[Congressional Record Volume 157, Number 187 (Wednesday, December 7, 2011)]
[Senate]
[Pages S8398-S8401]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          FOR-PROFIT COLLEGES

  Mr. DURBIN. Mr. President, in the school year 2009-2010, the U.S. 
Department of Education provided $132 billion in grants and loans to 
students. That was up from $49 billion in 2001--a dramatic increase in 
Federal aid to education. A large part of the increase can be traced to 
one particular type of school: enrollment at for-profit colleges. That 
has grown faster than any other sector.

  Currently, about 10 percent of the students pursuing education after 
high school attend for-profit schools--for-profit colleges and 
different training schools that offer certification in certain skills 
and certain professions, 10 percent. But that 10-percent portion of 
students in America account for 25 percent of all the Federal aid to 
education. In other words, dramatically more money is going to those 
students than those attending other schools after high school.
  When it comes to the student loan defaults, where college students 
borrow money to go to school and then fail to pay it back, for-profit 
school students account for 44 percent of the student loan defaults in 
America. Again, 10 percent of the students, 25 percent of the Federal 
aid to education, and 44 percent of student loan defaults are 
attributable to for-profit schools.
  The industry is dominated by 10 publicly traded for-profit companies. 
Of those 10 companies, they enroll almost half the students in for-
profit schools.

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So it is dominated by the big players. The largest, of course, the 
Apollo Group, University of Phoenix, at one point had over 450,000 
students enrolled nationwide, more than the combined enrollment of all 
the Big Ten colleges and universities--a big player when it comes to 
higher education and a big player when it comes to Federal aid to 
education. The Apollo Group, University of Phoenix, receives more money 
than any other college in America, far and away. None are even close. 
The next two schools, when it comes to Federal aid to education, are 
also for-profit colleges.
  While Federal spending on student aid has seen a huge increase, there 
has been very little accountability when it comes to these for-profit 
schools. Worse yet, almost no information has been available about 
whether the students are actually learning and finding work in their 
respective fields after graduation.
  In June of last year, Senator Tom Harkin--who has joined me in this 
effort to look closely at for-profit schools across America--added his 
name to a letter we sent to the Government Accountability Office to 
study the outcomes for students attending for-profit colleges. The 
report has been formally released. For-profit colleges serve--and one 
could argue they target--primarily low-income, nontraditional, and 
minority students.
  For-profit colleges often claim the reason more of their students 
can't find jobs and the reason more of their students default on 
student loans is because they are trying to provide education to 
students whom others will not accept. That is their explanation for 
higher debt levels and higher default rates and poorer student 
outcomes. Senator Harkin and I wanted to ask the Government 
Accountability Office straight out to take a look at the different 
students in terms of their income and background and compare outcomes--
for-profit schools versus public universities and private schools. Our 
question was: What does the research show about graduation rates, 
employment outcomes, student loan debt, and default rates for students 
at for-profit schools compared to those at nonprofit and public 
schools, taking into consideration different student backgrounds.
  When looking at student debt, one study by the GAO found that 99 
percent--99 percent--of for-profit college students took out loans, 
almost all of them. What is the comparison? Seventy-two percent of 
those attending public colleges took out loans, with 83 percent of 
those attending private, nonprofit colleges.
  When it comes to student loans, the for-profit colleges lead all 
types of schools and universities in the number of students who are 
taking out loans. The GAO found that for-profit college students have 
higher rates of unemployment when it is all over. When it comes to 
loans and debts, students at for-profit colleges fare much more poorly 
than their peers attending nonprofit or public institutions. Students 
at for-profit colleges took out more student loans and they generally 
had higher loan debt.
  Let me tell you about one of those students who contacted our office. 
His name is Jacob Helms. He attended a for-profit, online school to 
earn a bachelor of computer science degree in videogame design. When he 
enrolled, he was a little bit apprehensive because of the cost. You 
see, this for-profit, online school told him he had to take about nine 
classes a year and each class would cost him $1,500. Jacob was 
concerned about the cost, but the school told him: Don't worry about 
it. The loans you have to take out will cover your entire education.
  With that assurance, Jake enrolled 4 years ago. After about 4 years 
of attending courses year-round, Jake reached the maximum direct loan 
amount for independent undergraduate students. He had borrowed $57,500. 
The problem was, he wasn't finished. He hadn't completed his required 
courses. He had just run out of the ability to borrow any more money 
from the government. Jake is $57,500 in debt. He has no degree and no 
job prospects. He says all he wants to do is move forward and start a 
career--his original goal. Jake says the school will provide him with 
no assistance or alternative other than to drop out with a debt, no 
diploma, and no job.
  In fact, Jake didn't even know he had reached the maximum level on 
his Federal direct loan limit. He was withdrawn from online classes 
with no explanation and finally determined that since he could no 
longer borrow money from the Federal Government--he was at the top, 
with $57,500--they didn't want him. When he inquired, the school told 
him he had run out of money. With an annual income of less than $25,000 
and no other way to pay the tuition, Jake dropped out. He says the 
school's attitude was very clear: We got our money; we are done with 
you.
  Jake is not alone. Student debt has outpaced credit card debt. 
Imagine that. In October of last year--13 months ago--for the first 
time in history, the total amount of student loan debt is greater than 
credit card debt in America. In 2009, the average debt nationally for 
students at for-profit colleges was well above those who attended other 
institutions. Students at for-profit colleges graduated with an average 
debt of $33,000. At public universities, the average was $20,000. At 
private nonprofits, the average was $27,600.
  There are very few penalties for schools where students incur huge 
amounts of debt and can't repay their loans. More than three in four--
that is 76 percent--of young adults say college has become harder to 
afford in the past 5 years. Nearly as many--73 percent--say graduates 
have more student debt than they can manage.

  It was interesting to see with this Occupy movement--which had many 
different causes, in many different cities--that the one recurring 
theme, particularly from the younger people who were there, was we have 
to do something about student loan debt. Students across America, those 
who have attended colleges and universities, understand that debt and 
the burden it places on their lives. These students have to put off 
buying homes, starting families, and other major life decisions because 
of their debt.
  Sadly, many students are not informed about the loans they are taking 
out. They do not know the difference between a direct loan and a 
private loan, but they should. The one critical difference is this. It 
wasn't that long ago in America where people could borrow money from 
the Federal Government to go to college and beyond and then declare 
bankruptcy, so we changed the law. We said: That is not fair. They 
can't borrow this money from the Federal government and then refuse to 
pay it. So student loans from the government were no longer 
dischargeable in bankruptcy.
  I thought there was some sense and justice to that decision. We had 
cases that were reported of students literally finishing medical school 
and declaring bankruptcy before they went into practice so they didn't 
have to pay their student loans. That was unacceptable and unfair and 
it can no longer be done. Just a few years ago, we changed the law 
again and said private college student loans--those are loans from the 
university and not from the government--were also not dischargeable in 
bankruptcy. What does that mean? It means, if a student has incurred a 
debt or if one has signed on to their son or daughter's college debt, 
they are on the hook. They will have to pay that off or else.
  We asked some of the Federal agencies: Are you concerned about 
student loan default? They gave a very cold answer. They said: No. We 
will get our money because we will be watching for the rest of that 
person's life. Every time they think they are going to receive a 
Federal income tax refund, we will take the check. If necessary, we 
will take their Social Security checks too. That shows this student 
loan debt can haunt them for a lifetime.
  We recently had an e-mail from a young man. It was heartbreaking. He 
told a story of going to one of the for-profit colleges in the Chicago 
area and he ended up coming out of college with $90,000 in debt, a 
worthless diploma and no job. His parents signed a note. Because of the 
penalties and interest which accumulated after he had finished his 
education, his debt was now up to $124,000. Both his parents had 
decided they could no longer afford to retire, as they had planned. 
They had to keep working to pay off their son's student loan for an 
education that turned out to be worthless.
  I wish that was the only example I knew of, but we have been 
receiving

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more and more examples just like it. There is no way in this 
circumstance for this student to consolidate loans, lower interest 
rates or pay off the balance.
  Sadly, many students are not informed about the loans they take out. 
They do not know the difference between direct loans and private loans. 
They do not know this aspect of nondischargeability in bankruptcy. 
Private loans are even more burdensome. You see, when a person takes 
out a government student loan, after a period of time--because of some 
of the decisions made by President Obama and by this Congress--they can 
be at least limited in their exposure of how much they have to pay each 
year, 10 percent of their income, with certain qualifications--10 
percent, no more. After 10 years, should they take a job as a teacher 
or nurse, some of their government student loan debt can be forgiven.

  This is not true on the private side. The money loaned to a student 
by the school, for example, or by some other institution other than the 
government is not subject to these benefits or limits. Students wrack 
up unmanageable amounts of debt, then can't repay their loans or 
discharge their private student loans in bankruptcy.
  In September, the Department of Education released the fiscal year 
2009 national student loan default rates. It is a measurement of how 
many students default on their student loans, and it gives us a view of 
the overall burden of college on students. The rates of students 
attending for-profit colleges continue to soar well above the rates for 
students at private and public colleges--4.6 percent of students who 
attend private schools defaulting on their loans. But students who 
attend for-profit schools default at a rate almost 3\1/2\ times as 
high, at 15 percent. That is dramatically higher if they attend for-
profit schools. Because their debt is higher, their likelihood of a job 
is much less.
  This says more about the institutions than it says about the 
students. Yet there are no repercussions for schools with high default 
rates, unless--under new regulations from this administration--they 
have 25 percent default rates for 3 consecutive years. This is 
unacceptable.
  The recent GAO study recognizes we have few measures to determine the 
quality of education students receive. One measure we do have is that 
students at for-profits continue to go deeper and deeper into debt even 
though most of them don't graduate. Of students who began their 
education at for-profit schools in the 2003-2004 school year, only 15 
percent had obtained a bachelor's degree by 2009. Again, for-profit 
schools, over a period of 6 years, graduate 15 percent.
  What about other schools? Sixty-four percent of students at public 
colleges graduated in that 6-year period of time, and 71 percent at 
private colleges obtained a bachelor's degree. That is a huge 
difference. A 15-percent graduation rate at for-profit schools means 
students, many of them, are deeply in debt by a margin of almost 6 to 1 
are not graduating. They don't end up with a diploma. They have the 
debt, they have no diploma, and some of them end up with a worthless 
diploma.
  The recent Department of Education regulations are starting to work. 
They are cracking down on aggressive recruiting practices. Students are 
thinking harder about where they enroll in schools. In some cases, 
students are avoiding for-profit colleges. Every high school student in 
America should read the summary of the Government Accountability Office 
report on for-profit schools before they even consider enrolling in one 
of those schools.
  Some of the schools are starting to ask questions on their own about 
the way they do business, and they have come to me--many of these 
schools--pleading with me, saying: You are just talking about the bad 
guys. We are the good guys.
  Well, prove it. Prove it. Make certain that students are getting an 
education that is worthwhile. Don't sink them with debt. Stand by them 
when it comes to finding a job or at least be mindful of what that debt 
means to their lives.
  More needs to be done to educate families, high school teachers, and 
high school counselors about the choices students face. I hope these 
companies will continue to examine their practices, and I hope the 
Department of Education is going to continue monitoring the schools and 
the way they operate.
  Let me tell you about one such operation, the Career Education 
Corporation. I know about this school because its former CEO came and 
met with me in my office in Chicago and then appeared at a hearing, 
pleading with me to give special consideration to his for-profit 
schools, which were different and better and shouldn't be lumped into 
the category of these schools that are exploiting young people coming 
out of high school. I listened to him and basically said: Well, I will 
pay attention to the way this turns out.
  This gentleman, whose name is Gary McCullough, resigned as the CEO of 
Career Education Corporation on November 1 after it was reported that 
his school had misrepresented its placement rates for its graduates.
  Career Education Corporation is an Illinois-based company with over 
100,000 students nationwide. If you have not heard of Career Education 
Corporation, you may have heard of some of the names of its schools. I 
saw one of them on a bus in Chicago advertising for more students, and 
it is a familiar name to people who have followed the culinary side of 
business for a long time: Le Cordon Bleu. They bought that name, and 
they named one of their schools Le Cordon Bleu. We will teach you how 
to be a superchef, an Iron Chef, whatever chef you want to be. But it 
turns out that they were not only failing to educate and train the 
students, but the students couldn't get jobs, and the students were 
deep in debt.
  When Mr. McCullough ended up resigning as CEO of Career Education 
Corporation, they found out that only 13 of their 49 health, education, 
and art design schools--13 of 49--met the 65-percent minimum placement 
rate for the reporting period. They had falsified their numbers, and 
now they are under investigation. They should be. We need to get to the 
bottom of it. If they are lying to the students, something has to 
happen.
  First, they shouldn't be qualified for Federal student loans or Pell 
grants. If they are not graduating students into jobs, then they ought 
to be held to higher standards. And the students shouldn't be misled 
into believing that if they can get a Federal loan at a school, it has 
to be a good school.
  Secondly, there has to be some standard for accreditation. There 
obviously is little or no accreditation accountability at this point. 
You can't expect a high school student or his parents to be able to 
look at a school from the outside or look at the Web site and decide 
whether it is any good. There have to be some standards for performance 
and excellence when it comes to these for-profit schools--for every 
school, for that matter.
  Finally, if this school loses its accreditation, particularly in the 
programs where it has failed to graduate students, I think this school 
and this corporation should be held accountable for the student loans 
that have been incurred by these students. They didn't know they were 
signing up to go to an unaccredited school. Their debt is very real; 
their diploma is a phony. So it is time for these schools to be held 
accountable.
  I am sure there are many for-profit schools that offer a good 
education, but there are certainly many that are exploiting students 
today. They are so good at marketing, you can't avoid them, whether it 
is on the Internet or television. They are everywhere, everywhere you 
turn, particularly in low-income communities. They are offering 
``college'' to many students who can't get into a regular college or 
university. These students feel they are finally going to get their 
chance. Little do they know that all these for-profit schools are 
looking for is the money they can bring to them. When it is all over, 
they are deep in debt with no job and no place to turn.
  What is our responsibility? Remember, we put $132 billion a year into 
Federal aid to higher education. It is time for us to make sure the 
schools that receive them for the students are real schools, are 
graduating students and preparing them for a good life and a good job.

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