The marketing of for-profit colleges is ubiquitous, yet student outcomes are consistently poor. These outcomes include high dropout rates, low and unstable earnings of graduates, and heavy debt burdens that students are unable to repay, often resulting in default and ruined credit. The reliance of for-profit colleges on federal student aid dollars compounds these harms and fuels these poor student results.
Over the last decade, for-profit colleges have been subject to numerous investigations in the media and at both state and federal levels for fraudulent financial aid programs, predatory recruiting practices, and misleading statements about student outcomes. In 2015, the U.S. Department of Education put in place important protections known as the Gainful Employment (GE) Rule. The GE Rule increased the accountability of for-profit and other career training programs to both students and taxpayers by linking institutional eligi-bility for federal Title IV dollars to program-level measures of student outcomes: specifically, the relationship of typical student debt burdens to earnings levels.
Despite the promise of the GE Rule to improve student outcomes and safeguard taxpayer investment in federal student financial aid, over the last year the Trump administration has bowed to pressure from for-profit colleges, rolling back the GE Rule along with other accountability regulations in higher education and student lending. As such, this paper looks at the potential toll on students and their families that could result from these rollbacks, focusing on a popular set of programs offered by for-profit colleges: those in the healthcare support fields.
Key findings include:
- Healthcare support programs at for-profit schools are less likely to provide positive employment outcomes relative to student debt levels than similar programs at public schools. 83% of the for-profit healthcare support programs included in this study (certificates or associate's degrees) scored poorly in the first release of GE national data on programmatic student debt and earnings, compared to only 11% of public programs.
- Attendees of for-profit healthcare support programs face very high tuition and fees that are typically covered by borrowing. Website examples of disclosures for Florida for-profit programs like those attended by the study’s focus group participants show tuition and fees of over $17,000 for a typical 11-month healthcare support program.
- Schools advertise graduate earnings in a way that causes confusion for potential students. Website landing pages for these for-profit programs link to both Bureau of Labor Statistics occupational earn-ings data and GE program earnings data specific to that school. Specific GE program earnings are sub-stantially lower than average and result in unsustainable debt loans for graduates of those programs.
- Focus group results of healthcare support graduates of for-profit colleges in Florida confirm the financial devastation wrought by having attended and invested heavily in these programs. These details include disappointment in not being able to find full-time employment sufficient to make any progress repaying student debt, inability to cover typical family living expenses or access credit to buy a car or home, and despair and cynicism about the prospect for better financial prospects for their children—coupled with a determination that they avoid for-profit colleges for their education.
Based on these findings, we urge that strong protections be restored at the federal level and that states step up their efforts to protect students as well. States have an important role to play in regulation, oversight, and enforcement. This report's recommendations focus on what states can do, including:
- Require that for-profit colleges meet certain performance metrics. These should be focused on student debt metrics (repayment and default) and employment outcomes (job placement and earnings levels relative to debt loads).
- Prohibit the use of state-based student aid dollars for attendance at for-profit colleges.
- Require for-profit colleges to spend more on student instruction. In 2012, a congressional investiga-tion into the nation’s 30 largest for-profit schools found that, on average, for-profit colleges spent just 7% of revenues on instruction, while much more was spent on marketing. States should require that at least 50% of student dollars be spent on instruction and no more than 15% be spent on advertising.
- Protect students from steering and other predatory lending abuses. States should make it illegal for schools to steer students into unaffordable loans, particularly where the for-profit college has a financial incentive in making those loans and students have other options.
- Require that for-profit colleges avoid enrolling students in programs for fields where they will be ineligible for employment. States should not allow for-profit colleges to enroll students in programs that are not accredited for a field that requires that accreditation for licensing. Neither should states allow for-profit colleges to enroll students who will not be legally employable in their chosen field because of a criminal conviction or other factors. Last year, Maryland took the step to make this happen. Other states should follow.
- Repeal laws that revoke the occupational licenses of student loan defaulters. These laws are counterproductive and often fall hardest on students who took out high amounts of debt to attend for-profit programs.
- States should require that student loan servicers are licensed and regulated. Our focus group research shows that students are often poorly served by servicers who place them in inappropriate repayment programs and improperly apply payments, among a number of other problematic practices.
- States should ensure robust student tuition reimbursement funds. A number of our focus group participants attended schools such as ITT Technical Institute that were subsequently closed. Those borrowers deserve to have their loans reimbursed, so that the predatory behavior of a school does not become a life-long financial burden.