NCLC - National
Consumer Law Center Statement: U.S. Senate Report on For-Profit College
Industry
August 16, 2012
The U.S. Senate’s Health, Education, Labor, and Pension (HELP) Committee
released a report culminating a two-year long investigation of the
for-profit college industry that points to an immediate need for reform.
The investigation revealed that billions of taxpayer dollars are being
funneled to an industry that harms students and taxpayers through paltry
completion rates, lack of support services, and a large defaultrate.
“The for-profit industry has grown dramatically over the last decade,
and we hope that Congress will finally pass reforms that will make the
industry accountable,” said Deanne Loonin, project director of the
National Consumer Law Center’s (NCLC) Student Loan Borrower Assistance
Project.
Too
many borrowers harmed by unscrupulous schools have nowhere to turn. None
of the three cancellations (or
“discharges”) intended mainly to help borrowers—closed school, false
certification, and unpaid refunds— provides sufficient relief. For
example, a school may routinely pay admissions officers commissions in
violation of incentive compensation rules, fail to provide educational
materials or qualified teachers, and admit unqualified students on a
regular basis. None of these violations is a ground for cancellation.
Lack of completion is one of the most commonly cited reasons for default
in the studies that NCLC reviewed for its report. The report also found
that for-profit colleges consistently have the highest two-year default
rates, with a 15% cohort default rate for borrowers entering repayment
in 2009 and borrowing rates are also highest in the for-profit sector.
“With these two reports, the evidence is clear that student loan
borrowers need better protection,” said Loonin.
“Will Congress and regulators have the will to take action? We certainly
hope so and the sooner, the better.”
