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Press Release

May 29, 2014

Rep. Susan Davis Pushes Protections for Students Enrolled in For-Profit Colleges




WASHINGTON – Congresswoman Susan Davis (D-San Diego) joined her colleague Rep. Mark Takano (CA-41) and advocacy group Young Invincibles in calling on the Department of Education to strengthen accountability standards of for-profit schools and put stronger protections in place for-profit college students.

“I have heard far too many stories about for-profit schools luring in vulnerable populations with false promises,” said Davis, a senior member of the House Committee on Education and the Workforce. “Instead of getting ahead, many of these students end up slipping behind with insufficient degrees, or no degrees, and drowning in debt. We need to help protect students from being preyed upon by for-profit schools.”

The Department of Education has proposed a “gainful employment” rule to ensure students attending for-profit schools become job-ready and financially secure.  Davis, her colleagues and the advocates want the rule to be as strong as possible by setting high standards for career education programs, closing loopholes for programs with high borrowing and dropout rates, and ending funding for career education programs that target students for their federal aid dollars, like veterans and service members.

Service members and veterans can be particularly vulnerable because for-profit schools have a strong incentive to enroll service members and veterans. This is a result of the “90/10 rule” created when the Higher Education Act was amended in 1998.

The rule requires a for-profit school to obtain at least 10 percent of its revenue from a source other than Title IV education funds, the primary source of federal student aid.  Since Tuition Assistance and the G.I. Bill are not defined as Title IV they count toward the 10 percent requirement, similar to private sources of financing.

This incentivizes for-profit schools to attract service members and veterans who then need to take out private loans, as federal assistance doesn’t cover the full cost of tuition.  This can subject the student to a large debt without the high-quality education they were expecting.

A report by the Senate Committee on Health Education Labor and Pensions showed that one in every four students who enroll at a for-profit school default on their loans within three years of leaving. For-profit students account for almost half of all loan defaults.

Not every for-profit school is guilty of this poor behavior.  Davis said she has spoken with many veterans who have received valuable certification from for-profit institutions and that she has met with some employers who look to hire their graduates.

“One thing we need to work on is finding a way of separating the bad apples from the good,” concluded Davis.
 



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