WASHINGTON – The for-profit college sector got a fresh lambasting Tuesday from members of the U.S. Senate committee that has been leading the charge for tighter controls over the proprietary schools they say are preying on minorities and the poor.
Though some new facts and figures got presented at the hearing—titled Drowning in Debt: Financial Outcomes of Students at For-Profit Colleges—in some ways the hearing conducted by the Senate Committee on Health, Education, Labor & Pensions, or the Senate HELP Committee, served as a platform to extol the virtues of community colleges and to lament what leaders of the Democratic-majority committee believed were shortcomings of the U.S. Department of Education’s newly-adopted gainful employment rule.
The controversial set of regulations—meant to deny federal aid to ineffective college programs that consistently leave students saddled with high debt—was released last week but doesn’t take effect until July 2012 and won’t render any programs ineligible until 2015 based on the schools’ performance in fiscal 2012 through 2014.
Some higher education observers fear that the political dynamics of the U.S. Congress, not to mention the White House, could radically shift by then and that a different administration could undo the rule, which requires institutions to have at least 35 percent of former students repaying their loans.
Schools could also meet the minimum threshold for gainful employment if the estimated annual loan payment of a typical graduate does not exceed 30 percent of the student’s discretionary income or if the estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings.
U.S. Senator Tom Harkin (D-Iowa), chairman of the Senate HELP Committee, which launched the series of hearings into for-profit colleges last summer, said the new rule was a “modest” step in the right direction, but repeatedly alluded to the need for longer lasting measures, such as federal legislation, in order to rein in “bad actors” within the for-profit sector.
“What does it say to you, after this rule was published, that stock prices of these larger for-profit schools soared?” Harkin asked U.S. Department of Education Under Secretary Martha J. Kanter, one of several witnesses who testified at the hearing.
