Over the years, U.S. Sen. Dick Durbin (D-IL) has been highly critical of for-profit colleges, which have come under increased scrutiny from local and federal agencies in the wake of various reports alleging deceptive practices in the recruitment or students in Illinois and around the country.
Numerous complaints against the industry have prompted Illinois government officials to take action. The state is currently monitoring, investigating and prosecuting 25 for-profit colleges.
Last year, Durbin wrote a letter to the Department of Education and urged the agency to investigate the practices of three for-profit education companies - Career Education Corporation (CEC), Education Management Corporation (EDMC) and ITT Tech.
“The collapse of Corinthian Colleges Inc. should be a wake-up call for the Department of Education and lead to earlier and more aggressive oversight of for-profit colleges,” Durbin wrote. “Unfortunately, Corinthian is not unique in the for-profit industry. Other major for-profit education companies, including CEC, EDMC, and ITT Tech, face a litany of investigations and lawsuits similar to Corinthian and are all on the department’s own Heightened Cash Monitoring list. The department must investigate these companies and aggressively hold them accountable for wrongdoing in order to protect students and taxpayers.”
In 2014, Corinthian Colleges, which owned several for-profit colleges, was investigated by state and federal agencies for falsifying job placement data used in marketing campaigns and skewing grades and attendance.
Corinthian Colleges reached an agreement with the Department of Education allowing the then-mega for-profit company to remain afloat while it gradually closed its more than 100 campuses in a manner that would not disrupt roughly 72,000 students enrolled in the institution. Under the agreement, the company was also allowed to continue to enroll new students at the various campuses that were still open.
Durbin wrote a letter to former Defense Secretary Chuck Hagel stating that Corinthian should not be allowed to enroll new students and community colleges should enroll the displaced students.
Durbin also wrote two letters to high school principals, counselors and teachers across the state asking for help to protect students from for-profit college abuses.
But supporters of for-profit institutions reject the notion that not-for-profit automatically means a better option for students.
Competitive Enterprise Institute (CEI) fellow Carrie Sheffield wrote an article defending for-profit schools. Referencing a study by a Northwestern University economist, Sheffield said “just 18 percent of associate-degree students and 12 percent of students enrolled in certificate programs at for-profits have nonprofit alternatives (certificate programs in the same field of study) in their ZIP code.”
Many students attend for-profit colleges because they provide nontraditional avenues to complete post-secondary education by offering an array of growing and emerging occupations, which translates to more options for students.
“Career colleges provide a successful channel to post-secondary education and upward mobility for at-risk nontraditional student populations at a lower true taxpayer cost than public institutions and private not-for-profit schools,” Kara Cheseby wrote in a report for the CEI.
In an effort to eliminate for-profit scams and curb mounting student loan debt, the U.S. Department of Education implemented gainful employment regulations that set minimum debt-to-income and loan-default rate thresholds on programs at for-profit schools, community colleges and nonprofit institutions. Programs that exceed the threshold would be at risk of losing their ability to participate in taxpayer-funded federal student aid programs.
The regulations went into effect last July.
The implementation of such regulations has raised concerns among many for-profit education advocates who feel the regulations are discriminatory because for-profit colleges, which depend heavily on taxpayer-funded student aid, are affected the most.
Cheseby said gainful employment regulations limit options for at-risk student populations and hurt the economy.
“Career colleges are criticized for their profit margins, yet these profits are almost always retained to allow the schools to expand into new programs, facilities, faculty and students,” Cheseby said. “Only four of the 14 publicly traded career college firms pay a dividend, which is generally a modest percentage of earnings per share.”
But the complaints plaguing for-profit colleges continue to grow. Last month, Illinois Attorney General Lisa Madigan’s office announced that education-related complaints made the top 10 list of consumer complaints in 2015 for the first time.