For-Profit College Probes Fuel Rise in Consumer-Protection Sentiments

By Jones, LaMont, Jr. | Diverse Issues in Higher Education, June 14, 2018 | Go to article overview

For-Profit College Probes Fuel Rise in Consumer-Protection Sentiments


Jones, LaMont, Jr., Diverse Issues in Higher Education


A mid new efforts to reinvigorate lethargic federal investigations of for-profit colleges, some academics who study higher education see the issue as a harbinger of wider conflict and change.

New Jersey Attorney General Gurbir S. Grewal has revived the discussion by sending a letter to U.S. Secretary of Education Betsy DeVos with a specific request: either renew downsized and dormant investigations into fraud at for-profit schools and allow cooperation by states or turn the probes over to the states.

Grewal--who took office in January along with Democratic Gov. Phil Murphy, who appointed him--appears to be the first state attorney general to issue such a call to the federal government during this time of reckoning for for-profit colleges. His action comes two years after the Obama administration created a special team in the Department of Education to investigate abuses by for-profit post-secondary education providers in the wake of numerous scandals, including the bankruptcy of for-profit behemoth Corinthian Colleges.

Students who attended for-profit schools tend to default on student loans at higher rates, complete degree programs at lower rates and earn lower wages if they do finish. Racial minorities, low-income students and other underrepresented groups have been impacted disproportionately because they are a disproportionate share of the student population at for-profit schools.

Observers note that the U.S. Department of Education's investigations have slowed down, shrunken and in some cases stopped since the Trump administration took over in January 2016, as the department under DeVos has appeared less inclined to go full-throttle after for-profit schools accused of predatory and fraudulent activities. The team of investigators and lawyers is now significantly smaller and with a narrower scope--basically "processing student loan forgiveness applications and looking at smaller compliance cases," the New York Times reports.

Grewal, who says the department is no longer cooperating with or responding to New Jersey's requests to address for-profit college fraud, voices the frustration of many who demand to see for-profit schools that have behaved improperly held fully accountable. He questions, for example, the status of investigations into various for-profit schools such as DeVry Education Group, which in 2016 for $100 million settled a lawsuit that alleged misleading advertising.

Dr. Robert Palmer, an associate professor in Howard University's School of Education, says turning the investigations over to the states may not be a good move.

"Obviously, we have a secretary of education who tends to favor for-profit institutions," he says. "But the investigation should remain under the purview of the Department of Education. Some states may agree with DeVos' approach, so turning it over to the states probably would be a disservice to students, particularly low-income and minority students, who attend for-profit schools at higher rates."

Grewal's stance may foreshadow a rise in consumer protection at the state level, which could lead to tension between the federal and state governments, says Peter Lake, director of the Center for Excellence in Higher Education Law and Policy at Stetson University College of Law in Florida.

"Then you would have a federalism issue about how far [states] can go," says Lake.

Public interest in consumer protection surrounding transparency and potential fraud grew during the administrations of presidents George W. Bush and Barack Obama and were central in Bernie Sanders' presidential candidacy in 2016, particularly among young voters disgruntled about crippling student loan debt, Lake says.

Then along came DeVos, a champion of school choice with business-friendly policies in other areas of education who has drawn heavy criticism from some quarters. Although she seems to run "one of the least drama-filled" education departments compared to some of her predecessors, Lake contends, "her political foes sense that she is vulnerable. …

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