California has an extensive set of laws and regulations governing for-profit colleges, new research shows, but most states fall short in their oversight of the sector.
The study, released Monday by the Children’s Advocacy Institute at the University of San Diego School of Law, documents differences among states in how well their laws protect students from bad actors in the for-profit college industry.
Researchers judged states using seven criteria, such as enforcement, disclosure requirements, complaint processes and the transparency of their regulatory agencies. Forty-three states, including Maryland and Virginia, earned failing grades. Six others received a D, while California alone scored a B for its oversight of for-profit schools.
“States need to make sure that these institutions are actually providing what they’re advertising and they aren’t defrauding students because there is a track record of abuse,” said Melanie Delgado, author of the study and a senior staff attorney at the institute.
The collapse of Corinthian Colleges, a chain of for-profit schools felled by charges of fraud and predatory lending, illustrates the need for strong state and federal laws, Delgado said. Gaps in regulatory oversight leave loopholes that unscrupulous schools can easily exploit, but she said robust state laws and accountability could guard against this.
Steve Gunderson, who heads the trade group Career Education Colleges and Universities, dismissed the study as misleading and out of date, saying it is “virtually useless in any meaningful policy discussion” about the sector.
“Instead of calling for more regulations that impede the delivery of access and opportunity to students, policymakers should focus on modernization and reduction of unnecessary regulations in order to better serve students,” said Gunderson, a fierce critic of the current state and federal regulatory regime governing for-profit colleges.
Delgado argues that state oversight is especially important as the Trump administration rolls back Obama-era regulations designed to protect students from predatory for-profit colleges. But too many states rely on the oversight of accreditation agencies that are funded by the fees of the schools they rate, a model that critics say creates a conflict of interest and encourages leniency.
The study found that in addition to relying too heavily on accrediting groups, states also failed to enforce existing laws, create transparent governing bodies and require for-profit schools to disclose key measures such as graduation and student loan default rates. Delgado said those measures are indicators of whether for-profit colleges are living up to promises they make to students.
Maryland was lauded in the report for reviewing the advertisements of for-profit colleges, some of which have been accused of using misleading marketing to recruit students. The state, however, scored poorly for not requiring frequent onsite visits or extensive performance reviews.
Maryland Secretary of Higher Education James D. Fielder Jr. argues that the report failed to take into account a series of regulations governing for-profit colleges that took affect earlier this month.
He noted that the state now has tougher rules in place to monitor the financial health of colleges and universities. The six for-profit colleges operating in Maryland must now establish a fund to reimburse students in the event a school closes. And Maryland now requires institutions that close to surrender student records to the state, a response to the difficulties ITT Technical Institute students faced in retrieving their transcripts when the school abruptly closed in 2016.
The State Council of Higher Education for Virginia did not immediately respond to requests for comment.
Maryland is among the states where attorneys general have taken steps to crack down on abusive practices in the for-profit college sector, and force the federal government to uphold laws with the same aim. Those efforts are reactions to problems that arise — problems that robust state regulations could have prevented, Delgado said.
“Attorneys general have been doing a laudable job of protecting students, but after the fact,” she said. “Better state oversight can prevent those harms from occurring in the first place.”