For-profits need more accountability

Members of a House higher education subcommittee want higher standards and more oversight of for-profit colleges participating in federal student aid programs.

“For-profit colleges have wreaked havoc on students and taxpayers,” and, as a result, much more needs to be done to strengthen accountability in that sector, Rep. Susan Davis (D-California), chair of the House Subcommittee on Higher Education and Workforce Investment, said at a hearing Wednesday on accountability in higher education.

The recent wave of for-profit closures, which left students with no degrees and high debt loads, “raises serious questions” about the effectiveness of the “accountability triad,” that consists of the federal government, states and accreditors, Davis said.

“For-profit colleges have, by definition, a fiduciary duty to their stakeholders to maximize profits, often at the expense of students,” she said. “As a result, predatory behavior has only been rampant in the for-profit sector.”

While community colleges offer a high-quality education for much lower cost, propriety schools spend much more money on aggressive marketing that targets students of color, low-income students and veterans, several lawmakers noted.

Noe Ortega, deputy secretary of postsecondary and higher education at the Pennsylvania Department of Education, said for-profits have become more popular because they offer more flexible schedules that better meet the needs of students with jobs. “The traditional sector needs to adapt,” he said.

Community colleges are meeting those needs with reforms such as guided pathways that help students focus on the courses they need to achieve their career goals, noted Barbara Brittingham, president of the New England Commission of Higher Education.

Stronger measures

Davis called for accrediting agencies to do a better job of gatekeeping and ongoing monitoring, and said states should enforce minimal standards. But the U.S. Education Department (ED) needs to do much more.

Under Secretary Betsy DeVos, she said, ED has failed to implement rules established to protect consumers from the worst-performing schools, neglected to intervene when schools are putting students and taxpayers at risk, reinstated the troubled Accrediting Council for Independent Colleges and Schools (ACIS), failed to oversee low-quality career programs and failed to comply with a federal judge’s order to quickly provide relief to defrauded students.

Some schools are gaming the system by pressuring students at risk of default to put their loans in forbearance, said Melissa Emrey-Arras, director of education, workforce and income security issues at the U.S. General Accountability Office.

Some proprietary schools sent letters telling borrowers that was their only option, Emrey-Arras said. In one instance, a consultant to a for-profit school was “out-and-out lying to borrowers,” telling them they would lose access to food stamps if they defaulted.

She urged Congress to fix that metric. And despite the GAO’s recommendations urging ED to improve its College Scorecard, ED has not made meaningful changes, Emrey-Arras told the subcommittee.

Students defrauded

Rep. Mark Takano (D-California) noted that after Corinthian Colleges shut down in 2015, many former students are still waiting for loan relief and yet the school avoided sanctions.

Ortega suggested rethinking the role of the triad, and giving states more responsibility to ensure the quality of higher education institutions. He recommended uniform accountability standards across the states and said states should add more criteria around financial aid.

Poor accountability measures have a particularly negative impact on minority-serving institutions, said Nicolas Hillman, an associate professor at the University of Wisconsin-Madison. He called for more transparency. Too often, accreditors identify problems or know about dire financial problems “and leave students in the dark,” he said.

Wary of risk-sharing

Hillman cautioned against risk-sharing proposals from congressional Republicans, including some types of performance-based funding system. Colleges that have the most resources usually get the most funding under those systems, he said.

Rep. Suzanne Bonamici (D-Oregon) noted that ACIS, the accreditor that oversaw several unscrupulous proprietary schools that eventually failed, let them operate for too long after serious problems emerged. She expressed concerns that ED is going in the wrong direction by providing more flexibility and less oversight.

“The Education Department has a duty to protect students and taxpayers from bad actors,” said Rep. Andy Levin (D-Michigan). But under DeVos, colleges would be allowed to outsource huge swaths of their programs to unaccredited providers – and students wouldn’t even know, he said. Those schools could operate completely in the shadows.

“This proposal sounds like a shell game,” Levin said.

About the Author

Ellie Ashford
is associate editor of Community College Daily.