Corinthian famously defrauded its students with inferior education and the empty promise that they would be well-prepared for good, middle-class jobs. Then, hundreds of thousands of students were left in the lurch when the company finally turned belly up. In the end, some had their student loans forgiven, but thousands still have outstanding debt.
Click here for press coverage of Corinthian’s 2014 collapse.
The report, “Regulating Too-Big-to-Fail Education: Next Steps for the Department of Education (DOE),” is the third in a series on the lax oversight of for-profit colleges. Its authors are Chris Hicks, an independent researcher, and Angus Johnston, a history professor at City University of New York (CUNY)’s Hostos College and an AFT-affiliated local union member.
Their report paints the picture that student debt at for-profit colleges is student debt on steroids: bigger and “badder.”
Bigger because nearly all the tuition at for-profits comes directly from student loans. “Badder” because many for-profits fail to provide high-quality education despite raking in billions in federal financial aid — failing their students and, ultimately, the taxpayers.
“I don’t want to say, ‘we told you so,’ but we have blown the whistle on this for years,” said AFT President Randi Weingarten. “Now, the for-profit industry is in the situation that we feared. They have become more financially unstable than ever; they pose a huge risk to students whose lives and educations will be disrupted when the institutions go down, and they leave taxpayers the bill for cleaning up the mess,” she added.
Click here for our national union’s 2015 ad demanding action following the Corinthian scandal.
“These institutions shouldn’t be able to consolidate power to the point that they become ‘too big to fail,'” said AFT Connecticut President Jan Hochadel. “Even more importantly, we must work together to ensure government agencies — especially the federal education department — won’t throw up their hands and claim these for-profits are ‘too big to regulate’ either. Students and taxpayers deserve better than that,” she added.
Oversight of for-profits has been “haphazard and incomplete,” with a “weak and slow” regulatory response, say the report’s authors. They recommend stronger regulations that would kick in the moment an institution shows financial trouble, rather than when it is too late.
Other proposals range from using tools in place but rarely used — limiting executive compensation, restricting unnecessary institutional spending, prohibiting troubled schools’ expansion — to new tools that would strengthen financial oversight.
“Our union’s efforts have helped reveal the devastating results when for-profit colleges are allowed to exploit students,” said Dennis Bogusky, an international student advisor at Norwalk Community College. “This new report shows how federal education policies have failed to hold these institutions accountable — but also how that can be changed,” added Bogusky, who serves as AFT Connecticut’s Vice-President for Higher Education.
The report notes that the DOE has begun to identify new triggers for action, including adverse acts by accrediting agencies and too many students defaulting on their loans. Lax enforcement on existing sanctions, especially for the largest for-profits, suggests more needs to be done.
Click here for our previous report on the “Higher Ed, Not Debt” campaign.
