September 10, 2013

Durbin to Duncan: Time to Crack Down on For-Profit Medical Schools That Use Offshore Loophole

Bloomberg investigation reveals troubling statistics about foreign medical schools owned by DeVry that qualify for millions in federal funding without US accreditation

[WASHINGTON, DC] – In a letter to Education Secretary Arne Duncan, U.S. Senator Dick Durbin (D-IL) raised the alarm about foreign medical schools that are not accredited by approved U.S. accrediting bodies, but are still eligible for federal Title IV funds due to a 1992 loophole that allowed a small number of these schools to qualify for federal funding under lower standards than other foreign medical schools.

 

An investigative report that appeared today in Bloomberg Markets Magazine highlighted two foreign medical schools owned by DeVry, Inc. – American University of the Caribbean School of Medicine (AUC) and Ross University School of Medicine – which admit hundreds of students, many of whom were rejected by U.S. medical colleges.  According to the report, when compared to their U.S. counterparts, these students:

 

  1. Amass considerably more debt: Students at AUC accumulated an average of $253,072 in federal student loan debt as of June 2012 compared to an average of $170,000 for 2012 graduates of U.S. medical schools.  The U.S. figure accounts for debt incurred for undergraduate or other degrees, while AUC’s number is only federal medical school loans.
  2. Drop out at much higher rates:  the average attrition rate at U.S. medical schools was 3% for the class that began in the fall of 2008 while DeVry’s rate ranges from 20% to 27% - of those remaining only 66% of AUC students and 52% of Ross students finished their program. 
  3. Have much less success finding jobs to pay back those loans after college: While 76% of Ross students who applied for residency in 2013 earned places, 79% of AUC students that applied were matched.  Comparatively, 94% of fourth-year students schooled in the U.S. landed a first-year match in 2013.

 

“What’s more, it is reported that these schools actually pay U.S. hospitals for slots in training hospitals – a practice the American Medical Association worries will disrupt medical education in the United States.”  But, Durbin wrote, “Perhaps most troubling of all is that these schools are not accredited by Department-approved bodies and not required to meet the standards of other foreign medical schools, but are still eligible for federal Title IV funds.  The Bloomberg article reported that in 2012, DeVry’s two foreign medical schools raked in more than $300 million in federal funds.  It is my understanding that they are able to do this because of a 1992 loophole that allowed a small number of foreign medical schools to qualify for federal funds under lower standards than other medical schools.  If this is true, it seems to allow these schools access to millions in federal funds with little to no oversight or accountability.”

 

Text of Durbin’s letter to Duncan is below:

 

September 10, 2013

 

The Honorable Arne Duncan

Secretary

Department of Education

400 Maryland Ave, SW

Washington, DC 20202

 

Dear Secretary Duncan:

 

I write to ask you to respond to allegations made in an article entitled “DeVry Lures Medical School Rejects as Taxpayers Fund Debt” that ran in Bloomberg Magazine.

 

This troubling piece explains how two DeVry-owned foreign medical schools, American University of the Caribbean School of Medicine and Ross University School of Medicine, prey on students who have been rejected by traditional U.S. medical schools.  These students are lured into massive amounts of debt – much higher than traditional schools – and receive very little to show for it by way of a useful degree.  What’s more, it is reported that these schools actually pay U.S. hospitals for slots in training hospitals – a practice the American Medical Association worries will disrupt medical education in the United States.

 

Perhaps most troubling of all is that these schools are not accredited by Department-approved bodies and not subject to the same standards as other foreign medical schools, but are still eligible for federal Title IV funds.  The Bloomberg article reported that in 2012, DeVry’s two foreign medical schools raked in more than $300 million in federal funds.  It is my understanding that they are able to do this because of a 1992 loophole that allowed a small number of foreign medical schools to qualify for federal funding under lower standards than other foreign medical schools.  If this is true, it seems to allow these schools access to millions in federal funds with little to no oversight or accountability.

 

As you work to develop effective new gainful employment regulations, I encourage the Department to look into this matter and to use whatever tools are at your disposal under the law to crack down on these practices.  If you do not have the authorities necessary, let me offer to be a partner in making the legislative changes needed to give you greater ability to protect federal tax dollars from those who seek to profit while their students struggle and many times fail.

 

I look forward to your prompt reply.  Thank you.

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