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The Plot Against Low-Income Students

Robert Shireman was exiled from the Obama Administration after getting caught playing footsie with a short-seller betting against for-profit colleges. We lost track of him, but he was recently spotted in Albany canoodling with New York Gov. Andrew Cuomo to kill for-profit colleges in the state.

Readers may recall that Mr. Shireman executed the government takeover and expansion of student loans in the early Obama years. He then inspired the 2011 Obama gainful-employment rule that was tossed by federal courts. He left the Education Department after news reports chronicled how he had conferred with outside groups and short-seller Steven Eisman. He has continued to drive his ideological war on for-profits from the liberal Century Foundation.

The Trump Administration has put a stop to the gainful-employment gambit at the federal level. But Mr. Shireman is now using his foundation redoubt to take his crusade to progressive states. First up: New York.

Last year the Century Foundation published a study claiming that nearly half of all students including 72% of blacks who enroll at a New York for-profit college would default in 12 years. It also declared that seven degree-granting New York schools “put a majority of their students in debt only to earn less than $25,000, or the average wage of a high-school degree-holder, ten years after enrolling” and “all of these are for-profit schools.” These findings would be troubling if they were true. They’re not.

The spurious analysis was based on stale data from students who began college in 2003 before many for-profits with poor student outcomes closed. Administrators of the data source also warned researchers that state sector-by-sector sample sizes were too small to draw conclusions. Only 80 of the 16,000 students surveyed nationwide attended for-profits in New York. Smaller sample sizes make it easier to manipulate data for political purposes.

According to the most recent federal data, the three-year default rate among students in for-profit associate’s degree programs who entered repayment in 2014 is 15.1% compared to 14.9% for those who attend community colleges. About 30% of students who attend public colleges in New York including the four flagship research institutions earn less than $25,000 compared to 36% of for-profits.

In other words, for-profits have no worse student outcomes, and their graduation rates are typically far better than community colleges down the road. Yet that hasn’t stopped Mr. Cuomo from using the Century Foundation study as a pretext to shut down for-profits.

The Governor has proposed legislation to require for-profit colleges—and only for-profit colleges—to obtain at least 20% of their funding from private sources. No for-profit could meet this standard because they principally enroll low-income students with little savings who pay for school with Pell Grants, federal loans and state scholarships.

Mr. Cuomo also wants to require for-profits to spend at least 50% of their budget on “instruction” narrowly defined as faculty salary and benefits. Nearly all for-profits would fail this standard but so would about 90% of all colleges in New York, including Cornell, NYU, Fordham University as well as many state and city colleges—if the rule applied to them.

The Governor is trying to jam his plan into this year’s budget but is facing resistance from some Democratic legislators. Many for-profits are family-owned and have deep connections to low-income communities. Consider Monroe College in the Bronx, which provides full scholarships for low-income students and ranks among the top three institutions in the state for graduating black and Latino students. The School of Visual Arts in Manhattan hosts public lectures and art presentations. Two-third of its students graduate compared to fewer than half of those at New York City four-year public colleges.

Mr. Shireman wants to use the New York bill as a template for other states, starting with Maryland and California, and ultimately for federal regulation when a Democrat wins the White House. He and Mr. Cuomo are selling this as a way to help low-income students when the result would be precisely the opposite.

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