Inquiry Is Sought Into Practices of For-Profit Colleges

The New York Times Tamar Lewin reports:

Concerned about the disproportionate share of federal student aid flowing to for-profit colleges, several Democratic lawmakers on Monday asked the federal Government Accountability Office to investigate the for-profit institutions, in terms of both quality and finance.

“Recent press reports have raised questions about the quality of proprietary institutions,” said the letter signed by the chairmen of the Senate and House education committees and others.

“These questions stem from the rapid growth of this industry over the last few years, reported aggressive recruitment of students by such institutions, increased variety in the delivery methods used to provide education to students, and the value of the education provided by such institutions.”

Republicans had mixed responses to the request.

“There may be bad players in this industry, but for-profits also provide very necessary services for rural people, and for people learning certain trades,” said Steve Wymer, a spokesman for Republicans on the Senate Committee on Health, Education, Labor and Pensions. “We need to look for ways to improve the bad players, but not cast a wide net over the industry.”

For-profit colleges have less than 10 percent of the nation’s college students, but get about 25 percent of all federal student-aid disbursements.

With for-profit colleges taking in $26.5 billion in federal money last year, up from $4.6 billion in 2000, government scrutiny is becoming intense.

Last week, at a hearing of the House Education and Labor Committee, the Department of Education inspector general raised concerns about how accrediting agencies oversaw college credit hours, which determine how much federal aid students can get.

On Thursday, the Senate committee will hold the first in a series of hearings on for-profit colleges.

Meanwhile, the Department of Education last week proposed a regulatory package requiring greater disclosure by for-profit colleges, and tightening the rules against paying recruiters by the number of students they sign up.

The department is still working on a controversial proposal to cut off federal aid to for-profit programs whose graduates do not earn enough to pay off their loans.

Monday’s letter asked the accountability office to gather information on the growth of the institutions, their governance, and the kind, and quality, of programs they provide — along with students’ outcomes, completion rates, professional licensure rates, job placement rates and indebtedness.

In the letter, the lawmakers asked the accountability office to explore whether existing safeguards adequately protect against waste and fraud, and to make recommendations based on its findings.

The letter was signed by five Democrats: Representative George Miller of California, chairman of the House education committee; Senator Tom Harkin of Iowa, chairman of the Senate education committee; Senator Richard J. Durbin of Illinois; and Representatives Timothy H. Bishop of New York and Rubén Hinojosa of Texas.

The full text of the letter is below.

Gene L. Dodaro
Acting Comptroller General
U.S. Government Accountability Office

Dear Mr. Dodaro:

We write to request that the Government Accountability Office (GAO) conduct a review of the for-profit or “proprietary” postsecondary education sector and the sector’s share of revenue derived from Federal student aid funding. The federal investment in the proprietary sector is significant. While this sector accounts for less than 10 percent of total enrollments, it accounts for roughly 25 percent of all Federal student aid disbursed.

Recent press reports have raised questions about the quality of proprietary institutions. These questions stem from the rapid growth of this industry over the last few years, reported aggressive recruitment of students by such institutions, increased variety in the delivery methods used to provide education to students, and the value of the education provided by such institutions.

On March 30, 2010, President Obama signed the Health Care and Education Reconciliation Act into law. That legislation expanded student aid opportunities for students, including an historic $36 billion investment in the Pell Grant program. The increased availability of Federal student aid, coupled with the significant growth of the proprietary sector, raises the issue of whether current safeguards are sufficient to protect the best interests of students and ensure that the nation’s taxpayers are achieving the best possible return on their investment.

In conducting its review, we are particularly interested in GAO examining:

· The growth and change in the postsecondary education sector over the last several years, including changes in the structure and governance of institutions, recruitment practices, and the type and delivery of educational programs provided;
· What is known about the quality of educational programs offered by proprietary institutions and the outcomes for students attending such institutions, such as program completion rates, professional licensure rates, job placement rates, and student loan indebtedness;
· Whether existing program integrity safeguards are sufficient to protect against waste, fraud and abuse in the Federal student aid programs; and
· The extent to which proprietary institutions’ revenue is comprised of Federal student aid offered under Title IV of the Higher Education Act as well as other Federal funding sources.

Finally, based on your review, we request that you provide any recommendations you believe may be warranted.