HIGHER EDUCATION COMMITTEE WORKING TO PROTECT CONSUMERS, STUDENTS OF FOR- PROFIT OCCUPATIONAL SCHOOLS

(February 8—STATE HOUSE) Representative Tom Sannicandro joined his House colleagues Wednesday in passing a bill that protects students who enroll in for-profit occupational schools by expanding oversight of the industry, which has seen exponential growth in enrollment and profits in the last several years.

“The numbers on for-profit education are staggering; there are billions of dollars in play and millions of students being serviced. There are serious issues with fraud, deceptive recruiting practices, and loan default,” Sannicandro said. “The federal government has taken action but the state has an important role to play in protecting its citizens from predatory schools. Our tools for protecting students were inadequate and our regulations antiquated. This bill was a necessary step to update those tools.”

H.3625, An Act relative to oversight of private occupational school, strengthens consumer protection by placing the oversight role under the Consumer Protection Bureau’s Division of Professional Licensure (DPL). It establishes an Office of Private Occupational School Education and gives additional powers to investigate and resolve complaints in instances of wrongdoing.

With this bill’s passage, the school would also be required to pay back all unearned tuition should a school close, go bankrupt, or somehow fail to meet its obligations to the student. Previously, the cap on returned tuition had been $100,000.

For- profit occupational schools are non-degree granting businesses that train students in career-specific skills. They include such programs as culinary schools, automotive training, professional photography and aeronautical maintenance training. Tuition can range from up to $57,000 a year.  Of the 209 schools operating in Massachusetts in 2010, 42 earned over $1 million in tuition revenues.

The bill did not cover schools that offer degrees, programs offered by employers for their own employees, recreational or religious organizations, courses offered by public schools or private K-12 schools and a number of other programs.

Attention on the for-profit industry has increased in the past few years because of the exponential growth in the number of students, the huge amounts of federal money going their way, and the high default rates. In late 2010, the Congressional Government Accountability Office issued a report For Profit Schools: Undercover Testing Discovers Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices. The some $4 billion dollars in pell grants and $24 billion in loans through the Department of Education that went to for-profit schools in 2008 spurred the investigation and report by the GAO. The top 12 schools with the highest default rates on student loans in Massachusetts are for-profits (source.)

The Joint Committee on Higher Education took up the issue of for-profits in Massachusetts in a June 8, 2011 hearing. On June 15, 2011 the committee voted to recommend favorable action on a bill that merged the Governor’s for-profit bill and the State Auditor’s for-profit bill. That bill was later considered by the Joint Committee on Ways and Means, and was voted on in the House on Feb. 8, 2012.

These schools “serve a vital role in Massachusetts, offering short-term, market-driven, career-specific training opportunities; helping displaced, unemployed, and underemployed workers prepare for and find new jobs; meeting the demands of Massachusetts employers for a skilled and competitive workforce; and contributing to the Massachusetts economy,” said Thomas Meagher, administrator of private occupational school audits for the Office of the State Auditor in his testimony to the Committee. Later, speaking of the need for updated regulatory power, he warned “in the event of a precipitous school closure, currently enrolled students might be deprived of a significant financial investment, as well as the prospects of a brighter future.”

“For-profit schools can play an important role in providing career training for students. The accessible and innovative methods of delivering education should be looked at by non-profits and publics alike,” Sannicandro said. “This bill is not condemning the whole industry but rather protecting students against those schools which are not operating in good faith.”

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Tom Sannicandro © 2015