Regulation of for-profit colleges not the problem
Last May, Corinthian Colleges abruptly closed all of its campuses and left 16,000 students with no degree, no job prospects and, in many cases, crippling debt. It was the one of the largest shutdowns in the history of for-profit education.
There are suggestions in some quarters that at least part of the blame for Corinthian’s sudden collapse belongs to the federal government, which imposed regulations on the school and filed lawsuits when those requirements weren’t met. These critics also points to the Higher Education Act, which automatically halts federal funding to colleges that file for bankruptcy, as being partly responsible for Corinthian’s failure.
The for-profit college industry, the argument goes, is being regulated and litigated to death. But this is a deeply flawed diagnosis of what is wrong with the for-profit college industry and, more specifically, what happened at Corinthian.
The problem is not federal regulation and litigation – the problem is that for-profit colleges have repeatedly shown they are much more interested in recruiting students and collecting their money than preparing them for a successful career. For-profit colleges invest more money into increasing enrollment than academic instruction. The industry has an astonishing record of deceptive practices and marketing schemes that promise high-wage job opportunities but deliver enormous debt instead.
The problem is only getting bigger: The amount of debt owed by those attending for-profit colleges has grown from $39 billion in 2000 to $229 billion in 2014. Considering the size of the industry, state and federal governments have a duty to ensure these companies are acting responsibility and to penalize them when they violate the law, which they often do.
Corinthian is a case study in unethical business practices. A federal court recently ruled that, before closing, the school violated federal law by using false job placement rates to dupe more than 115,000 students into taking out loans.
When a for-profit school is acting irresponsibly or teetering financially, the Department of Education’s responsibility is not to protect their balance sheet and keep the company solvent – its responsibility is to protect the students and those who may enroll in the future. Thousands of people would have benefited if the Department of Education had intervened in 2011, when it first found that Corinthian was not a financially responsible company. If anything, the federal government has been too slow and too lenient in regulating and prosecuting the industry.
The most offensive aspect of the for-profit industry’s business model is that it targets America’s veterans. A 2014 study found that eight of the 10 institutions getting the most GI Bill dollars were for-profit colleges, which view veterans as an avenue to access the billions of dollars in education benefits given out annually by the Department of Veterans Affairs. Seven of those eight schools, including now-defunct Corinthian Colleges, were facing either state or federal investigations.
Current servicemembers are among the industry’s victims. The University of Phoenix was temporarily banned from recruiting on military bases and receiving federal education funding for service members, partly due a probe by the Federal Trade Commission into the school’s advertising and marketing practices.
After years of allowing the for-profit college industry to abuse its role as a provider of higher education, state and federal governments are setting new requirements and holding schools accountable when they deceive students. That is a positive step for our community, and I’m pushing my colleagues to do even more. Last month, the House passed a bill I wrote that would place stronger requirements on schools enrolling veterans to prove they are preparing their students for successful careers. This is just the first step in protecting the people who protect our national security.
Veterans, service members and all students who enroll in for-profit education are doing it for the right reasons. They are trying to advance their careers and achieve financial stability through hard work and a commitment to learning new skills. They deserve better than to be exploited by unscrupulous companies.
Some advocates for for-profit colleges complain that litigation is adding “significantly” to their cost of doing business. But if these schools can’t handle the added cost of defending themselves against lawsuits, there’s an easy solution: Start keeping the promises they make to students, and stop breaking the law.