Wednesday, October 15, 2014

14 Attorney Generals endorse legislation regulating for-profit schools

More than six months after a bill that would improve coordination and oversight of the for-profit college industry was introduced in the Senate and House, a number of state attorney generals have signed on in support.

Fourteen attorneys general sent a letter [PDF] of support to senators Dick Durbin, of Illinois and Tom Harkin, of Iowa, as well as representative Elijah Cummings of Maryland for their efforts in introducing the Proprietary Education Oversight Coordination Improvement Act in the Senate and House back in April.

The AGs are from a diverse group of states- Arkansas, Connecticut, Illinois, Iowa, Kentucky, Maine, Maryland, Mississippi, Missouri, Nevada, New Mexico, Oregon, Pennsylvania and Tennessee

Wisconsin’s AG, J.B. Van Hollen, is absent from this list despite the fact that thousands of students from Wisconsin have accumulated huge debts attending for-profit colleges and many of these schools have abysmal job placement and graduation rates. The Wisconsin’s Education Approval Board attempted to pass state standards for these schools in 2011, but their efforts were undermined by intense industry opposition and Governor Walker’s decision to dismiss three members of the governing Board.

The issue emerged in Wisconsin’s Attorney General race last week during a debate. When asked what they would change if elected, Jefferson County DA and Democratic candidate for AG, Susan Happ, said she would aggressively prosecute for-profit colleges that engaged in fraudulent activity while Brad Schimel, the Waukesha County DA and Republican candidate, said he would not.  

The Ag’s letter released Tuesday, October 7th said the that the proposed Act “is both timely and necessary as each of our offices have encountered far too many former and current for-profit school students who have been harmed by the dishonest and unethical practices of some for-profit institutions.”

The group says passage of the Act, which would create an interagency oversight committee to improve enforcement of federal laws and regulations as they pertain to the industry, will provide a mechanism to hold for-profit schools accountable for accepting billions of dollars in taxpayer money.

“There are some schools within the for-profit college industry that are more interested in getting their hands on federal student loan dollars than in educating students,” Kentucky Attorney General Jack Conway says in a news release. “The for-profit college industry lacks real oversight and accountability at the federal level, and this legislation will help prevent future abuses of the student loan system and keep for-profit schools honest.”

The proposed Proprietary Education Oversight Coordination Committee would consist of representatives from the Dept. of Education, Consumer Financial Protection Bureau, the Dept. of Justice, Securities and Exchange Commission, Dept. of Defense, Dept. of Veteran Affairs, Federal Trade Commission, Dept. of Labor, and Internal Revenue Service.

The committee would work with attorneys general at the state level to coordinate federal and state activities related to the for-profit college industry. Currently, several states, including Kentucky and California, are party to lawsuits against proprietary colleges for misleading students about job placement rates.

The group applauded the proposed bill’s proactive stance by warning prospective students about specific, allegedly predatory schools.

Each year the committee established under the bill would publish a warning list of schools that have engaged in illegal activities, had programs withdrawn or suspended and or have been proven to engage in abuse, unethical, fraudulent or predatory practices. The measure would arm students with information that could prevent them from falling into the debt-trap that has become the for-profit college industry.

“State Attorneys General across the country hear complaints from students who have attended for-profit schools,” the letter of support states. “The students are drowning in debt because they have huge student loan liabilities and no job to show for those huge debts.”

There have been several high-profile events and reports regarding the for-profit industry since the bills introduction several months ago.

In early summer, the Department of Education cut off the funnel of federal dollars received by Corinthian Colleges Inc, the operator of for-profit schools Everest University, Heald College and WyoTech. As a result, CCI agreed to sell or close the vast majority of its campuses across the country.

Back in September, the Consumer Financial Protection Bureau announced it was suing CCI for allegedly duping tens of thousands of student into taking out costly predatory, and often financially devastating student loans. The suit seeks to halt CCI’s practices and provide relief to students who have collectively taken out $569 million in school issued private student loans.

Also in September, ITT Education Services announced it was under increased scrutiny from Securities & Exchange Commission and the Department of Education for failure to provide financial statements.

The Proprietary Education Oversight Coordination Improvement Act currently awaits the consideration from Health, Education, Labor and Pension committee in the Senate and consideration from the Higher Education and Workforce Training committee in the House.

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