Dubrin Cautions Students Against For-Profit Colleges

SPRINGFIELD – Too many unscrupulous for-profit schools are taking advantage of students and federal taxpayers by taking enormous resources from the federal student loan program yet failing to provide quality education that leads to employment, U.S. Senator Dick Durbin (D-IL) said today at a roundtable discussion at Lincoln Land Community College.

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

Earlier this year, Durbin wrote to high school principals from across Illinois to call their attention to the often irresistible lure of for-profit colleges, many of which are facing increased scrutiny from federal and state regulators for a variety of abuses, including fraudulent marketing and recruiting practices, falsifying job placement rates, and predatory lending practices. Durbin asked the principals to make their students aware of all of their options for accessible, affordable higher education, including programs at community colleges and other not-for-profit institutions.

"I have heard too many heartbreaking stories of Illinois students, often low-income or minority students, who thought they were doing the right thing by signing up at a for-profit college. But after attending, many students find their dream has turned into a nightmare when they end up with a worthless degree that employers don't even recognize, credits that don't transfer, and almost twice the average debt of their fellow students who attended traditional public schools," Durbin wrote.

"Congress needs to get serious about this shameful industry. We have to provide better oversight and better protections for students when these companies rot from within. It’s important to make sure prospective students know all their options. Community colleges, like Lincoln Land, have a unique role in helping students get a quality, affordable education and training for a career. With tuition rates that average $3,260, versus a for-profit college at $26,986, community colleges often provide better value to students."

Today Durbin met with Dawn Thompson, a single parent from Athens, Illinois, and current student at Everest enrolled in online courses. Dawn was initially drawn to Everest by its claims of job placement upon graduation, flexible schedule and online classes. She earned a paralegal degree from Everest, but was unable to find a job in her field, and was left with more than $100,000 in student loan debt, both federal and private. Dawn felt her only choice was to go back to school to improve her chances of getting a good-paying job and to defer her loans. Now, back at Everest in their online Masters of Business Administration program, Dawn is further in debt and feels she was robbed of her financial freedom, as she will not be able to pay off her loans in her lifetime.

Durbin has been fighting for years for more federal regulations of for-profits schools, particularly Corinthian Colleges Inc. Corinthian has 107 campuses nationwide under the names of Everest Colleges, Heald Colleges and WyoTech, with about 72,000 students enrolled. As a company, Corinthian receives about 85 percent of its revenue, approximately $1.4 billion per year, from the federal government. But one in five Corinthian students who entered repayment on their federal student loans in 2010 defaulted. Under the Operating Agreement signed on July 3, by Corinthian and the Department of Education, Corinthian agreed to close 12 campuses. It will attempt to sell the rest of its 85 campuses within six months – including all six in Illinois. In response to a letter from Durbin and 11 other U.S. Senators, the Department has said that it would not approve sale of a Corinthian campus to another school if that school is currently under investigation by a state or federal agency.

In December 2013, Durbin asked the Department of Education to investigate reports that Corinthian had engaged in various misleading and fraudulent practices related to its job placement rates and marketing – including paying employers to hire their students on a short term basis and count it as a successful job placement. After five months without receiving a complete submission of the data requested, the Department of Education placed Corinthian on a higher level of scrutiny and announced it would delay Title IV disbursements. Corinthian announced it may not be able to survive the delay and saw its stock plummet to less than 25 cents a share.

In April, Durbin introduced the Proprietary Education Oversight Coordination Improvement Act with Senator Tom Harkin (D-IA). The bill would improve coordination between federal agencies that oversee the for-profit college industry. Through the establishment of an interagency oversight committee, the bill aims to improve aims to improve enforcement of federal laws and regulations while increasing accountability of for-profit colleges to students and taxpayers. U.S. Representative Elijah Cummings (D-MD), the Ranking Member of the House Committee on Oversight and Government Reform, has introduced the bill in the House of Representatives as well.

Additionally, as Chairman of the Senate Defense Appropriations Subcommittee, Durbin included language in the Department of Defense Appropriations Act, 2015 to help put an end to the for-profit industry’s predatory marketing campaigns and aggressive recruiting of servicemembers and their families.
This week, Durbin and six Senate colleagues sent a letter to President Obama, asking for increased oversight of the financial integrity of for-profit colleges.