A Quandary

“For-profit organizations successfully serve many students, and the department has been very sensitive to what all students suffer for which may only affect some students in certain programs,” said Kevin Kinser, associate professor who studying at for-profit colleges at the State University of New York at Albany. “So they are reluctant to throw the baby out with the bathwater.”

Kinser pointed out that the Education Department had little leeway under the law when it came to cutting federal student loans and awarding money to potential abusers. “There are individual triggers in place for financial sustainability, institutional integrity, et cetera,” he said, “but no three strike rule and you are out.”

Education officials say they have cracked down on many for-profit schools, restricting their ability to expand their programs or the number of campuses, capping the number of students eligible for student loans, or requiring schools like Education Management to post a letter of credit to gain access to federal loans and scholarships. The letter aims to protect students and taxpayers if the company is unable to meet federal student aid obligations.

“What is clear to all of us is that the best way to solve this problem is up front and not to let bad schools run,” said Ted Mitchell, the Under Secretary for Education. The agency’s “more aggressive stance,” he said, contributed to an 18% drop in for-profit registrations from 2011 to 2013.

Yet critics say even schools with blatant violations have become adept at exploiting loopholes, bending rules, or taking advantage of appeals processes that take years. Companies with multiple campuses can pool statistics on degrees, finances, enrollments, staffing and other statistics to hide poor performance, experts say.

“The clear line standards are good, but they can also be managed,” said Ben Miller, senior director of post-secondary education at the Center for American Progress, a liberal research and advocacy group. “That’s why hardly anyone gets caught. The big schools know how to work the numbers to avoid failure. “


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