Betsy DeVos Just Unleashed Predatory Colleges on America
The Trump administration is pushing policies sure to deepen both the class divide and the debt trap.
As 20 million college students ready for the fall semester, thoughts turn to the opportunities and the promise of American higher education, which remains essential to the American dream.
But the dream has been mortgaged by shifting federal policies. Currently, there are discussions about changing the gainful employment rules and federal aid policies. That may not be immediate or sexy, but it’s important. What seem like ripples now could become tidal waves later.
In case you need proof, let’s look back to the early 1980s, when two higher-education policy changes started changes that affect us to this day.
The first was the passage in 1980 of the Bayh–Dole Act, officially known as the Patent and Trademark Law Amendments Act, which for the first time allowed universities to hold patents arising from federally funded research grants. Before this law, federally funded research (which at the time was basically all research) led to patents that were assigned to the federal government. After the law, universities could hold their own patents giving them a massive incentive to innovate. One study found that the leading, R1, research universities generated $2.9 billion from their research efforts in 2016 alone.
The potential dollars on the table have led some universities to try and rush into the R1 ranks. This is not an easy task, as the designation demands becoming a doctoral institution of the highest level. Some institutions have expanded their doctoral programs, increased funding for graduate students, hired more research-focused faculty to teach these graduate students, provided releases from teaching to privilege research, and developed facilities for doctoral-level work. None of this is cheap and the potential payoff isn’t exactly clear, other than potential bragging rights in the pecking order of institutions.
The university as patent holder has also forced some interesting changes in how larger, R1 institutions are structured. As charitable institutions, the goal of a university is not to maximize profit. But, as patent holders, these same universities aim to produce products that generate profit, leading many of them to create holding groups to enforce patents, insulating and protecting the university and its interests.
The drive to join the ranks of the top research universities and the need to continually enhanced facilities and recruit top faculty led to a cultural change in higher ed. In the 1990s, one could see two tiers of faculty in some departments at certain universities, those research-focused faculty that taught the Ph.D. students and those who taught undergraduates (joined by an army of teaching assistants and adjuncts).
You could also see the cultural change in the “star system” of faculty that developed as universities poached top celebrity academics from each other. This led to a lot of hopping around for top academics, who like top athletes liberated by free agency, maximized their opportunities.
And in the new science, social science, arts and humanities spaces that popped up on many campuses, as it seemed that some universities were on a constant building spree that was slowed, but not stopped, after the 2008 market crash. All these expenses, along with some others, have lead to increased budgets and as a result rising tuitions.
This gets me to the other major higher education policy change from the 1980s, and that is the shift in student aid away from direct aid or grants to student loans. Earlier federal policy provided direct grants-in-aid to students through what eventually became known as Pell grants, which were supplemented by various state programs, like TAP in New York State. This system worked when tuition was modest. As tuition rose, so did the gap between student aid and tuition. In 1980, a little know policy change opened the doors to supplemental student loans, beyond the Guaranteed Student Loan Program. In 1981, the Reagan administration tighten eligibility on Pell grants and reduced the overall amount available and so did most states to their local programs. This put more pressure on the supplemental student loan programs, which started to grow. In 1986, the Guaranteed Student Loan Program had a new cap, which along with increases in tuition rates put even more pressure on the supplemental loan system. That proved to be a huge boon to private banks, which rushed to develop these lucrative products.
Fast forward to today and we can see the result: a total student loan debt of $1.4 trillion.
This tale of a few “small” changes in federal higher education policy should give us caution as we ponder the current proposed changes in higher education by Education Secretary Betsy DeVos and the Trump Administration.
DeVos has recently proposed changes that would be very advantageous for for-profit colleges. Her plan would weaken the so-called “borrower defense rule” enacted at the end of the Obama administration to protect students who amassed student loan debt from institutions that were later shut down for fraud. This had been coupled with the administration's efforts to hold for-profit colleges more accountable through greater scrutiny and the need to report gainful employment data to the DOE.
Now DeVos’ DOE has weakened the gainful employment rules and proposes to weaken the borrower defense rule—signalling to for-profits that they can return to their old, evil ways.
As sociologist Tressie McCullom Cotton argues in Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy, that means a three-tiered system of higher education with top universities for the elites, typical higher education for the middle class and lower ed for the working classes—a constellation of for-profit colleges preying on the poor since, as Cotton writes, “the more insecure people feel the more they are willing to spend money for an insurance policy against low wages, unemployment, and downward mobility.”
Now is the time to pay attention to new higher ed policies that threaten to rip beyond repair the fabric of the American dream.