We have a public and economic interest in making sure that students have access to affordable higher education that will give them the skills they need to get good-paying jobs. Unfortunately with many for-profit colleges, this isn’t happening. This bill simply requires that the State Board of Education assess student outcomes and ensure that Maine students are treated fairly.
Senator Langley, Representative Kornfield, and Members of the Joint Standing Committee on Education and Cultural Affairs:
My name is Jody Harris and I am the associate director for the Maine Center for Economic Policy, or MECEP. MECEP is a nonpartisan research and policy organization dedicated to improving economic opportunity for working families by advocating for fairer tax policies, for access to education, health care, and livable wage jobs, and for critical investment in government programs and services on which Maine people rely.
I am testifying today in favor of LD 1404, An Act to Ensure the Integrity of For-profit Colleges.
For-profit colleges grew steadily in the 1980s and 1990s resulting in part from state budget cuts to higher education that stagnated our public institutions. Following the deregulation of Wall Street, their numbers exploded as banks invested in this industry.
Despite their popularity, for-profit college performance was poor and accusations of fraud were widespread. In 2012, the Health, Education, Labor, and Pensions Committee in the U.S. Senate investigated the schools. Their report, the Harkin Report examined the then 30 largest for-profits and found that for-profit colleges were up to six times more expensive than their public counterparts, with the majority of their revenues―much of it derived from federal tax dollars―being spent on CEO salaries and advertising.
For-profit colleges get the bulk of their revenue from federal Title IV loans, Pell Grants, and the GI Bill. To access these funds, for-profit schools target and enroll women, students of color, and poor students for whom these federal grants are designed. And, as a result, the high rates of borrowing and large debt loads for students attending for-profit colleges disproportionately impact these vulnerable populations.
A recent study by the Center for Responsible Lending, a national advocacy organization, looked at rates of borrowing and repayment at for-profit colleges in Maine and the results are damning. Whitney Barkley-Denney, a policy counsel with the Center for Responsible Lending, is here to discuss their study. In order to avoid repeating her testimony, I will focus my testimony on how this bill creates oversight of for-profit colleges in the state.
In order for institutions of higher education to access Title IV Pell Grants and Student Loans, they must be accredited and receive state approval. LD 1404 would increase oversight by the State Board of Education, by requiring that they evaluate metrics related to student outcomes for for-profit schools applying to operate or to renew their approval in Maine.
The bill improves standards for for-profit schools in Maine in three ways. First, it requires that schools disclose how much they spend on advertising and CEO salaries vs. instruction. Evidence clearly shows that student lose when institutions spend excessively on advertising and CEO compensation. In one glaring example, the for-profit University of Phoenix paid $154 million over 20 years for the naming rights to the Cardinal Stadium; resources that would have been better spent on meeting student needs.
Second, the bill requires that schools are evaluated for the performance of their students―including graduation rates, job placement rates, and loan repayment rates. Importantly, this bill creates a definition for job placement and, specifically, for placement “in the field”. Without such definitions, it is hard for a prospective student to know if the job placement rate being quoted by the school is legitimate or not. EDMC, a for-profit college corporation which includes the Art Institutes, famously paid the largest whistleblower settlement in history―about $200 million―for falsely inflating their job placement rates.
Finally, this bill requires that programs, not just institutions, are properly accredited. Currently accreditation doesn’t extend to the program level. This would prevent programs like the shuttered InterCoast College nursing program, where students paid more than $30,000 for a nursing program that didn’t lead to licensure, from opening in Maine.
We have a public and economic interest in making sure that students have access to affordable higher education that will give them the skills they need to get good-paying jobs. Unfortunately with many for-profit colleges, this isn’t happening. This bill simply requires that the State Board of Education assess student outcomes and ensure that Maine students are treated fairly.
I urge you to support LD 1404.
[pdf-embedder url=”https://www.mecep.org/wp-content/uploads/2017/04/LD1404_for-profitcolleges.pdf”]
