Feds Likely to Rein in For-Profit Colleges
By Charlene Crowell NNPA Columnist | 12/24/2013, noon
As higher education costs continue to increase faster than most consumers’ income, college loan debt has now topped $1.2 trillion. Even so, most consumers would agree that its cost is worth the chance to climb the ladder of economic mobility. One area where the cost may be too high, however, is at for-profit colleges where high-cost debt often leads to a degree with little or no chance of gainful employment.
Last month, the Federal Trade Commission (FTC) issued new guidance on deceptive practices by private vocational schools. It warned against misrepresenting teacher or enrollment qualifications, the nature of courses, the availability of financial aid, and the availability of jobs for graduates. Additionally, FTC’s Vocational School Guides addressed the use of deceptive diplomas or certificates, and placing classified ads that appear to be “help wanted” ads.
“The FTC’s new guidance on vocational schools identifies some of the most deceptive practices by for-profit colleges,” said Maura Dundon, the Center for Responsible Lending’s (CRL) Senior Policy Counsel. “For-profit colleges that mislead students about their expected salaries, job placement, or the quality of the education should take notice that they are violating the FTC Act. The guidance does not technically extend to all for-profit colleges, but it is a warning to the whole industry about deceptive recruitment.”
In 2012, for-profit colleges sued and were successful in overturning related Department of Education rulemaking affecting institutions offering career education programs. In response, the Department unfolded a thoughtful approach to engage various stakeholders in a negotiated rulemaking process.
Representatives from a cross-section of interests were appointed and charged to help the Department craft these gainful employment rules. Deliberations would include things such as repayment rates, caps on loan debt, default rates and borrower relief. A written reference guide was prepared and shared that identified related meeting dates, time requirements, rules of engagement and expected outcomes.
As expected, the negotiations were heated and the last scheduled negotiating session ended without consensus, as well as a threat of a lawsuit and two letters signed by more than 60 Members of Congress (MCs) with distinctly opposing views.
In fact, Rep. Elijah Cummings [D-Md.] showed up at the last rulemaking session to support the rulemaking effort and offered his perspective.
“We need these rules to ensure students get what they bargained for, an education that will help them find a good job in the field they study,” said Cummings. “Too many have left these schools with nothing to show for their time and money other than insurmountable debt. If these institutions are truly committed to educating students from under-served communities, they need to be equally committed to demonstrating positive outcomes for those students.”
Thirty-three of Cummings’ colleagues also supported a letter to the Department of Education that urged finalization of gainful employment regulation.
“More than ever, we need a rule that ends federal financial aid for programs that consistently leave students – our veterans, working parents, and other Americans struggling to build new lives – without decent incomes and with insurmountable debt,” stated the Congressional letter signed by Congresspersons from 16 states: Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Minnesota, New Jersey, Ohio, Tennessee, Texas and Washington State.
The Department of Education is expected to proceed with rulemaking even though the for-profit colleges continue to organize opposition. Any proposed rule will include an opportunity for public comment.
Everyone supporting more for-profit school regulation should make their voice heard. The level of public support expressed will only strengthen the likelihood of strong action. Every letter, brief or long, will help consumer protections. Additional information on the Department’s gainful employment negotiated rulemaking is available at: http://rspnsb.li/1cOU4AB.
Students that take on significant debt deserve a meaningful education that results in likely employment opportunities. Further, federal financial support should not go to schools that fail their students. Tell your Representative that a strong rule is needed to ensure fairness and real educational opportunity.
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.firstname.lastname@example.org.