Education Innovation
Is Trump U an Argument Against Higher Ed Reform?

Donald Trump is starting to face scrutiny from his rivals and the press for his ownership of “Trump University”—a for-profit company offering classes in real estate and finance that was, by all accounts, a successful fleecing operation that preyed upon the very working class Americans he is now courting politically. But no sooner had these attacks started than some liberal commentators began to denounce them as hypocritical, on the grounds that Republicans have supported higher education reforms that would allegedly make such frauds easier to perpetrate. Here’s Andrew Joyce, making this point at Fusion:

Sen. Marco Rubio landed a devastating attack against Donald Trump at the Republican debate Thursday night when he brought up a class-action lawsuit against “Trump University,” which New York authorities say was more of a fraudulent scheme than an actual university.

… You might think that Rubio wants to crack down on schools like Trump University, but you’d be wrong. He wants a lot more of them. One of the key provisions in Rubio’s education plan is a proposal to lower accreditation standards to let more schools compete for students. As he described the plan in July, “Our higher education system is controlled by what amounts to a cartel of existing colleges and universities, which use their power over the accreditation process to block innovative, low-cost competitors from entering the market. Within my first 100 days, I will bust this cartel by establishing a new accreditation process that welcomes low-cost, innovative providers.”

It’s possible to imagine “Trump U!” becoming a rallying cry for opponents of higher education reform efforts in the months and years ahead. Indeed, it could end up being quite a potent one, given that the argument contains a kernel of truth: tough accreditation standards, after all, did (and should!) act as a bulwark against Trump-style schemes. (Trump U failed to receive accreditation, and therefore failed to qualify for federal student loans; instead it pushed enrollees to pay for classes with credit card debt, according to the lawsuit filed by former students.) Accreditation is clearly important, and pointing out that what we have now is not working well does not imply that one wants to completely get rid of it. (Note that even in the quote above, Senator Rubio is not calling for the outright abolition of accreditation.)

In fact, there’s little reason to assume that a more flexible accreditation process—one that devolves power to state and local bodies—would be any less competent at screening out Trump-style scams than the existing, federally approved accreditation network. A good system would ensure that all providers are still monitored, with information about their performance made public so that the prospective students know what they would be getting by signing up.

A smart system would go beyond mere accreditation, however. Ignorant and inexperienced people make easy marks for predators, so requiring students to complete a course in personal finance before taking out loans seems like a sensible idea. Furthermore, all educational institutions should have skin in the game. If their students can’t repay loans, the institution should lose money. This would create a strong incentive for universities to recruit well-prepared students and provide them with better guidance about the various programs and options they offer. (Trump University, in contrast, appears to have wildly inflated expectations in hopes of running away with money the students didn’t have and could never earn back.)

Indeed, when defenders of the higher education status quo focus on institutions like Trump University, they are in some ways missing the forest for the trees. Donald Trump’s scam operation vividly highlights the perils of educational institutions that don’t give students any return on their investment. But America’s higher education system is saturated with such institutions already. The federal government has not only accredited and subsidized its share of fly-by-night for-profit educational programs; it also rubber stamps programs in non-profit schools that leave large numbers of students with few skills, few job prospects, and mounds of debt. There is rot and inefficiency pervading our entire system; reforming higher education regulations (including credentialing requirements) and reining in student loans are important steps toward rebalancing a sector that has gotten deeply out of whack.

As student loan debt piles up, even as the quality of the workforce stagnates, it’s increasingly clear that something has to give. The Trump University scandal is a reminder that deregulation shouldn’t be reckless. But it is in no way an argument against fixing a comprehensively broken system.

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