SEIU Testimony at a Department of Education Hearing on Oversight of For-Profit Universities

We represent 2.1 million members.  Nationally, we represent 15 thousand part-time college faculty as well as faculty in the California State University system. SEIU is committed to quality, affordable education for all students. We encourage the Department of Education to develop strong gainful employment rules to prevent poor-performing career education programs from receiving federal funds and that encourage institutions to improve their employment outcomes for graduates.  We also encourage the Department to strengthen rules that would prevent schools from evading other current laws that are designed to protect students and taxpayers.

Many of our members and their families pursue educational opportunities to get degrees and certificates that can be pathways to better paying jobs.  However, in too many instances our members and their families are simply left with debts they cannot repay and worthless degrees, or no degree at all.   Many of our members are low-income workers who rely on federal aid for a quality education.   Our members and their families also include veterans who have served their country honorably but are being failed by for-profit institutions that bank the veterans’ GI Bill funds but provide a subpar education.

There is ample evidence that strong rules are needed to improve performance and accountability as it relates to for profit institutions.  For profit institutions represent about 13 percent of students but account for nearly half of America’s federal student loan defaults.[i]  Nearly a quarter of borrowers who attend for profit colleges enter into default within three years of entering repayment.[ii]  As you know, focusing solely on default rates seriously under-reports the degree of financial distress of borrowers.  Many others are in deferment or forbearance and do not yet show up in the cohort default rate data.

These high debt and default levels have significant consequences for borrowers.  Default impacts credit, which may be a barrier to finding housing or financing a car necessary to get to and from a job.  People in default may also be denied professional licenses.

These high default rates are particularly problematic at many for profit institutions.  Public and nonprofit colleges have substantially lower rates of student loan default.

The Department has a responsibility to borrowers and to taxpayers to ensure that career training and educational services that are financed by taxpayers actually result in positive outcomes for borrowers.   Career training should lead to a career.  We strongly urge the Department to pursue regulations that end federal funding for the worst programs, and reduce funding for other poorly performing institutions.

Please also consider interim consequences for schools that fail some, but not all, of the gainful employment measures.  Currently, some schools that are nearly complete failures continue to receive federal aid.

We also encourage the Department to strengthen regulations that prevent abuses of the 90/10 rule.  We are aware that legislation is necessary to improve accountability and performance in this area.  However, the Department can strengthen regulations that prevent institutions from reorganizing or combining campuses for the sole purpose of avoiding the 90/10 rule.  For example, institutions should not be allowed to combine Office of Postsecondary Education ID (OPEID) numbers to hide programs that fail to meet the 90/10 rule.  To prevent this manipulation the Department should require continued compliance under former OPEIDs for at least three years after any change in OPEID and sanction any that would have exceeded the 90/10 rule but for the change in OPEID.  In addition to this suggestion, the Department should explore every avenue allowed within current law to prevent abuse and manipulation of the 90/10 rule.

The Department also should strengthen regulations to prevent similar manipulation of Cohort Default Rate; too many for-profit colleges are gaming their CDR numbers.

Finally, please either strengthen your False Certification Rule or otherwise create a rule to block federal aid to programs whose graduates are not eligible to sit for licensing exams in those careers that require a license (such as law, medical, plumbing, electricity).  It is unconscionable to allow students to waste their federal aid and their time at programs whose graduates are not even allowed to try to pass a licensing test.  The for-profit schools offering these scams know that their graduates are not eligible to work in the promised career.

As a union that represents higher education faculty members across the country, and also a union that represents workers that seek degrees and certificates to improve their ability to secure higher paying jobs, it is important that the Department of Education ensure the highest standards of performance among all educational institutions.

We look forward to working with the Department on these important issues.

 

 



[i] Ed Trust analysis of IPEDS, 12-Month Enrollment Survey, 12-month headcount enrollment, 2009-10; Ed Trust analysis of Award Year 2010-11 Title IV Program Grant (http://federalstudentaid.ed.gov/datacenter/programmatic.html) and Direct Loan (http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp) Volume by School

 

[ii] FY 2009 Official National 3-Year Cohort Default Rates, Calculated August 5, 2012.

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