Senator slams for-profit colleges

Chicago Tribune
June 30, 2010
By: Katherine Skiba

WASHINGTON — Sen. Dick Durbin said Wednesday that legislation to strengthen regulation of for-profit schools was ahead, complaining that some of the schools leave students with whopping levels of debt and "worthless diplomas."

While many schools are good, the Illinois Democrat said, others are "raking in huge amounts of federal dollars" while persuading low-income students to mortgage their futures on degrees that will not attract high-paying jobs.

Durbin described a woman with $110,000 in student-loan debt and "purported" bachelor's and master's degrees — all from online study —who took a job with a Chicago nonprofit that helps poor children.

"She had never set foot in a classroom," he said, and her income left her unlikely to repay her loans.

Durbin, in remarks at the National Press Club, named the large chains — the University of Phoenix, Kaplan University and the Illinois-based DeVry University — but did not single any out for bad practices. Highlights of his talk:
  • With 2.6 million students, up from 673,000 in 2000, the for-profits represent the largest growing sector in higher education.
  • The University of Phoenix has 458,000 students, or more than all the Big Ten's undergraduates.
  • The schools, using aggressive marketing campaigns, tend to enroll women, many of them single parents, minorities, poor and first-generation college students. Military personnel and veterans also are increasingly admitted.
  • Students in the for-profits receive $26.5 billion in federal aid, a more than fivefold increase since 2000, and their loan default rate is high.
  • The schools have less than 10 percent of all college students, but collect nearly 25 percent of Pell grant dollars.
  • The schools heavily rely on federal grants and loans, some for almost 90 percent of their revenues.

Durbin said the recession, aggressive head-hunting and the failure of public colleges to meet demand has led to enrollment growth. But he said the Obama administration is drafting new rules that may cut federal aid to for-profits if their graduates have a high student-loan default rate.

He also said for-profits should release graduation and job-placement rates. He characterized his as a "difficult" fight, saying the schools had "bought all the lobbyists in town," including at least a half dozen of his former congressional colleagues.

At DeVry Inc., based in Downers Grove, senior vice president Sharon Thomas Parrott said the firm would give "careful consideration" to Durbin's comments.