House Panel Takes Up Oversight of For-Profit Schools

WASHINGTON (CN) – In a House subcommittee hearing Tuesday on the regulation of for-profit colleges, lawmakers across the aisle agreed that Congress needs to intervene against predatory behavior from private institutions like the now-defunct ITT Technical Institute and Argosy University.

“There are dreams and aspirations being dashed by these for-profit colleges,” Chairwoman Rosa DeLauro, D-Conn., said in her closing remarks, capping off testimony that focused on the number of students left with enormous debt and little to show for it when they leave certain for-profit schools.  

The House Subcommittee on Labor, Health and Human Services, Education and Related Agencies invited former for-profit college student Eric Luongo to testify about his experience at DeVry University.

Loungo, also a disabled veteran, said he received G.I. Bill educational assistance after being honorably discharged from the Navy. He believed he would attend college for web graphic design for free, but was pushed to fill out federal loan paperwork and sign promissory notes every year, and was left with over $100,000 in debt and a degree that couldn’t even land him a job.

Later in the hearing, Representative Katherine Clark, D-Mass., asked witness Robert Shireman, director of higher education excellence and senior fellow at The Century Foundation, if there is an adequate process for former students to file claims for relief in situations like the one Luongo faces.

Shireman said the Department of Education requires specific documentation for students with high debt guided by aggressive for-profit recruiters. Many, like Luongo, only have the memory of phone conversations allegedly meant to cut down on paper trails.

“I never thought I would be the subject of such predatory acts,” Louongo said. “As far as I know, it leaves me on the hook for $101,000 that, quite frankly, I’ll never be able to pay off.”

Corinthian College, shuttered in 2015, stands as one of the most potent cautionary tales in the realm of for-profit institutions. When Corinthian filed for bankruptcy, many of its stunned students were left with millions in student loan debt but no meaningful degree to find jobs to pay the loans off.

While some for-profit schools – like Monroe College, headed by witness Marc Jerome – are an exception, colleges like Corinthian made millions from loan money their students funneled in for tuition.

While there is a cap on federal subsidies for these colleges, they often find ways around it through veteran enrollment, as there is no such limit on money they receive from G.I. Bill assistance. As a result, these colleges often target veterans aggressively in their recruitment campaigns.

None of the witnesses who spoke Tuesday said they believed for-profit colleges should be done away with completely, but all discussed solutions to regulating them.

Jerome, president of Monroe College, suggested measuring which for-profits benefit the most from federal Pell grants, and how many of their students with them actually graduate.

Shireman recommended debt-to-income and other value measures, and also cautioned that Education Secretary Betsy DeVos’ deregulation tactics – like reinstating the Accrediting Council for Independent Colleges and Schools – are adding fuel to the fire.

U.S. Senator Dick Durbin, D-Ill., testified as a witness for the House panel, and told his fellow lawmakers to remember two numbers: nine and 34. Nine percent, he said, is the number of high school students who attend for-profit colleges, while 34 percent is the number of for-profit students who will default on their student loan debt.

“These hearings on this industry are so few and far between,” Durbin said, “and it’s a damn shame.”

While most in the hearing room Tuesday agreed something needs to be done to curb problems in the system, GOP ranking member Tom Cole from Oklahoma insisted there is value in having options for higher education outside public colleges.

He argued there is a balance to be struck between having options and regulating “unscrupulous actors.”

Both Cole and Jerome argued that non-profit and public universities also face similar issues of low graduation rates and huge loan debt for students. They asked why Congress would not regulate public institutions in the same way it regulates private ones.

Representative Andy Harris, R-Md., doubled down on this argument later while grilling witness Kevin Carey, vice president for education policy and knowledge management at New America.

Carey, for his part, insisted for-profits be held to a higher standard given their history of wrongdoing.

But Jerome defended his institution’s standing, telling the panel that calling all for-profits “predatory” was unfair.

“The regulatory framework that’s out there now isn’t working,” he said, adding that many public and nonprofit institutions wouldn’t pass the kinds of scrutiny – like graduation rates and post-grad debt measurements – proposed for for-profit schools.

Chairwoman DeLauro said that while she applauds the success of Jerome’s institution, she believes Congress needs “to be cognizant of what is happening overall in this industry,” condemning the swindling of students “on the government’s dime.”

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