EDMC settlements chart new direction for private-sector education

As someone who has long believed in the importance of private-sector education, I read with interest the announcement that one of the sector’s leaders, Education Management Corporation (EDMC), has settled with both the U.S. Department of Justice (DOJ) and attorneys general from 39 states and the District of Columbia.

Private-sector opponents position the agreements as a victory for students. I agree — but for reasons that are very different from the sector’s critics.

While the DOJ settlement was substantial, it largely related to the past. I find the consent judgment with the state attorneys general much more interesting — that one looks forward.

{mosads}Opponents see the agreement as a weakening of the sector. But if you read the judgment, you see that the agreements that EDMC and its academic institutions have worked out with the various states are good for students, will strengthen the company’s schools and, I believe, provide a template for all institutions of higher education to follow.

As presented in various news releases, the agreement outlines important areas of change.

First, there will be improved transparency. For students, from the very beginning, EDMC’s academic institutions will provide a one-page, easy-to-understand, clearly worded overview of costs, loan default rates, job placement rates and the relationship between debt and earnings for the programs offered. EDMC says that it will also build an interactive website to allow students to plug in their own financial information to personalize their decision.

That information will help all students answer the critical questions: Is this program really for me? Should I make the commitment? Answering those questions in advance is going to dramatically lessen the mismatches between expectations and the realities of educational decisions.

EDMC will also take steps to make sure that, where relevant, programs are aligned with local market demand and licensure requirements. Since most students are from and remain in the areas where schools are located, they will only be enrolled in programs that lead to licenses in their home states.

Further, EDMC institutions will offer a no-cost orientation program to help students determine for themselves if they can make the commitment and handle the requirements of the course work.

Finally, EDMC commits to stepped-up enforcement of its recruiting policies — particularly, increased scrutiny on their recruitment practices as well as those of third-parties who assist the institutions in their recruitment efforts.

These changes are not general statements of good intentions; they are binding. They are going to create fundamental improvements in transparency and accountability, and all of higher ed should sit up and take notice!

But there is also a bigger picture here.

EDMC is one of the private sector’s largest, most visible companies. What they have called their “blueprint for change” will certainly have influence. And it is all happening at a particularly important time.

Pick any survey, in virtually any industry, and it will say that America is experiencing a growing shortage of workers trained and ready to fill open positions. Now, compare that with the fact that private-sector institutions award the majority of all allied health and culinary arts credentials earned. They provide 38 percent of all electrician credentials and 40 percent of all vehicle maintenance and repair technology credentials. The list goes on.

Can the private sector do a better job of matching students and educational opportunities? Experience says: absolutely. Should we tear down the infrastructure and replace it with something else? Reality asks: why?

Based on recent political rhetoric and talking points, some would have you believe that the go-to solution would be to replace the private sector with free community college education — often pointing out the community college programs already offer many of the same programs as the private-sector schools. I would happily wrap my arms around that argument if the community college system was able to take on that responsibility. It’s not.

Writing in the Sept. 17 issue of U.S. News and World Report, Judah Bellin, a higher-education policy researcher at the Manhattan Institute, said that the president’s plan “mostly ignores an unfortunate truth about America’s community colleges. They’re in bad shape. Without serious reform, it makes little sense to send more students to these institutions.”

Administration estimates put the bill for strengthening the system at upward of $60 billion — a budget item you won’t get from petty cash. The plan would cover 75 percent of student tuitions, with the states asked to kick in the rest. Those two facts alone, in a time of stretched state budgets, make the plan a long shot at best.

As an observer with a rooting interest in providing students with an education that enables jobs that change lives, it makes much more sense to allow the private-sector institutions to do their good work, making corrections where necessary and building on the innovation and nimbleness that is characteristic of the sector.

I believe EDMC should be commended for leading the sector in establishing greater accountability and transparency, and in doing a better job of helping students pursue the right education to enable the careers they choose and the lives they want to lead.

The company has taken a big step that I believe others in the sector can — and must — follow.

This piece has been slightly revised.

Alford is the co-founder, president and CEO of the National Black Chamber of Commerce.