Bennett Asks Congress To Put Curb On ‘Exploitative’ For-Profit Schools

By Robert Rothman — February 17, 1988 5 min read
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Secretary of Education William J. Bennett last week urged the Congress to adopt stiff measures to curb the “shameful and tragic” abuse of student financial-aid programs by proprietary schools.

He suggested that such measures might include making a high-school diploma or its equivalent a requirement for aid.

In a letter to Senator Edward M. Kennedy of Massachusetts, chairman of the Senate Labor and Human Resources Committee, Mr. Bennett released a new department-funded report and other previously published documents that he said gave clear evidence of a pattern of “exploitative and deceitful practices” by the for-profit career schools.

“You will find accounts of semi-literate high-school dropouts lured to enroll in expensive training programs with false hopes for a better future cruelly dashed,” he wrote. “You will read of falsified scores on entrance exams, poor-quality training, and harsh refund policies.”

“The pattern of abuses revealed in these documents is an outrage perpetrated not only on the American taxpayer but, most tragically, upon some of the most disadvantaged, and most vulnerable members of society,” the Secretary said.

He asked Senator Kennedy to hold hearings on proprietary schools and said the department would submit a package of legislative proposals aimed at curbing their abuse of the financial-aid process.

In addition to requiring that aid recipients have high-school credentials, the package will include, he said, proposals to increase lender responsibility for student-loan defaults and to allow lenders and guarantee agencies to screen the new student-loan data bank for previous defaulters.

The Secretary also urged state agencies and accrediting associations to “redouble their efforts” to monitor the schools.

Senator Kennedy said in a statement that the reports Mr. Bennett submitted document serious abuses that require “urgent action” by the department and the Congress.

But he added that any actions taken must also “preserve the essential role of these programs in helping needy students.”

‘Not Good Social Policy’

Proprietary-school officials criticized Mr. Bennett for basing policy recommendations on anecdotal evidence, and said the proposed legislative remedies were unwarranted and counterproductive.

“It’s not good social policy, education policy, or economic policy to deny non-high-school graduates the opportunity to pursue further vocational training,” said Jerry W. Miller, president of the Association of Independent Colleges and Schools, an accrediting agency for about 650 schools.

“If you write somebody off after they drop out of high school, that’s a heck of a lot of people being denied a second chance,” he said. ''What happens to them if they can’t get postsecondary training?”

The proprietary-school representatives admitted that abuses existed, but they said they were not nearly as widespread as Mr. Bennett’s letter indicated.

“We think the overwhelming majority of proprietary schools are doing a good job,” said Mr. Miller. “There are problems. We are concerned about them, and we are working on them.”

He pledged that his organization would work with the Secretary and the Congress to “close down any institution that is not operating in an ethical way.”

“The reputation of the sector is at stake,” he said. “Our membership, more than anybody, wants that kind of institution out of business.”

‘Serious Problems’

The increasing popularity of proprietary schools, particularly among young black males, has been spurred, observers say, by the schools’ growing sophistication in the area of student aid. Recruitment often includes detailed information on federal-aid eligibility, and many schools even process students’ application forms.

Because their share of student-aid dollars is growing, Mr. Bennett and other Education Department officials have recently begun to question in public whether proprietary schools are giving taxpayers their money’s worth.

In his letter, Mr. Bennett noted that the documents he included fulfilled a pledge he had made to Senator Kennedy at a hearing in December--to provide evidence of abusive practices by proprietary schools.

At that hearing, Mr. Bennett had defended his proposal to deny federal student aid to postsecondary in8stitutions that fail to reduce their student-loan default rate to below 20 percent by 1990. A large proportion of institutions with high default rates, he noted, are proprietary schools.

The study Mr. Bennett released last week found “serious, and in some cases pervasive, structural problems in the governance, operation, and delivery of postsecondary vocational-technical education.”

“Although we found that the institutions we visited exhibited some exemplary practices,” it says, "[there was] evidence of serious problems at each step in the delivery of education.”

The report was prepared by Pelavin Associates Inc., a Washington research firm. Its authors note that the study was “exploratory,” and thus did not “include estimates of the frequency, severity, or magnitude of the problems that were identified.”

The study, begun last October, was based on interviews with Education Department officials and accrediting agencies, a review of marketing materials from 160 institutions, consumer information from state agencies, and site visits to nine vocational-technical institutions and state agencies in three states.

‘Questionable’ Practices

Among its findings were:

  • “Questionable” recruiting practices, such as recruiting students from unemployment lines or guaranteeing them financial aid.
  • A consistent lack of critical consumer information, such as program completion rates, in recruiting materials.
  • “Flawed” accreditation practices that limit the ability of accrediting agencies to monitor compliance with standards and policies.
  • According to Secretary Bennett, federal action is needed to ensure that such practices do not persist.

He said he had already made some regulatory changes, such as providing the department’s office of the inspector general with additional resources to investigate allegations of fraud. And he has proposed regulations, he said, for recognizing only accrediting agencies that emphasize “truth in advertising” and student learning.

Rules for Refunds

In addition, he will propose new rules that require “reasonable refund policies” and prevent institutions from avoiding liability by transferring ownership.

The Congress, Mr. Bennett said, must close “legislative loopholes that invite unscrupulous schools to defraud the taxpayer and take advantage of vulnerable students.”

But Mr. Miller of the independent-schools association said some of the Secretary’s proposals may threaten the good proprietary institutions as well as the bad, by in effect denying them revenue from student aid.

Noting that three-fourths of students enrolled in postsecondary vocational training are in proprietary schools, Mr. Miller said that “any effort to wipe these schools out would deal a severe blow to the economy.”

A version of this article appeared in the February 17, 1988 edition of Education Week as Bennett Asks Congress To Put Curb On ‘Exploitative’ For-Profit Schools


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