WASHINGTON - Congressman Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, today was joined by Congressman Michael Honda, Congressman Raúl M. Grijalva, Congresswoman Gwen Moore, Congressman Keith Ellison and other Representatives in sending a letter to Secretary of Education Arne Duncan, asking the Secretary to implement a strong “Gainful Employment” rule, to provide oversight on the “for-profit” education industry.
“While many proprietary universities contribute to a robust higher education sector, I am gravely concerned that unscrupulous actors in the industry are limiting students’ access to opportunity by leaving them with debt they cannot pay off and little hope for professional fulfillment,” Cummings said in the letter. “Available data indicate that too many students are not getting a return on their investment at some proprietary universities, and are instead finding themselves worse off when they leave these programs than when they began their course of study.”
In 2009, proprietary institutions received $24 billion in Title IV federal loan dollars and federal Pell Grant funds, accounting for nearly 90 percent of the revenue of some schools. Students at for-profit schools represented only 10 percent of the higher education sector last year but, the industry received 25 percent of total federal loan dollars.
"I strongly support the gainful employment rules which will protect students from fraud that adversely impacts the low income and minority population,” said Rep. Honda. “Low income and minority students are increasingly concentrated in for-profit institutions and one in five students who attend for-profit schools default on their loans within three years, far in excess of the national average. In 2008 - 2009, the federal government invested over $4 billion in grant aid to students at for-profit institutions. With this level of public investment, the department has a fiduciary responsibility to make sure its investment is being administered properly and the proposed gainful employment rule will accomplish just that."
The loan default rate among students at for-profit institutions is nearly double that of students attending public and private non-profit schools, and graduation rates are much lower at for-profit schools compared to those at public and private non-profit schools.
Congresswoman Moore said, “Students should have every chance to succeed. With higher education costing more and more, we must ensure that students get a return on their investment. And gainful employment regulations will help do just that.”
Students at public and private non-profit schools on average borrow less often, and borrow in smaller amounts, than students at for-profit institutions.
“If your business model isn’t based on bilking the public, you've got nothing to worry about,” said Rep. Keith Ellison. “I fully support the Administration’s rule to ensure that we’re not saddling students with unnecessary debt and leaving the taxpayers holding the bag while private corporations make off like bandits.”
The letter also points out that the Leadership Conference on Civil and Human Rights wrote to the Department of Education to emphasize that the proposed Gainful Employment rule stands to benefit students of color, low-income students, female students, and armed service members and veterans. Each of these groups is heavily enrolled in for-profit schools.
“This isn’t about shutting down successful schools or denying students their choice of education,” Rep. Raúl M. Grijalva said. “It’s about making sure schools don’t sell degrees that turn out to be worth less than students paid for them. Especially as we work toward economic recovery, expensive pieces of paper that don’t prepare students for good careers are not something taxpayers can afford to subsidize. The Department of Education has crafted a good rule, and I sincerely hope it goes forward intact.”