In NCLC’s January 2012 report, “State Inaction“, we called on state regulatory agencies and Attorney Generals to challenge for-profit school abuses in their states. State action is an important complement to effective federal oversight.
Fortunately for students, there are many signs of increased interest at the state level. Attorney General Jack Conway of Kentucky has been leading a multi-state effort to investigate consumer protection violations by for-profit colleges. Recent examples of state action include a lawsuit filed by Illinois Attorney General Lisa Madigan against Westwood College for alleged deceptive practices. Madigan’s lawsuit alleges that, through marketing its criminal justice program, Westwood falsely convinced students they could pursue a law enforcement career with agencies such as the Chicago Police Department, Illinois State Police and suburban police departments, even though those employers don’t recognize a Westwood degree due to its lack of regional accreditation. Leigslators in California are also contemplating a “crackdown” on abuses in the for-profit sector.
On February 23, Senator Harkin released new data from the Department of Defense showing that for-profit colleges received half of all military Tuition Assistance (TA) funds–$280 million out of $563 million spent last year on the program that gives service members the opportunity to take college classes while on active duty.
There have been numerous reports of for-profit schools targeting service members, due at least in part to the schools’ efforts to comply with the so-called “90-10 rule”. This is a federal law barring for-profit schools from receiving more than 90% of their revenues from Department of Education federal student aid. Because GI Bill funds and Department of Defense Tuition Assistance are counted as private dollars (i.e. in the 10% category), many schools actively recruit service members as a way of beefing up the revenues they can report in the 10% category. This is not the only way schools have sought to comply with the 90-10 rule. For example, we released a report last year showing how many schools have started offering their own private loan products. They offer these products despite knowing that a very high percentage of the loans will fail in order to generate revenues to place in the 10% category. It is worth it to the schools even if a majority of the loans fail because otherwise they might lose eligibility to participate in the lucrative federal aid programs.
Senator Durbin recently introduced legislation that would amend the 90-10 rule so that for-profit schools would be required to derive not less than 15% of their revenues from sources other than federal funds. It would also broaden the category of “federal funds” to include most Department of Defense aid. Senator Carper recently introduced similar legislation.
To get a better understanding of this issue, we recommend a January 2012 Huffington Post article written by Tressie McMillan Cottom, a PhD student at Emory University and former employee at two for-profit colleges. According to Cottom, the aggressive tactics used by many for-profit schools to target prospective students’ fears insinuates that for-profit school students are “lazy and stupid.” In countering this characterization, Cottom describes the students she worked with: “But the students I worked with were not lazy, unmotivated, or stupid. They understood the value of education. They were aspirational and, yes, they were often desperate. But lazy people do not take two buses with a stroller to make an admissions appointment, as did many of my students. Lazy people do not pay enollment fees in small cash, collected from tips and family donations. They do not summon the courage to ask their ailing grandmother to cosign for a student loan. ”
The efforts to challenge abuses at the federal and state level can help ensure that these students have real opportunities to succeed.