Obama College Rating System: For-Profit Institutions Ambivalent About Framework Released By White House

The ongoing battle between the White House and for-profit higher education institutions over access and outcomes took a new turn Friday when the Obama administration announced the framework for its long-awaited rating system that seeks to link federal aid to college performance. The policy change is putting some for-profit institutions, which receive an average of 86 percent of their funding from the government, on the defensive.

President Barack Obama's rating system, proposed last year, aims to hold schools accountable for student success. The framework unveiled Friday indicates that colleges would be evaluated on access, affordability and outcomes -- controversial metrics for schools with a lot at stake. Administrators, higher-education organizations and politicians doubt not only whether it's truly possible to measure a college's value but also whether the government should be doing so.

"If after nearly a year and half of work, this is all the [Department of Education] can muster, it seems to support the long held belief by many in higher education that while a college rating system is admirable in theory, it is not feasible to create metrics that definitively assess the quality of so many institutions across the country," Steve Gunderson, president of the Association of Private Sector Colleges and Universities, said in a statement. Gunderson said the system would only confuse students and families making decisions about higher education.

Thomas Babel, the vice president of regulatory affairs at DeVry Education Group, said he thought the rating system was generally headed in a good direction. DeVry has more than 60,000 students on about 90 campuses. But Babel said Friday he disagreed with two data points mentioned in the framework: net price and completion rate. They need to be slightly adjusted, he said, because right now they're "oriented toward traditional student populations ... and certainly not our student."

Obama has cracked down on for-profit schools in the past. In November, his administration announced gainful employment rules threatening career training programs' funding if students don't make enough money after graduation to pay off their loans. A group of private colleges sued, saying the regulations were "unlawful, arbitrary and irrational" because student income could be influenced by circumstances out of their control. In other cases, media outlets have exposed for-profit colleges for allegedly deceiving applicants by promising them positions they weren't qualified for and rigging job placement statistics. The U.S. Consumer Financial Protection Bureau is investigating Corinthian Colleges Inc. for its loan policies.

Under Obama's rating system, net price -- the cost of attendance after a student gets financial aid -- is problematic for schools with large commuter populations. Commuter students don't pay for room and board, but they could be included in net price and drag down a college's rating.

Student demographics also were a focus of a January letter from Kaplan Inc. to the Department of Education. David Adams, Kaplan's deputy general counsel and vice president for regulatory affairs, called for a rating system that considered students' backgrounds and gave weight to institutional missions. The latter was fulfilled in Friday's framework, and Kaplan spokesman Mark Harrad said the company supported Gunderson's statement.

Looking ahead, Babel said the possible link between funding and performance -- which would require congressional approval and wouldn't come until 2018 at the earliest -- was too far off to worry about. He also wasn't concerned about the ratings impacting potential DeVry students' college choices.

"I don't get a sense from our students that they use this type of data as an integral part of decision-making," Babel said.