Diploma Mills Over the Years

A.J. Angulo, professor education and history at Winthrop University, has done all of higher education a service with his latest book. Diploma Mills: How For-Profit Colleges Stiffed Students, Taxpayers, and the American Dream is the first historical examination of for-profit higher education in the United States. This well-written study covers decades of for-profit education, from the wild and unregulated 19th century to the billion-dollar equity deals of the recent past. The stories, patterns, concerns and problems are remarkably consistent over the years. History gives a very useful perspective to understand the industry.

In their pursuit of revenue, FPCUs (For-Profit Colleges and Universities) have regularly cut corners, shortchanged students, and run afoul of regulators. There are spells when things seem to have had fewer improprieties and periods when there are more crises. Angulo highlights both, noting that the moments of reflection and reform show that there are always ongoing problems with for-profit higher education. He is careful, too, to be clear that some for-profit institutions have offered students useful education that meets their needs. His aim is on the unethical, and there is rich history to mine.

Angulo moves quickly and effectively through higher education’s earliest years in America. He explains how as the non-profit higher education world professionalized in the latter part of the 1800s, for-profit education had to redefine itself and its markets. In 1912 the City Club of Chicago, a non-profit organization committed to pursuing Progressive Era goals, released a comprehensive report based on years of investigative work on FPCUs in twenty major cities. The report highlighted FPCU solicitation of students, abysmal student success rates, and wasted money. The solution, the City Club argued, would be to expand vocational studies in many fields at the secondary level. Remember, too: this was a period in which most Americans did not graduate from high school. The growth of shop classes, home economics and vocational/technical high schools is due, in part, to addressing the needs of business and the problems of the for-profit education world.

After World War II and the GI Bill, FPCUs expanded massively. Accompanying that growth was erratic attention to quality. Veterans complained vociferously about fraud. Illinois representative Elroy Sandquist led a drive, in his state and then nationally, to clarify language and legislation to deal with new educational conditions. When the matter reached Texas Congressman Olin Earl Teague, regulation of the FPCUs had an informed, dedicated and effective champion. Teague pushed other legislators and the Veterans Administration, which had recently issued a critical report on how FPCUs were funded but were not meeting the educational needs of veterans. Teague drafted legislation that passed Congress in 1950 and followed that with committee leadership looking at FPCUs and the GI Bill. He also worked with the General Accounting Office to investigate for-profit abuses in higher education.

Leadership on reining in FPCUs was enthusiastically taken up by James Edmonson, dean of the School of Education at the University of Michigan. Edmonson published, broadcast, and spoke about abuses in FPCUs across the country. He assumed a key role in the National Education Association, where he focused the organization’s attention on higher education fraud. His death in 1954 slowed the reform movement.

Many believed that FPCUs would die with the passage of the Higher Education Act of 1965. However, in 1972 Congress added language that included proprietary schools for funding consideration. FPCU growth began again, this time with federal dollars. Angulo charts how this growth lead to the scandals of the 1980s and corresponding investigations by Bill Bennett, Secretary of Education. Bennett found widespread abuses and moved to increase scrutiny of FPCUs.

The explosion of the FPCUs in the past 20 years has reset the higher education stage. Regulation of FPCUs has been politicized, particularly as the industry has invested heavily in lobbyists. For-profit higher education is a major political force, funded in great part by the massive profits generated by the larger FPCUs.

Today, FPCUs have an outsize impact on access, cost, student outcomes, and the overall public understanding of higher education. The consequences have been harmful for many students. For example, students who attended an FPCU are twice as likely to default on their student loans as students who attended public colleges and universities. It is detailed in a study by the National Center for Educational Statistics. We have much more data and research on the effectiveness and student outcomes of the non-profit and for-profit sectors. However, political and policy debate about higher education often forgets to distinguish between the two sectors.

Angulo does not dwell on the back-and-forth between non-profit and for-profit education. It is not part of his agenda. The long view of history shows, though, that for-profit higher education often serves as a spur to changes in the non-profit sector. It is a phenomenon that calls for more reflection, particularly among all of us who work in the non-profit world.

Angulo’s recommendation going forward is direct. He does not believe that regulation has or can redirect FPCUs. Instead he calls for the cessation of public subsidies in all forms for for-profit education. It will be interesting – particularly as we are entering another one of those periods where policy about FPCUs is being hotly contested – to see what types of counter-argument for subsidies emerge. In Diploma Mills, Angulo has marshaled strong history in support of his argument.

David Potash

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