The For-Profit Fight Moves to the States

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In the discussion about for-profit colleges, journalists have primarily focused on upcoming federal rules. This makes sense since these schools are so heavily subsidized by the federal government.

But the gainful employment rules—under which for-profit schools wouldn’t be eligible for federal financial aid if average graduates need to spend more than 8 percent of starting salaries to service student loans—aren’t coming quickly. In the absence of new rules about student debt levels, many states are starting to get involved in regulating for-profit colleges on their own.

According to a piece by David Harrison at Stateline:

That has led several states, tired of waiting for action from the federal government, to take matters into their own hands. Legislators say they are simply trying to protect students and consumers in their states. Backers of the for-profit schools say fiscally troubled state governments are seeking to save money by restricting the amount of public aid that for-profit schools are entitled to.

According to the National Conference of State Legislatures, lawmakers in 17 states have introduced bills on for-profit colleges this year, many of them designed to tighten regulation of the schools. Earlier this month, Maryland’s House and Senate enacted measures that would eliminate all state aid to for-profit schools, ban commissions or bonuses for student recruiting, and make all for-profit schools in the state contribute to a fund to protect students if any college in their group breaches a contract. Governor Martin O’Malley says he supports the bills and intends to sign the ultimate version into law.

Different states are taking different tactics. Legislation in California would restrict schools (any schools) from taking advantage of state education grants if schools have low graduation or high default rates. Such rules would mostly end up hurting for-profit schools.

Legislation in Nebraska would merely increase state regulation of all colleges in the state. In other states (Florida, Illinois, Iowa and Kentucky) officials are launching investigations into existing practices at for-profit schools.

Such tactics represent many different ways of looking at higher education, and businesses, in terms of what they’re supposed to do for a state. Such efforts may prove troublesome for people eager to reform the practices of proprietary schools, however.

Looking into how a for-profit school operates is not nearly the same as looking into a state university. Since most for-profit schools operate primarily online, they’re not really state-based. It’s unclear how regulation in one state can really change behavior at proprietary institutions as a whole. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer