As Harvard Struggles, For-Profit Colleges Are Poised To Flourish Under Trump

Forbes

a day ago

Most trade schools in the United States are for-profit.
Amid his ongoing assault on elite 'woke' colleges, President Donald Trump mused Monday that he might redirect some of Harvard University's now suspended federal funding to trade schools—institutions he championed through both campaigns and in his previous term. 'I am considering taking Three Billion Dollars of Grant Money away from a very antisemitic Harvard, and giving it to TRADE SCHOOLS all across our land,' Trump wrote on Truth Social. 'What a great investment that would be for the USA, and so badly needed!!!'
Trump doesn't appear to have the legal power to reroute the $3 billion on his own—these are dollars appropriated by Congress for research and it would presumably be up to Congress to redirect them to trade schools. But if there were ever a time he'd get GOP support for such a move, it could be now. Most trade schools are for-profit. And both trade schools and the broader for-profit higher education sector—which has a history marred by fraud, abuse and controversy—seem poised to thrive under Trump and a Republican Congress.
The House-passed 'big, beautiful bill' includes several wins for for-profit education, including the repeal of regulations that limited student loans for some for-profits and a new workforce Pell grant option that opens up this federal aid for lower income students to shorter duration workforce training programs. Trump has plans to overhaul the accreditation process, which could make it faster and easier for for-profit schools to gain access to federal aid for their students. And the for-profits will also have a sympathetic ear at the Department of Education: Nicholas Kent, Trump's nominee as under secretary of education, the government official overseeing higher education, is the former chief policy officer and a lobbyist for Career Education Colleges and Universities, the for-profit trade association. (His nomination is awaiting a Senate floor vote after Republicans pushed it through the Committee on Health, Education, Labor and Pensions last week by a party line 12-11 vote.)
Investors certainly believe Trump will be good for the for-profit schools. After he was elected in November, the sector's stocks rallied, says Jeffrey Silber, a senior analyst in BMO Capital Markets Equity Research. For example, Adtalem Global Education (which runs colleges, medical schools and a veterinary school) has seen its stock rise 61% since Trump was elected, including a 9% jump the day after. The stock of Perdoceo Education Corporation, which owns for-profit universities and technical schools, is up 46%, including an 11% jump the day after the election.
In a statement, the CECU (nominee Kent's old organization) applauded Trump's suggestion to reroute Harvard dollars and his 'continued focus on career education.' It added: 'The best way to support trade schools is to reduce the regulatory burden facing private career schools while increasing funding that allows students interested in the trades to choose the highest quality school.' Congress appears to be doing just that.
As it stands, in the House-passed tax and budget bill (H.B. 1, now formally named the One Big Beautiful Bill Act), the new workforce Pell grants would be available for students without graduate degrees who are enrolled in 8-week to 15-week workforce training programs. There would be some limits—correspondence courses which require students to mail in assignments are excluded, and eligible programs must be state-approved, though, notably, they don't need to be accredited.
Previous versions of the legislation included quality assurance benchmarks, but H.B. 1 includes only watered-down versions of those, says Michelle Dimino, director of the education program at the public policy think tank Third Way. Eligible programs must show a 70% completion rate—a low bar for short-term programs—and a 70% job placement rate for graduates. Both metrics are easily gamed, Dimino says. 'We've seen instances where predatory colleges would employ their own former students to make sure that they showed up in a job at the time when the job placement rate was going to be calculated,' she says. 'Sometimes colleges might look for students who are already employed right as a target audience because they know that they'll do good on a job placement measure.'
A gold-standard measure for program outcomes is the post-graduate earnings boost. In other words, how much more money graduates with the credential earn than a typical high school graduate. On this measure, for-profits largely fail, says Michael Itzkowitz, founder and president of The HEA Group, a college access consultancy. According to his research, which uses federal education data, 59% of certificate-granting institutions leave graduates earning less than $32,000 a year—a typical high school graduate salary—even 10 years after they enroll. 'Throwing money at these schools blindly is really a poor bet, nor is it an effective or efficient use of taxpayer dollars,' says Itzkowitz, who in 2015, while at the Department of Education, rolled out The College Scorecard, the largest-ever release of federal education data.
New money will likely bring new programs, Dimino predicts. 'There's a lot of incentive then for [short-term credential] providers to come into the space to try to capture some of those dollars,' she says. 'So you could have a random private bootcamp company that can just prop up a lot of very short-term credentials and tap into Pell funding even if they haven't gone through the accreditation process.' Accreditation has long been used as a third-party check on college quality, and currently associate's, bachelor's and graduate-degree granting colleges, as well as certificate granting trade schools, must be accredited in order for their students to receive federal financial aid. The workforce Pell would side-step this requirement.
Americans need more options for short-term credentials—few education experts would argue against that. But so far, filling that need has primarily fallen to for-profit colleges, many of which offer students poor returns on investment and leave them with crippling debt. While bachelor's and graduate degree-seekers are more likely to take on debt to finance their education, students who completed only some college or a less-than-two-year credential are more likely to be behind on their debt payments (30%) compared with higher degree seekers (11%), according to the Economic Well-Being of U.S. Households in 2024 study just released by the Federal Reserve. 'Every time for-profit colleges have been given access to more federal aid, abuses have followed,' says Dimino. 'It's hard to ignore this trendline and yet we're giving them free reign to do that again.'
Previous administrations have put in place guardrails to prevent schools from misleading or defrauding students. After the for-profit chain Corinthian Colleges, investigated for predatory and fraudulent practices, collapsed in 2015, the Obama administration implemented the Borrower Defense to Repayment rule, which entitles students to loan cancellation if they're defrauded by their school. Another check on for-profits, the gainful employment rule, requires schools to pass debt-to-earnings and earnings premium thresholds to be eligible for federal funds. The sector is also subject to the 90/10 rule, which requires schools get at least 10% of the revenue from sources outside federal student aid. The House-passed budget bill would restrict the use of borrower defense to repayment and repeal the gainful employment and 90/10 rules. For-profit colleges and advocates have called these regulations burdensome and unfair, since private non-profit colleges are not held to the same standards.
Even the Trump-catalyzed economic uncertainty could benefit for-profit colleges, Silber notes. 'Hopefully we're not going into any kind of recession, but if we are, that's another way that at least the stocks of these companies could benefit because they're seen as being defensive,' he says.