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Career education is a vital pipeline to high demand jobs in the workforce. Students from all walks of life benefit from the opportunity to pursue their career education goals and find new employment opportunities. Join Dr. Jason Altmire, President and CEO of Career Education Colleges and Universities (CECU), as he discusses the issues and innovations affecting postsecondary career education. Twice monthly, he and his guests discuss politics, business, and current events impacting education and public policy.
Jason Altmire (00:04):
Welcome back everyone to another edition of Career Education Report. I'm Jason Altmire.
(00:10)
I get asked a lot when I'm out and about, or hearing from folks primarily in the for-profit higher education sector but private schools as well, people will say, "Is it just me or does the department seem to have unhealthy focus on private post-secondary schools for the for-profit businesses that are involved in higher education?" And we have a guest today that has written a lot and thought about that very question. I think the short answer is no, it is not just you. It really is happening. And our guest today is going to explain how and why it's happening.
(00:51)
His name is Michael Brickman. He's the adjunct fellow at the American Enterprise Institute focusing on higher education and education reform. He had previously been a senior advisor to the US Undersecretary of Education in the Trump administration. And he is also director of education policy and a senior fellow at the Cicero Institute, which looks among other things at state policy related to higher education. So Michael, thank you for being with us.
Michael Brickman (01:22):
Thanks so much for having me.
Jason Altmire (01:24):
You have written and thought a lot about the role of the for-profit sector across higher education, not just schools, but OPMs and otherwise. And you wrote a very insightful opinion piece on it actually a few months ago now, but I really thought it was right on the mark in talking about the federal government. The way you phrased it, "The federal government is abusing its power to target private sector education providers," which of course are strong words. So can you just, I guess start by talking about what was your motivation in writing the article?
Michael Brickman (02:00):
Well, it's frustrating to see this pattern over and over again where the federal government takes action against a certain private actor simply because they are a private actor. And you know that because of their rhetoric. In the Obama administration, they had a for-profit task force that was a multi-agency effort to look at for-profit higher education and regulate it as much as possible it seems like.
(02:31)
But it's not that for-profit higher education or for-profit anything really should be deserving additional scrutiny. I think the issue is there are a lot of people who are in government right now who view for-profit higher education as somehow deserving a lot of additional scrutiny. And they will not give the same scrutiny, even for the same results, for a non-profit or a public institution or some sort of non-profit or public actor.
(03:02)
And to me, it's not that I am out there cheerleading necessarily for for-profit higher ed or OPMs or anything like that. It's just that if somebody can deliver the results, they should be rewarded. And if they can't deliver the results, then they should be punished accordingly. But I'm just not sure what tax status has to do with it. And it seems like for this administration and the Obama administration, tax status has a lot to do with it in their minds.
Jason Altmire (03:32):
You talk a lot in your article about MOHELA, which is an acronym, and anyone who writes about or thinks about the role of for-profits, especially OPMs in higher education, will come across MOHELA in their readings. Maybe you can talk about what is MOHELA. But also, they got involved kind of tangentially in a lawsuit that the Department of Education lost and then suffered some huge scrutiny at the hands of the department. Maybe you could talk a little bit about that.
Michael Brickman (04:09):
MOHELA is a loan servicer. They actually happen to be an instrumentality of the state of Missouri. So that's a little bit of a unique case where it's not one of these private for-profit actors that they're going after. But what MOHELA did wrong, as you alluded to, is they were involved in the lawsuit that ultimately made it to the Supreme Court that struck down the Biden administration's loan forgiveness policy.
(04:35)
And that has resulted in the Biden administration investigating them, taking action against them, taking some loans away from them and bringing them back to the Department of Education ostensibly so they can probably forgive even more loans more easily because they control them.
(04:53)
But it's part of a pattern where the ends justify the means. And if you're an external actor, again, usually it's for-profit but in that case not even a for-profit actor, and you're standing in the way of something that they're trying to do through policy, they're going to go after you with the full force of government.
(05:15)
So much of the loan forgiveness policies, for example, very clearly, they do not have the statutory authority to just forgive hundreds of billions of dollars in loans. And the Supreme Court has already told them that. And yet, literally the day that that happened, President Biden said essentially, "They can't stop me. They tried to stop me, but they're not going to stop me. I'm going to find a way to do it anyway." And he is, and there are now lawsuits challenging this new loan policy.
(05:43)
But for MOHELA, which is an entity that the Department of Education has some oversight over, they seem to be in a much worse position now than before they were involved in that lawsuit. And you can call it a coincidence, but as I think we're going to talk about, there are so many examples of this that it would be really surprising if all of them were a coincidence and it just so happened that the entities that are opposing the administration or simply standing in the way of the administration's view, that if you are delivering a good education and making a profit, you really are doing something wrong pretty much automatically.
Jason Altmire (06:27):
Many of the people with oversight over higher education in the Department of Education today also had senior-level roles within the Biden administration.
Michael Brickman (06:37):
The Obama administration?
Jason Altmire (06:40):
Yes, the Obama administration. So the folks who were in President Obama's Department of Education overseeing higher ed generally are the same people who are overseeing higher education in the Biden administration. And they are people who have long histories of being opposed to the role of the for-profit sector in higher education. And you talk about how, even dating back to the Obama administration, there has been a pattern of how for-profit entities are targeted when the administration starts to look at those entities. Can you talk about what that pattern looks like?
Michael Brickman (07:17):
Yeah, it really plays out over and over again. And I will say it's a lot of the same people who were in the Obama administration, but there's a younger generation coming behind them that I think is even further to the left and even more hostile to the idea that anybody should be doing well for themselves and doing well for students by creating a for-profit entity at all in higher education.
(07:43)
But to me, the pattern looks like this. There's a target that the federal government identifies, and then either the government or activists, it varies who goes first, but they start to raise concerns and they start to call things problematic and there are some papers written. And then before you know it, a member of Congress will ask the Government Accountability Office or another oversight entity, the Department of Education's Inspector General, someone will ask them to write a report about this concerning phenomenon or concerning entity.
(08:17)
And these so-called neutral observers essentially validate those views. And it's not necessarily the GAO's fault or anybody else, but when a member of Congress asks for a report, they ask very specific questions, and those are often meant to lead to a certain outcome. And so you get this seemingly neutral report that comes out, and people in the press often who are sympathetic to whatever views are coming from the Democratic administration or Democratic members of Congress will say, "Look at this neutral report. It's raising this really concerning issue."
(08:54)
And that just leads to further pile on. You get additional activist groups, you get additional government agencies to start to look at this. And sometimes those government reports will even ask for specific oversight steps to be taken. So for example, in the case of OPMs, the report was written and then it asked the Department of Education to consider doing something to create greater oversight. And lo and behold, they said, "Sure, we will definitely do that. We have this authority that we never realized we had." And they're going to start to take even more severe action against, in that case, OPMs, but this happens again and again.
(09:42)
But the result of that, just the bad press alone, not to mention the possibility of greater regulatory scrutiny means that they start to suffer challenges in ways that non-profit or government entities probably wouldn't because they have shareholders. They have boards that are concerned that perhaps revenues will dip as a result of this bad press or a government agency saying that this group is doing something wrong, whether or not they actually are.
(10:12)
And so because of all of this, then the government will ultimately take action. That's a late step. People typically start the story there with government actually taking action and enacting a regulation or something like that. But what you can see is that a lot of the damage is already done before they even take action. And sometimes the government agency never takes action, and yet there's still significant damage done to a company or an industry. And I think OPMs are a good example of that.
(10:42)
But regardless of the truth and whether anybody did anything wrong, ever, you create this self-fulfilling prophecy that makes it harder for these companies to operate, it inhibits innovation. And really that means there are fewer people trying to serve students in a competitive environment. I think that has something to do with why higher education has gotten so expensive. And it really is inhibiting opportunity for the students who ultimately this entire system is trying to serve.
(11:15)
And so I really think it's important to point some of this out because it will look like an organic effort to fix something that has gone wrong. And in some cases there are bad actors, and we should be clear about that. Sometimes there are bad actors that genuinely have done something wrong. But sometimes those bad actors because they're in a for-profit environment, are already out of business or have already lost their customers before anything happens and the market is self-correcting.
(11:45)
But what then happens because of this government and activist involvement is you have the pile-on effect, and that can really harm whole segments of the higher education sector and make it harder for people to get jobs and all sorts of other follow-on effects.
Jason Altmire (12:00):
You referenced the self-fulfilling prophecy of all of this, and it absolutely does happen where the department will decide on a target as you described, they will focus regulatory scrutiny, they'll get the media involved, and you will start seeing the bad press. That is very often a coordinated effort. Then the investment dries up, people start to get concerned.
(12:25)
And one of the examples that you gave was ITT Technical Institute. This was in 2016, but whenever the media writes about our sector in this way, they very frequently reference what happened at ITT. And you offer some details on how all of that came about in relation to the tactics of the department that you just described. So I think that's a pretty interesting story to hear about. So maybe talk a little bit about the demise of ITT and what you see as the department's role in helping that happen.
Michael Brickman (12:58):
There are a lot of views about what happened with ITT, and there certainly is a case to be made that ITT made some serious mistakes and maybe strayed from its original mission and did some other things that they deserved to lose customers and maybe their entire business over.
(13:17)
So it's not to say that these types of actions are invented out of whole cloth, it's that when someone makes a mistake or someone does something wrong, rather than allowing the market to correct, students to choose other institutions if an institution is starting to slip in its mission, you instead have this pile-on effect where not only that one bad actor is punished in the case of ITT, but the entire for-profit higher education sector, there is a demand for regulation. And a lot of that has now come to pass in gainful employment and borrower defense and a number of other regulations that are implicitly at least if not explicitly focused on the for-profit sector.
(14:06)
I'm a strong believer in higher education accountability, and I think some of these ideas around looking at earnings and looking at outcomes are a good idea. I don't love the idea of a federal government-derived formula because you end up with a complex 500-page regulation. But if you were to do that for all of higher education, I think that might be something worth exploring, to focus on outcomes, to focus on whether students are successful.
(14:33)
The problem is this is targeted at a sector that seemingly a lot of these appointees at the Department of Education just don't like for ideological reasons. And the reason seems to be simply that they are a for-profit entity. And there's a lot of rhetoric on the left and especially the far left around the idea that you cannot possibly do well in higher education if you're making a profit, that if you're making a profit, that's money that you're essentially taking away from students.
(15:05)
And I think it just reveals a basic ignorance about how economics works from a lot of these people, and they're making policy based on that ignorance, which is really frustrating. You talk to some of these people and it doesn't occur to them that a for-profit entity might achieve scale more easily, where if they're doing something well in serving 100 students, they would have a much easier time subsequently serving 1,000 or 10,000 or 100,000 students with that successful model.
(15:41)
They also seem to overlook the fact that when a for-profit entity makes a mistake and does something wrong, the market punishes them. That's often not true of especially public institutions that are backed with say, the full faith and credit of a particular state. There are many programs, and I will say I think there are many programs in for-profit higher ed, non-profit, public that are getting quite poor outcomes. I think there are also programs in all three sectors that are getting excellent outcomes.
(16:17)
And this should not be a conversation, I think we spend way too much time talking about sector and far too little time talking about are the results good or are they not? And if they're good, how do we get more of that? And if they're bad, how do we have some accountability so that we're not in a situation where we're pushing everybody into college. A huge percentage of those people are not successful.
(16:44)
There's then an argument that because we said higher education is the pathway to you to the middle class, but then it doesn't turn out that way, and so the federal government then comes in and says, "Well, we need to forgive hundreds of billions of dollars of these loans on the back of taxpayers, and by the way, keep doing the same thing over and over again. We haven't fixed any of the problems."
(17:07)
So we need meaningful accountability. We do need to step in, but the problem we're seeing over and over again is that there seems to be a premeditated attack on certain entities and the policy of even what levers do we use to go after this entity? That's almost after the fact. They identify the target first and then they comb through the regulatory books to figure out which sanctions they have the ability to use.
(17:39)
And as we've seen also, if they can't find anything good when they go and read the regulations, they go and write new regulations regardless of whether or not they actually have that authority. So it's frustrating. I think it creates a much more polarizing higher education environment than is needed. And it's just cutting off a lot of options for students that might be good options for them.
Jason Altmire (18:03):
I think a textbook example of what you just described, deciding what the problem is and then creating a policy to target the focus of your ire, is the Dear Colleague Letter from 2022, going back a couple of years now, where the department determined that they had a problem with online program management for-profit firms. The congressional Democrats requested a GAO study exactly in line with what you just said. This study concluded what it was supposed to conclude from that perspective. And then the department came out with a set of regulations that were extremely punitive as you describe.
(18:46)
And almost all the entirety of higher education came out in opposition to those because they were so sweeping and so vast in their scope that they included many activities that the department didn't even think about. And you talked about their lack of business experience and financial background and not understanding the repercussions of their actions. I think that experience with OPMs and the proposed regulation that the department was considering is a good example. You talk a little bit about that in your article. Can you give your thoughts on that?
Michael Brickman (19:21):
Yeah. You're seeing a situation there that really highlights the point where initially they said, "We need every agreement you have with an outside vendor." And that could have included pretty much the entirety of ed tech, it wasn't just OPMs. And they got significant backlash from that.
(19:44)
And from everything I can tell, they were surprised at that backlash, which I think again, reveals the fact that they're not getting out of their bubble. They're not really understanding, not just how these specific industries that they want to regulate work, but really just how the private sector works in general. Very, very few of them have any private sector experience, and I think that's a challenge to policymaking that has oversight over the private sector.
(20:14)
And in the case of OPMs, I think another thing that was really surprising to them and frankly is the reason they had at least paused on this is they got a lot of backlash from their friends, from the public and non-profit institutions who said, "Hey, actually, it's pretty valuable for us to be working with OPMs and some of these other vendors."
(20:38)
And again, nobody is saying that every OPM has done an excellent job. Nobody's saying these companies are perfect. Clearly they've made a lot mistakes, and you can look at the share price of some of them to see that. But what I don't think is fair is to create policies, by the way, without regulation. These were Dear Colleague Letters, which for listeners who are not familiar with the Dear Colleague Letter, just think blog post. They can change fundamentally the policy of the entire country on a certain issue with a blog post that they just post one day without a lot of vetting, without any public input.
(21:20)
They've paused on that, which I think they deserve credit for, but they could follow through on it. The other thing you're seeing though is that before, during, and still now after their consideration of this policy, you see the activist community still howling about OPMs. You see other entities in higher education such as creditors, the state oversight bodies for higher education saying, "Hey, we might look at OPMs."
(21:51)
I just find that very difficult to believe that it's a coincidence. As we talked about earlier, there's clearly, if not coordination, people reading each other's Twitter feeds and articles and taking cues from one another, including in the media about this is the "problematic" entity that we're going to go after now.
(22:14)
And again, the issue seems to have very little to do with outcomes for students. Students seem to be mentioned almost as an afterthought in some of those conversations coming from the department about OPMs. It's really, we don't like these entities. We have a problem with the fact that public and non-profit institutions are using their accredited status and then working with an outside company to deliver a lot of the content.
(22:45)
And it doesn't seem to matter whether that content is better for students, is more relevant to the workforce, is giving people what they're looking for. That doesn't matter. The agreements between the students and the institutions don't matter. The agreements between the OPMs and the colleges don't matter. D.C. knows better and they're going to tell you that this is not working. And as a result, you've seen a significant contraction of that industry in a way that I think could inhibit innovation for a long time.
Jason Altmire (23:16):
Our guest today has been Michael Brickman. He is one of the leading thinkers on these issues related to higher education, researcher, writer. Michael, if somebody wanted to learn more about your ideas and thoughts and get in touch with you, how would they do that?
Michael Brickman (23:31):
Yeah, we have page with some of the things I've written recently. You can go to aei.org/brickman, B-R-I-C-K-M-A-N. And you can also follow me on Twitter or X or whatever we're calling it these days. My tag is @BrickM, B-R-I-C-K-M.
Jason Altmire (23:51):
All right. Michael Brickman, thank you for being with us.
Michael Brickman (23:54):
Thanks so much for having me.
Jason Altmire (24:02):
Thanks for joining me for this episode of the Career Education Report. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at career.org and follow us on Twitter, @CECUed. That's @-C-E-C-U-E-D. Thank you for listening.
Audio (24:26):
Voxtopica.