April 3, 2014

Durbin, Harkin, Cummings: More Coordination Needed in Federal Oversight of For-Profit College Industry

Senators propose committee to improve enforcement of federal law and increase for-profit college accountability to students and taxpayers

U.S. Senator Dick Durbin (D-IL) and Chairman of the Health, Education, Labor and Pensions Committee U.S. Senator Tom Harkin (D-IA) today introduced legislation that would improve coordination between federal agencies that oversee the for-profit college industry.  Through the establishment of an interagency oversight committee, the Proprietary Education Oversight Coordination Improvement Act - which will be introduced in the House of Representatives by U.S. Representative Elijah Cummings (D-MD), the Ranking Member of the House Committee on Oversight and Government Reform - aims to improve enforcement of federal laws and regulations while increasing accountability of for-profit colleges to students and taxpayers. 

 

“For many years, for-profit schools were allowed to operate one step ahead of the law.  As the number of investigations by federal, state and local agencies increase, however, I think we are starting to turn the corner,” said Durbin. “With so many agencies involved in these oversight efforts it is important that they are effectively working together to hold these schools accountable to taxpayers who often subsidizes up to 90% of their operations and to students who ultimately are the victims of their schemes.  Better coordination will help regulators prevent the ongoing fraudulent and abusive practices of this industry that rakes in more than $25 billion in federal dollars every year.” 

 

“Far too many students seeking the American dream are instead enrolling in schools that leave them with worthless degrees and burdensome debt.  We need to do more to ensure that students attending these schools are receiving a quality education—one  that justifies the billions of dollars taxpayers are spending each year,” Harkin said. “This legislation is common sense.  Federal and state agencies must work together to ensure that these schools are held accountable to students and taxpayers—not just shareholders.  I look forward to working with my colleagues to move this important effort forward.”

 

“Congress must ensure that for-profit schools use the significant federal resources they receive to provide educational instruction that will enable students to achieve their goals and better their lives.  The streamlined oversight created through this legislation will combat the deceptive practices common in this industry and help students enrolled in these schools get what they – and, frequently, taxpayers – are paying for,” said Cummings. “My work will not stop until these students and our investment in these schools are protected.”

 

The Durbin-Harkin-Cummings bill would require the formation of an interagency committee - the Proprietary Education Oversight Coordination Committee - made up of representatives from the following agencies: the Department of Education; the Consumer Financial Protection Bureau; the Department of Justice; the Securities and Exchange Commission; the Department of Defense; the Department of Veterans Affairs; the Federal Trade Commission; the Department of Labor and the Internal Revenue Service.

 

Five for-profit colleges are currently under investigation by at least one of four federal agencies according to a report in the Chronicle of Higher Education.  The report also finds that ten for-profit colleges are under investigation by at least one of the 22 states attorneys general that currently have an investigation open into a for-profit college including Career Education Corporation, Corinthian Colleges Inc. Education Management Corporation and ITT which are under investigation in 17, 20, 17 and 16 states respectively.

 

The Proprietary Education Oversight Coordination Improvement Act requires the committee to:

 

  • Hold quarterly meetings as a group and annual meetings with State Attorneys General to coordinate federal and state activities related to for-profit school oversight;

 

  • Publish a whole-of-government report on the for-profit college industry in order to compile, in one place, student complaints, data about student outcomes and financial information related to executive compensation, marketing and other metrics;

 

  • Publish a warning list of schools that have engaged in illegal activities or for which there is sufficient evidence of widespread or systemic abusive, unethical, fraudulent or predatory practices.

 

The for-profit college industry receives more than $25 billion in federal dollars which is enough funding to make it the ninth largest federal agency.  While they enroll only about 10% of all college students, they take in 20% of the Department of Education’s federal student aid funds and account for a disproportionate 46% of student loan defaults.

 

Durbin and Harkin have been working together since 2009 to protect students from the predatory practices of the for-profit college industry.  In November 2013, they reintroduced legislation in the Senate that would help put an end to the for-profit industry’s predatory marketing campaigns and aggressive recruiting of veterans, servicemembers and their families.  The Protecting Our Students and Taxpayers (POST) Act, which U.S. Representative Steve Cohen (D-TN) introduced in the House of Representatives, would eliminate the loophole that allows these publicly traded companies to receive more than 90% of their revenue from the federal government.  More information on that legislation can be found HERE.

 

Cummings has done significant work to investigate the practices of for-profit colleges, including an investigation into the compensation packages of top executives at these institutions. Cummings requested copies of compensation agreements for senior executives at 13 for-profit schools to determine whether salaries, bonuses, and other compensation are appropriately tied to the performance of students they educate.

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