Continuing Congress’s scrutiny of for-profit colleges, Sen. Dick Durbin, Democrat of Illinois, argued at a forum he held in Chicago on Tuesday that “there are too many schools taking advantage of students and making money hand over fist.”
The forum, which featured testimony from two former students and the leaders of three major for-profit higher-education companies and two traditional colleges, covered much of the same ground as recent hearings held by the Senate education committee in Washington, according to Wall Street analysts who attended the event. The two students described being misled about their programs’ accreditation status and their job prospects, while the corporate executives defended their institutions and warned against a rush to regulate the for-profit sector.
A recording of the forum is available on Senator Durbin’s Web site.
Like Sen. Tom Harkin, Democrat of Iowa, the chairman of the Senate education committee, Senator Durbin voiced concerns about the sector’s aggressive recruiting tactics and heavy dependence on federal student aid. He dismissed the colleges’ argument that the higher-than-average default rates for students of for-profit colleges are due to the sector’s demographics and expressed outrage at the high costs of for-profit culinary programs.
During the question-and-answer period, Senator Durbin grilled the chief executive of the Career Education Corporation about the morality of charging $40,000 for culinary programs that prepare students for $10-an-hour jobs, calling the programs a “federally subsidized rip-off.” He also confronted the president of Kaplan University and the chief executive of DeVry Inc. about their students’ low loan-repayment rates.
“The loser is not only the student, but the taxpayer,” Mr. Durbin said, according to an analyst with the investment-banking firm Signal Hill who attended the hearing. “You are enticing students into debt where they lose and you win,” the senator said.
Mr. Durbin proposed that for-profit colleges be required to bear some of the risk on government loans made to their students and called for an end to the practice of allowing for-profit colleges to acquire accreditation by purchasing nonprofit institutions. He also proposed an examination of how much federal aid the colleges spend on marketing campaigns.
It’s unclear how much influence Mr. Durbin will ultimately have in the debate over for-profit colleges, however. While the senator holds a key leadership post in the Senate, he does not serve on the committee that would consider any legislative changes for the sector.
For-profit colleges got some moral support at the hearing from a group of students from the Illinois Institute of Art, who stood outside the forum carrying signs that read “‘Gainful employment’ rule discriminates against my school.” The Education Department’s proposed gainful-employment rule would cut off federal student aid to programs where students have high debt-to-income ratios and low loan-repayment rates.
During the hearing, Mr. Durbin said he had approached one of the students and asked how much his program cost and what he thought he could make at his first job out of college. The student told him that his two-year culinary program would cost $54,000 and that if he was lucky, he could make $30,000 in his first job.
