize how much this OPM model hurts students. It rewards greed and profit at the expense of a quality education. It incentivizes schools to sign up as many people as they can, charging top dollar for subpar programs, while hiding their deception and profiteering behind the nonprofit brands of well-regarded schools.
The fact that they did this with a social work program — to people who were trying to build a career motivated by helping others — adds even more insult to injury.
Having this degree was supposed to change my life, but all it has done is complicate it. All I’ve gotten with this diploma is a mountain of debt and anxiety.
The Higher Education Inquirer has posted a number of articles
about student loan debt. In 2023, the
student loan mess has reached epic proportions. Not only has the US Federal Student Aid debt portfolio reached more than $1.6 Trillion,
we learned that $674 Billion was estimated to be unrecoverable.
In California, the US District Court in Sweet v Cardona agreed
to a $6 Billion settlement between student debtors and the US Department of
Education.
In Texas, a group representing for-profit colleges has sued
the US Department of Education for their actions in settling Borrower Defense claims.
And across the US, about 40 million student debtors and
their families are awaiting a decision from the US Supreme Court—a decision
that will not likely favor the debtors.
Borrower Defense to Repayment claims are claims by student loan debtors that
their school misled them or engaged in other misconduct in violation of certain
state laws.The Department of Education may
discharge all or some of the student loan debt and hold the school and its
owners responsible.
As of January 2023, there are more than three quarters of a million Borrower
Defense claims against schools. And each
month, about 16,000 new claims are added. Evidence from the Sweet v Cardona case revealed that only about 35 workers were responsible for processing hundreds of thousands of claims. Those claims have been disproportionately made
against a number of for-profit colleges and formerly for-profit colleges, what
we call “subprime colleges.”
Some of these subprime schools have closed (Everest College, ITT Tech, and Westwood College for
example), some remain in business as for-profit colleges (like University of
Phoenix and Colorado Tech), some have changed names and become covert for-profit colleges or robocolleges (like
Purdue University Global, University of Arizona Global Campus, and the Art
Institutes), and some schools act act like subprime colleges regardless of tax status. This includes low-return on investment programs at several US robocolleges and overly expensive graduate programs offered by 2U, an online program manager for elite colleges.
Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district
court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v
Cardona (Image credit: Ashley Pizzuti)
Transparency and Accountability
The US Department of Education keeps an accounting of Borrower Defense claims, but only publishes the aggregate numbers, not institutional numbers. Those institutional numbers do make a difference in promoting transparency and accountability for the largest bad actors. So why does the Department of Education not publish those institutional numbers?
The National Student Legal Defense Network submitted a FOIA (22-01683F) to the US Department of Education (ED) in January 2022 asking just for that information. And what HEI has discovered is that just a small number of schools garnered the lion's share of the Borrower Defense claims. To get a digital copy of that information, please email us for a free download.
What
harm is done when people overestimate university costs? Does this
overestimation matter for any practical purposes, especially because it
seems to affect both lower-income and higher-income families?
The
most obvious effect is that people may be less likely to attend college
themselves or may be more likely to recommend against attending college
when they talk to their children or friends. Misinformation spreads
easily—especially in the form of indicators like sticker prices that are
easy to misinterpret—and perceived higher prices tend to dissuade
people from almost all purchases or investments, including at-tending
college. When people decide not to go to college because of inaccurate
perceptions of the cost, they miss out on the personal benefits of
higher education and all of us lose the benefits to society that accrue
from more highly educated communities.
Overestimating
college costs likely also impacts the kinds of universities that
students apply to and attend, especially those from lower-income
families. Despite the fact that many private universities are actually
cheaper to attend than nearby public universities for lower-income
students because of generous financial aid, the large gap between the
sticker prices of selective private and public universities likely
pushes many lower-income students to attend the latter, even if the
student believes that the former would offer a higher-quality education.
The same is likely true for students from families or communities where
few people went to college because information about the value of
college education is more difficult for them to obtain. At the national
scale, these forces may tend to push lower-income students out of the
country’s highest-quality universities.
Finally,
overestimating college costs almost surely damages the reputation of
universities as accessible institutions that promote socioeconomic
mobility, especially for public universities as
the skyrocketing sticker prices of private universities have generated
misinformation about the cost of attending public institutions, voters
seem to have cooled toward the public funding of universities,
increasingly perceiving them as bastions for higher-income students.
These sentiments ironically have led state legislatures to decrease
their annual investment in public universities, which in turn has led
universities to charge higher tuition.
Interestingly,
the empirical evidence about the ramifications of the widespread
overestimation of college costs in the United States is relatively thin.
Unfortunately, despite (or perhaps because of) wide agreement that
overestimates of college costs would actively dissuade some young people
from attending college, very few studies have directly tested this
theory.
In 2013, economists Caroline Hoxby and Sarah Turner published a
study about the second potential effect—that over-estimating college
costs discourages lower-income students from attending higher-quality
universities. They conducted a large-scale experiment among
high-achieving, low-income high school students across the United States
in 2011. Hoxby and Turner randomly divided a large group of such
students into treatment and control groups and mailed the treatment
group a packet of detailed information about the annual net cost of
attending a variety of both nearby and nationwide universities. They
presented this information as the average cost for families at three
income levels—$20,000, $40,000, and $60,000—so that students could
extrapolate their own expected costs if they were to attend each
university. In a second experiment, the same information was mailed
directly to students’ parents, this time including additional details
about the graduation rates and average wages of graduates from each
university.
Hoxby and Turner’s key finding is that students in both of
these treatment groups (the one in which students received information
and the other in which parents received information) applied to more and
better universities than those in the control group and were more
likely to be admitted to better universities, which the researchers
categorized based on average SAT scores and graduation rates. Not all of
these students actually attended better universities as a result,
although those whose parents received the information about net costs
were somewhat more likely to do so. They also found that when
application fees were waived, these effects were greatly magnified
The
study results suggest that lower-income students’ overestimation of
university costs warps their decisions about which colleges to apply to
and that the simple intervention of giving college students and their
families information about the true cost of attending college can
meaningfully improve their decisions. This was an exciting finding, and
in 2016 the College Board tried to replicate it on a massive scale. It
mailed detailed information, including average net college costs for
lower-and middle-income households, to hundreds of thousands of
lower-income students who took the SAT exam. Unfortunately, this time
the mailers had no effect on which universities the students in the
treatment group chose to attend. Maybe students didn’t read the
information from the College Board or maybe they didn’t trust the
information that it provided. Either way, it seems that cookie-cutter
informational mailers aren’t a magic bullet; widespread misinformation
about college costs will have to be combated using other tools. It would
be better if prospective college students had access to easy-to-use,
interactive, and personalized net cost information for all the
universities they wanted to apply to.
Hi! My name is Tarah Gramza. Dahn Shaulis has
been talking with me about the University of Phoenix/University of Arkansas situation. I offered
to share my knowledge as I have quite a bit with years of experience in this
mess of subprime colleges and student loan debt.
Theresa started her battle with the US Department of Education (aka ED) nearly a decade ago trying to get anyone’s
attention to hear her story and draw attention to the fraud being committed by
these schools right under everyone’s noses. Our stories are all similar: we
attended schools who promised a future full of butterflies and roses, misled
quality of education, pressured enrollment, false advertised job placement,
lied about costs...the list goes on.
Following
the bread crumbs
Our lawsuit started as a mission to
hold the Department of Education accountable for delaying the processing of Borrower Defense to Repayment applications. These delaying actions broke ED's own rules and regulations. The last
several administrations tried to change rules for their own agendas and to satisfy
their paid cronies. We know for a fact many congressional leaders have been
deeply invested and made millions from this for-profit schools fraud. This
includes the Secretary of Education at the time, Betsy DeVos.
The first settlement forced ED to process applications fairly within a period of time. The
department made a big mistake, they decided to deny 90% of class members
applications and used illegal denial letters, which ultimately stopped the
settlement and sent us back to litigation/discovery. During the discovery it
was uncovered that ED had internal emails showing they were
intentionally not reviewing applications per the law requirement (a policy
of mass denial), withheld evidence by the department on many of the
main culprit schools, and knew about the fraud being committed at the
highest levels. This led to additional claims by the class and now opened the
department up for direct financial liability and undue harm. This led to the
final settlement that sits today.
Between the first
settlement and the illegal denials and the present one, the administrations changed and
Betsy DeVos quit her job. During the discovery (testimony) it was found that
upper leadership under Betsy DeVos pointed their fingers directly at
Betsy herself and that she directed these policies, an attempt was made to make
her testify. As government always does, they protected her and their own tails
in the process and she was allowed to skate by unscathed. The new administration
decided it was time to start doing the right thing; the sheet was
pulled back enough for everyone to see they well knew about the fraud for
over a decade.
This lawsuit also brought forward
the fact that ED had not used its own rules to go after schools for
recoupment costs on the taxpayers behalf and recoup funds from these executives,
schools, leaders. This includes some of the leaders of major school collapses
such as Corinthian Colleges and ITT Tech. Sadly, the executives just jumped from one school
to the next bringing their fraud with them along the way, leaving a wake of
schools with damaged students.
Putting
it together
The final settlement (Sweet v
Cardona) was signed and all of a sudden four schools from the list of 151 known
offender schools decided to intervene on the lawsuit. They used every excuse
they could to conjure up to stop this case and hold up the settlement--even though the settlement didn’t hold them accountable for the class
discharged claims. The judge ultimately denied their requests leading a final
settlement approval. Three of those four schools then appealed the judge for a stay,which was officially denied Friday evening.
Why would four schools appeal a lawsuit
that doesn’t involve them of which ultimately has no recoupment against them
for the class?
Well- here’s why, the post class
group AND any following applications will have recoupment. The department,
right around the time of the announcement, had recently announced the
recoupment efforts againstDevry Universityand this terrified the schools.
They knew full well they were next and that it would put them out of business
and these shareholders would be left holding the bag. Now a plan needed to be
put into place to try to find a way out.
The
plan
University of Phoenix is one the
biggest offenders and probably one the largest schools to profit from this
business model of fraud. We’ve seen evidence that much of the fraudulent
activity came directly out of the University of Phoenix training manuals. They also had
some of biggest lawsuits, so intervening as University of Phoenix was a bad idea.
The new rules and regulations were
published a few months back with hard targeted rules that establish a line in
the sand starting July 2023. These regs held harsh consequences for all schools
not only into the future but also for past bad deeds. The rules also clarified
and hardened the rules for information sharing (evidence) and group
discharges.
It became apparent that the shareholders
and owners of University of Phoenix needed out and now. This is because the
recoupment efforts follow owners. If they can sell the school, they can cash
out what is left of their $1 Billion investment and run intact. Which leads to
the point of this email, if Arkansas, or any other buyer decides to buy University of Phoenix
they will be the target for the recoupment efforts which I estimate to be
approximately $600M dollars as it stands today with the number pending
recoupable borrower defense applications. If things go as expected this number
could exceed $1B. The rules call for recoupment of funds and also steep consequences
such as loss of title IV funds.
Why would the Governor of Arkansas
pursue this deal?
The Governor of Arkansas knows full
well the risks. The political side of this story is administrations. Republican
administrations have been very friendly to these schools and have in the past
created and changed ED rules in the schools favor and turned a blind eye to the
fraud. Democrats have also been guilty of this but in today’s climate we have
to think of the present state of the Republican position in student debt
relief. The state of Arkansas is offered a sweet deal of a percent of profits
on a private deal which they claim doesn’t cost tax payers.
Recent announcements made by the Department of Education have added an additional layer of risk for anyone purchasing University of Phoenix as ED recently announced it “may require certain individuals to assume personal liability as a condition of allowing the schools they own or operate to participate in the federal financial aid programs and likely to require an individual to assume personal liability on behalf of the institutions or groups of affiliated institutions that pose the largest financial risk to the United States. This is determined based on institutions with the most serious and significant sets of concerns.” The question becomes, who will be putting their personal assets as collateral? University of Phoenix is not only a risk, it is one the primary reasons for the need for additional protections to the tax payers.
What value would the purchase of University of Phoenix have to the state of Arkansas if it can’t have its Title IV renewed? This fact alone combined with the University of Phoenix history, should scare away even the most riskiest investor!
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