NYC Council Member Ydanis Rodriguez

Higher Ed Committee Shines Light on Predatory Practices of Many For-Profit Colleges

CITY COUNCIL HIGHER EDUCATION HEARING FOCUSES IN ON PREDATORY PRACTICES OF PROPRIETARY COLLEGES

 

New York, NY-On Friday, February 15, 2013, The City Council Higher Education Committee held an oversight hearing on the Educational Value of For-Profit Colleges in New York City. This hearing sought to provide greater insight into the practices of one of the fastest growing industries in education both city and nation-wide. The council heard from Monroe College and Long Island Business Institution as well as a number of advocacy groups committed to alleviating some of the ills caused by the bad actors of the for-profit college industry.

Currently, there are 300 proprietary colleges in New York City with close to 100,000 students who attend them. The hearing was called due to mounting reports of predatory practices at these schools, where lower-income students-many of whom do not have a high school degree or GED-are enticed into taking on high levels of debt with the promise of a high paying job after graduation. The results however end with students not being able to service their debt, dropping out and having few skills and fewer options. For students who are able to graduate, many times the degrees or certifications received do not transfer into the necessities of the job market or to other higher education institutions. Most shocking is that some schools that engage in these practices are not accredited institutions, which leaves students with an unrecognized degree and high levels of debt.

Only 22% of students at proprietary colleges graduate within 6 years of their enrollment; this is compared to 55% at senior public colleges and 65% at private colleges. Proprietary colleges have the highest number of borrowers who drop out of college. While their enrollment only accounts for 9% of the nation’s college students, these schools receive the greatest amount of government subsidies in the way of Pell grants and 50% of the Department of Defense tuition program for veterans. 42% of students at proprietary colleges took out private loans with higher interest rates and less flexibility, putting them in even greater financial trouble.

The Neighborhood Economic Development Advocacy Project (NEDAP), an advocacy group that works around social justice issues, brought up cases they have encountered where low income students see advertisements on the subways about a 6 month degree program that can place students in $50,000-$100,000 a year job, guaranteed, as well as tuition assistance. After pursuing this seemingly great opportunity, the reality was that the school was only interested in the federal Pell grants and loans offered to lower income earners and left the students in debt with no new skills. Teachers reportedly rarely even showed up to teach the classes.

At today’s hearing, the Chair of the Higher Education Committee, Council Member Ydanis Rodriguez, expressed his commitment to further exploring the predatory practices of these schools, citing a new plan to create a list of the best and worst schools, working with the state Attorney General on his investigation into proprietary schools and launching a campaign to keep New York City students safe from usurious institutions with little to no educational value.

“The strategies many proprietary schools employ involve promising vulnerable students the world, saddling them with debt and then leaving them to sink or swim. We have seen this model before in the buildup to the financial collapse in 2008 and the sub-prime mortgage crisis. This is the next generation of subprime lending and it is hurting our veterans, communities of color and lower income students who have taken it upon themselves to pursue a higher education degree. We cannot allow these practices to continue unabated and I look forward to working with my partners in government to keep our students from falling victim to high levels of debt just so these schools can make a quick buck. I invite advocacy groups focused on this issue to join me in building a coalition to protect our students currently enrolled in for-profit schools, as well as those thinking of attending, from those institutions only seeking to exploit them.”

The City Council of Milwaukee, WI recently introduced legislation two weeks ago seeking to curb the proliferation of for profit colleges in their city. This city ordinance would require proprietary colleges and/or development firms seeking to build these schools, to document their compliance with the U.S. Department of Education regulations pertaining to the college’s program integrity.

City of Wisconsin Proposal: http://www.jsonline.com/business/proposal-would-limit-city-money-to-forprofit-colleges-7d8j1q9-189131101.html

This follows a push by Iowa Senator Tom Harkin, Health Education Labor and Pensions Committee Chairman, who released a report in July of 2012 detailing the inadequacy of for-profit schools and their effects on students’ debt and purchasing power. His report found that students who attended for profit colleges accounted for 47% of all student loan defaults and that more than 1 in 5 students enrolling in a for profit college will default on their loans within 3 years of entering a loan repayment program.

Harkin Report Executive Summary: http://www.help.senate.gov/imo/media/for_profit_report/ExecutiveSummary.pdf

With so many students in New York City enrolled in for-profit colleges and the prevalence of the colleges’ marketing around the city, advocacy groups and elected officials are taking notice of the industry and will look to ensure that the bad actors are exposed.