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For-profit Higher Education
In public records and interviews, a Star investigation found more than 200 consumer complaints about TCN filed to the Indiana attorney general since 2013, plus almost 100 in Ohio, Texas and Florida. They allege deception or outright fraud by salesmen, and high-pressure sales tactics to entice people to sign for thousands of dollars in up-front purchases financed by long-term personal loans.
Iraq and Afghanistan veterans have flocked to for-profit colleges, including a troubled chain that is closing or selling its campuses amid a series of federal and state investigations. A report to be released Wednesday from the office of Sen. Tom Harkin, D-Iowa, a critic of the for-profit education industry who chairs the Senate Education Committee, finds that for-profit colleges received $1.7 billion in Post-9/11 GI Bill benefits in the 2012-2013 school term. About a quarter of benefits paid under the program went to the for-profit sector.
Eight big for-profit-college companies received nearly a quarter of all the money spent on Post-9/11 GI Bill benefits in 2012-13, says a report released on Wednesday by Sen. Tom Harkin and the Senate education committee's Democratic majority. And even as the for-profit colleges’ overall enrollments fell from 2009 to 2013, the document asserts, their enrollments of veterans "dramatically increased."
Legislation designed to prevent for-profit colleges from gaming the federal aid system and exploiting veterans died within 15 minutes of being introduced this month. U.S. Rep. John Kline of Minnesota, the Republican chairman of the House Committee on Education and the Workforce, quashed the bill by ruling it non-germane to the topic of financial aid being discussed at his July 10 hearing.
These are hard days for most for-profit colleges. Declining revenues and an ongoing regulatory crackdown has led to speculation that some in the sector -- including one of the major, publicly traded companies -- will go nonprofit to get out of the crosshairs.
In the years before the mortgage crisis, financial regulators often looked the other way as banks and other lenders pursued reckless activities that cost investors, taxpayers and borrowers billions of dollars. When trouble hit, these regulators had to scramble to fix the mess that their inertia had helped create. This same dismal pattern is now playing out in the for-profit education arena.
Senate Minority Leader Mitch McConnell (R-Ky.) seemed to have little sympathy for students who have accumulated massive amounts of student debt during a town hall with constituents last week. Instead of looking to the government to forgive their debt, he said, they should start looking at schools that are cheaper.
The US Department of Education wants to improve the chances that students at for-profit colleges come away with a reasonable likelihood of “gainful employment in a recognized occupation.” But the department’s proposed regulatory changes that would strip federal student loan aid from millions of students are more likely to invite lawsuits than to prompt serious changes in how people with limited access to mainstream colleges and universities prepare for careers.
The U.S. Department of Education has a special unit to track the finances of for-profit colleges at risk of suddenly closing, and it even trained staff members this year to use a new service that provides real-time information on publicly traded education companies. Yet despite all that, the department has said it didn’t know how shaky the financial ground was under Corinthian Colleges Inc. when it temporarily turned off the spigot of federal financial aid to the company in mid-June.