New Efforts to Regulate For-Profit Colleges

The latest attempt to throw a collar on for-profit colleges is the The College Student Rebate Act of 2012. House Representatives John Tierney (D-Mass.) and George Miller (D-Calif.) put it in front of a congressional committee in mid-September.

Should the Act pass, it would require for-profit schools to devote 80% of their revenue to "educational and related expenses." If they fail to do so, the schools would be required to refund an amount equal to the margin by which they exceeded the cap.

Association of Private Sector Colleges and Universities (APSCU) President Steve Gunderson spoke against these latest proposed restrictions. If proprietary schools’ finances seem skewed toward non-academic expenditures more so than schools in other sectors, the reason is simple: They need to spend more money on recruiting, Gunderson says, to compete with non-profit and public universities that have high school guidance counselors to rely on for exposure.

For-profit schools must instead rely on “more traditional means of marketing and advertising,” according to Gunderson.

The problem is that many people regard these “traditional means” as predatory if not outright fraudulent.

Veterans are among those most vocal about the misrepresentative recruiting practices of for-profit colleges. Thousands of veterans reported that proprietary schools cheated them out of GI Bill money for their educations.

Legislators have fought to close a loophole in The Higher Education Act that makes those who qualify for money from the GI Bill and other federal assistance particularly profitable as enrollees at for-profit schools.

As The Education Trust explains, the loophole “incentivizes for-profit colleges to exploit American service members and veterans.” Student Veterans of America shut down over 40 chapters at for-profit colleges that make false claims to veteran friendliness.

Proprietary colleges goad their enrollees toward dishonesty, as well. The government conducted an undercover study in 2010, finding that that these schools encourage applicants to misreport their savings on FAFSA applications.

When Anna Pycior discussed this issue on Policyshop in July, she predicted that Senator Tom Harkin (D-Iowa)’s 800-page brick of a report on these and other treacheries “should be the final nail in the coffin of for-profit colleges.” Yet the industry continues to thrive at the bottom of this heap of documented evidence against them, and remains unscathed by any regulation in recent memory.

How do they do it?

Well, proprietary education is big business. They have enough pocket money to throw millions of lobbying dollars around Washington to puncture government regulation and settle their way out of lawsuits.