Political differences impede regulation of for-profit schools

Building on a U.S. Senate investigation that concluded that for-profit colleges employed aggressive or misleading recruiting tactics, state officials are weighing tighter regulation of the institutions in Minnesota.

Larry Pogemiller, director of the state Office of Higher Education is gathering information on the schools, an inquiry that follows a two-year investigation by the Senate Health, Education, Labor and Pensions committee into companies that run 30 for-profit schools in the United States.

In July, the Senate committee's chairman, Democratic U.S. Sen. Tom Harkin of Iowa, issued a harsh assessment of the companies that cited harassment of potential students, poor results, and concluded that some colleges produce far too many dropouts who default on student loans.

Since then, Pogemiller has sought information on the percentage of students that graduate from the schools and what percent end default on student loans.

"We're trying to set the table for policymakers to provide them information so they can make the judgment," he said.

Among the schools noted in Harkin's report for problematic recruiting tactics are Capella and Walden universities.

A Capella spokesman said the case the committee cited was an isolated incident, and that the report said the company had better controls on recruiting practices than many of the other schools reviewed. A Walden spokeswoman said the vast majority of the school's prospective students have expressed "high satisfaction" with the recruiting process.

The committee did not review Globe University and the Minnesota School of Business, but some former employees of those schools told MPR News how recruiters there emotionally manipulated prospective students and fed them misleading information to get them to enroll. Globe and Minnesota School of Business officials insist the schools don't allow predatory behavior.

Earlier this year, two former deans filed whistleblower lawsuits against the company that runs Globe and Minnesota School of Business, claiming it misled many of its students.

CRITICISMS FOR THE STATE

The Senate committee's report also complained that many states are too passive in monitoring for-profit colleges.

Pogemiller described Minnesota's regulations of for-profit colleges as average but said his office does not have the money or staff to investigate for-profit schools.

"When I first came over in this job six months ago, I was kind of surprised," Pogemiller said of the state's lack of oversight of for-profit colleges. "It's really just kind of a registration system. I actually thought it was more regulated than it was."

State higher education officials review the finances and programs of for-profit schools registered with the state. They also mediate student complaints. But the complaints typically involve grades or tuition disputes.

If a college provides students with misleading information, the office can suspend or revoke its registration, essentially shutting it down. It can also act if a court- or government proceeding finds a school has engaged in fraud or misrepresentation.

Pogemiller is hesitant to seek additional funding. He said the schools may not be sufficiently plagued with problems to warrant such investigations.

Instead, Pogemiler said, it might be wiser to spend state money on a higher priority — such as offering more financial aid to students.

"You have to balance at what level that abuse deserve[s] an allocation of resources," he said.

Pogemiller said the state Attorney General's office, might be better equipped to enforce how for-profit schools operate.

NATIONAL DEBATE

Minnesota will be looking at its for-profit schools amid a national debate on the tactics employed by for-profit schools, and the academic performance and debt rates of students.

In Washington, critics and supporters of the schools agree that they are necessary, and do a good job of serving nontraditional students.

"For-profit schools fulfill, in many ways, a different function, and that's good," said U.S. Sen. Al Franken, who sits on Harkin's committee.

But Democrats such as Franken and Harkin want tighter regulation to curb abuses.

The Senate committee report concluded that the Department of Education needs to collect better information on all colleges so officials can accurately compare performance.

The report also said federal officials should require for-profit colleges to decrease their reliance on federal financial aid revenue, and bar them from spending that money intended for instruction on advertising.

It also suggests that the Department of Education set up an online clearinghouse for all student complaints and that the department develop an effective plan to go after rogue colleges and enforce the rules.

Franken said he was disturbed by tales of the for-profit abuses he heard during the investigation.

"I'm sitting in these hearings, and my hair is curling," he said. "It's outrageous, and I think taxpayers should be very concerned about this."

But some in Congress resist calls tougher regulation of for-profit colleges.

Government agencies, including the Department of Education, already have everything they need to control the problem, said U.S. Rep. John Kline, a Republican from Minnesota's 2nd District.

Piling on more regulations would only result in more bureaucracy and government overreach, said Kline, chairman of the House committee on Education and the Workforce.

"I don't know that every time there is a bad actor or even an alleged instance, that you need to run and have a new statute, or create a new program, or create a new department to look into that," he said. "Let's let the people who have responsibility now do their jobs."

However, Kline does support making sure consumers have more information on for-profit schools.

He said lawmakers have discussed whether colleges should be able to advise students against heavy borrowing.

"Right now, under the law, they really are barred from discouraging a student from taking out too much of a loan," he said.

WHO IS RESPONSIBLE TO ACT?

States continue to monitor for-profit colleges, and in Minnesota that falls to the Attorney General Lori Swanson.

Last September, Swanson joined about a dozen other states and jurisdictions in suing the parent company of The Art Institute International and Argosy University. The suit, filed in federal court in Pennsylvania, claimed that the two for-profit schools provided illegal incentives to admissions recruiters.

Both schools have campuses in the Twin Cities.

Swanson said her office is investigating several other for-profit colleges.

"The kind of things we're hearing from consumers on are people who were lured to attend a for-profit college based upon representations about their ability to find a job or about graduation rates, and then find out that they had ... those hopes and promises dashed," she said.

Swanson's office and the state Offices of Higher Education are acting independently. They have no immediate plans to coordinate their efforts.

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