Later this month, millions of students will be returning to college while others will be attending for the very first time. While the cost of college has put a strain on the bank accounts of millions of American families, some for-profit colleges are making a killing – while killing the career hopes of the students they’re supposed to serve.
During the recent Great Recession, millions of Americans enrolled at for-profit colleges with hopes of becoming more employable. Annual revenues at these institutions grew more than 600 percent from 2000 to 2011, reaching $32.7 billion. As of 2017, more than 1 million students were enrolled in such schools. For-profit colleges market to and attract a disproportionate number of veterans and students of color, with African-Americans and Latinos making up almost half their enrollment.
Yet, only one-in-four students who enrolls in a four-year for-profit school actually graduates within six years while for not for profit colleges, roughly 60 percent do. And while for-profit schools make up only 13 percent of all college students, they account for 47 percent of student loan defaults.
This is a problem not just for those students and their families but for taxpayers as well. Billions of dollars that are spent to educate Americans and strengthen our workforce are being paid instead to schools that aren’t doing their job. On average, federal funding under Title IV of the Higher Education Act accounts for 70 percent of for-profit college revenue. By the end of last year, students enrolled in for-profit colleges cumulatively owed $245.6 billion in debt.
Largely because of the huge growth in loan debt, more than 270 for-profit schools in communities across the country are under financial scrutiny by the U.S. Department of Education. One such school was the Illinois Institute of Art (IIA), located in Schaumburg. Last year that school closed without warning – leaving hundreds of local students at a loss.
At a May hearing on the subject before the House Oversight Subcommittee on Economic and Consumer Policy, which I chair, former-IIA student Richard J. Infusino told members of our subcommittee: “My life has been turned upside-down by a school that cared more about making money than looking out for students. My career plans are on hold. I’ve lost thousands of dollars, and I’ve lost faith in the system that is supposed to protect students like me.”
Spurred by the 2015 collapse of Corinthian College, the largest for-profit school at the time, the Obama administration attempted to crack down on bad actors in the for-profit sector. One such step was to strengthen loan regulations that forgave the debts of defrauded students who did not receive the education they were promised. Unfortunately, the Trump administration has moved to rescind those regulations and taken other steps to protect the interests of for-profit colleges rather than the students they’re supposed to serve.
President Trump’s handpicked Secretary of Education, Betsy DeVos, has a long history of supporting for-profit schools in her home state of Michigan and elsewhere – many of which have failed to meet accountability standards. Secretary DeVos then appointed Diane Auer Jones, who came from the for-profit industry, as her senior policy adviser. Just last month, the New York Times reported that Auer and other DeVos aides had “pulled strings” for failing for-profit colleges — including Dream Center Education Holdings, which operated the Illinois Institute of Art.
As parents and students dig deep this month to pay for another year of college, our federal government should be making sure that for-profit schools are providing the educational opportunities they’ve promised. That’s why I will soon be introducing with my colleague Rep. Mark Takano (D-Calif.) the “Protecting Students from Worthless Degrees Act.” Our legislation would simply require that all higher education programs, including for-profits, meet any federal or state accreditation and licensing requirements necessary for graduates to enter their intended occupation. Institutions that fail to meet these requirements would no longer be eligible for federal student financial assistance, including Pell Grants, Stafford Loans or benefits under the G.I Bill.
This new law would protect students and taxpayers alike. Education is one of the most important investments that families make in their children and that taxpayers make in our country’s future. We must ensure that those resources are being used for the purpose they’re intended – not to benefit fraudulent institutions and profiteers.
Raja Krishnamoorthi chairs the House Oversight Subcommittee on Economic and Consumer Policy and represents the 8th District of Illinois.