Durbin Says For-Profit Colleges Should be Reined In

Sen. Richard J. Durbin, D-Ill., called for a check on the unregulated growth and rising costs of for-profit colleges at a Newsmaker press conference June 30. He compared the growth of for-profit educational institutions to the subprime mortgage bubble.

"There is growing concern that we could be looking at a repeat of the subprime mortgage fiasco, with low-income, high-risk students mortgaging their futures – not on overpriced homes this time, but on worthless diplomas," he said.

"The largest chain of for-profit colleges, the University of Phoenix, has become the second-largest higher education system in America, behind only the State University of New York," he said. "With 458,000 students, it is now larger than the entire undergraduate enrollment of the Big Ten."

Although recession and eagerness for students "to improve their skills and boost their employability" are some reasons for the expansion of for-profit colleges, Durbin said,  there are two other major reasons:

"First, is easy access to government loans. For-profit schools make it easy for students to line up loans and enroll with no money upfront," he said.

The other factor, Durbin said, is "slick marketing and hard sells. Career colleges market their programs as passports into the middle class."

He said the schools' TV commercials urge viewers to "make the call that will change your life and get you on the right track to a rewarding career."

Durbin called for limits on the amount of federal assistance that may be spent on marketing and a review of a rule that allows for-profits to receive up to 90 percent of their revenue from federal aid.

Durbin also proposed a ban on companies that acquire accreditation through the purchase of non-profit colleges and suggested greater scrutiny of loans that for-profit colleges make to their students.

Durbin said the Obama administration has begun stricter oversight and accountability for federal student aid; restricting institutions that receive student aid from paying admission recruiters; and disclosing job placement rates and tying the employment with aid.

--   Tejinder Singh, [email protected]