Is comeuppance ahead for predatory colleges?

02/13/2014 5:42 PM

02/15/2014 6:04 PM

One needn’t look too far to find alumni of the sector of higher education known as the for-profit colleges.

In the happiest scenario, a graduate of one of these programs may show up at your house to repair your air conditioner, or visit your business to deal with a computer problem. Trade schools have their success stories, and they are eager to have us know about them.

But too often you’ll find former students staffing the drive-through windows of fast-food restaurants, while shouldering massive amounts of student debt.

A Kansas City Star reporter last week found a for-profit college graduate at the City Union Mission. Shelley Riley, a 38-year-old single mom, explained that she finished four years of training to be a medical assistant with $60,000 worth of loans and no prospects of a job in a medical office. She lost the part-time job that had sustained her through her years as a student, and sought refuge at the shelter.

The abusive practices of this sector have been well documented. They recruit low-income students, many with questionable academic abilities, and help them obtain federal grants and loans. They hold out the promise of jobs that are unlikely to materialize at salaries that will never be attained.

Deception is rampant. There is no way Riley should have been able to pile up $60,000 worth of loans to train to be a medical assistant. Jobs in that field start in the neighborhood of $10 an hour.

The for-profit sector receives about one-fifth of federal grants and loans available to help people pay for college. It is responsible for almost half of all student loan defaults.

Everybody takes it on the chin except for the schools themselves. They collect their money regardless of the student’s success or failure.

How is this permitted to go on?

Well, the for-profit companies have been as aggressive about lobbying Congress and other officials as they are when recruiting students. They beat back efforts by President Barack Obama’s administration to enact a meaningful “gainful employment” rule, meaning colleges would have to offer programs that enable a reasonable percentage of students to find jobs and repay their loans.

And although Obama and his education secretary, Arne Duncan, have publicly called attention to the for-profit sector’s poor results, neither U.S. attorneys nor bureaucrats in the Department of Education have shown much inclination to take on the schools. Federal regulations give the education department authority to deny Title IV funds to schools that misrepresent the cost and employment potential of their programs, but it is rarely used.

Recently, though, some of the companies have reported to regulators that a group of state attorneys general have requested information on student recruitment practices, employment statistics for graduates and student lending activities. Missouri Attorney General Chris Koster is participating in the effort, although his office wouldn’t give details about his role.

Assuming the state probes aren’t simply window dressing, they have the potential to result in the companies agreeing to cease abusive practices and, importantly, cash settlements to debt-ridden former students.

In another sign that the days of operating with impunity may be ending, the federal Consumer Finance Protection Bureau is looking at whether some of the for-profit companies have violated federal laws dealing with private student loans.

Also, the Obama administration is taking another crack at establishing a gainful employment rule.

Weak-kneed enforcement has enabled the for-profit college sector to shrug off its outrageous practices with callous disregard for taxpayers and the many people who leave its campuses worse off than when they enrolled. Now, the companies and their investors are reportedly worried. It is past time to turn the tables.

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