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A fairer deal for college students

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By Tom Harkin
Friday, September 3, 2010

One of the more dramatic developments in higher education in recent years is the explosive growth of for-profit colleges. The largest for-profit institution, the University of Phoenix, has a student body of more than 440,000, far larger than all the universities in the Big Ten combined. Some for-profit colleges are living up to their promise, pioneering innovative approaches to enrolling students and helping nontraditional students earn college degrees and postsecondary certificates.

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But there is evidence that too many of these institutions are driven more by the profit motive than their commitment to educating students. We must guard against for-profit schools that load up students with tens of thousands of dollars of debt in exchange for largely worthless degrees.

There is a strong federal interest in these institutions because they are funded primarily by taxpayer dollars. Federal student aid accounts for nearly 90 percent of revenue at some for-profit colleges, and in some cases, close to 30 percent of that federal investment is being spent on marketing and advertising to persuade students to enroll.

In an investigation detailed in an Aug. 4 Senate committee hearing, the Government Accountability Office found that 14 of 15 for-profit colleges required higher tuition than nearby public schools did. For example, the program to earn an associate degree in business administration from Kaplan University Online costs $33,390; a program leading to the same degree at Northern Virginia Community College costs $8,500.

Higher tuition bills not only raise federal costs but also put students at increased financial risk. Most community college students can pursue their degrees without taking on federal loans. By comparison, nearly all students at for-profit colleges take out loans to earn similar degrees. According to statistics for the 2008-2009 school year, for-profit colleges account for almost 10 percent of students enrolled in higher education nationwide, but those students receive 23 percent of federal student loans and grants, yet accounted for a staggering 44 percent of defaults in recent years.

For many students, defaulting on student loans is not the end of their struggles. Student loan debts are not dischargeable in bankruptcy, and defaults disqualify them from further aid. Instead of a degree, then, many students end up with debt burdens that may preclude a real chance at earning a college degree or certificate.

I believe reforms are urgently needed to take advantage of the strengths of for-profit institutions while avoiding their pitfalls. The taxpayer investment in for-profit schools requires careful oversight to ensure that taxpayers and students are getting good value for the $26 billion in federal funding that flows to for-profit colleges each year.

Public hearings conducted as part of an investigation by the Senate Health, Education, Labor and Pensions Committee have raised questions about whether the industry is doing enough to meet its students' educational needs. In its investigation of for-profit colleges, the GAO documented a culture of high pressure and often deceptive sales tactics designed to push people into enrolling and signing up for loans. Acts of outright fraud by recruiters were not unusual.

The Education Department has proposed rules to reduce abuses in career and for-profit programs. The rules could eliminate student aid eligibility for programs whose students have a dangerous combination of high debt levels, low incomes after graduation and low rates of student loan repayment. The proposed rules would also strengthen protections against school officials who are paid based on the number of bodies they recruit or who make deceptive statements to prospective students.

All students deserve a quality education for their investment. No one has more at stake than the students enrolling at career colleges, many of whom are low-income and of color. New steps can ensure that these students get accurate information about the costs and likely outcomes of educational programs, while weeding out the programs that would leave them with debts they are unlikely to be able to repay.

The federal government should and will continue to support for-profit colleges that prepare students for the 21st-century workplace and strengthen our economy. But the government should not be in the business of subsidizing for-profit institutions that leave students saddled with onerous debts they cannot repay and degrees or credentials that are of little value.

The writer, a Democrat from Iowa, is chairman of the Senate Health, Education, Labor and Pensions Committee.



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