For-Profit Colleges and Universities (Executive Session)
Mr. President, we know what open season means when it comes to these students. Gilbert Caro of Chicago can tell us. He was profiled in the Chicago Tribune article that I mentioned. Gilbert received his master of business administration…
Mr. President, we know what open season means when it comes to these students. Gilbert Caro of Chicago can tell us. He was profiled in the Chicago Tribune article that I mentioned. Gilbert received his master of business administration degree from DeVry University. It is possibly the second largest for-profit college in the United States.
He took on nearly $100,000 in debt for his master of business administration degree. He believed that debt was worth it because it was going to unlock the door to a high-paying job and financial security.
Do you have any idea what Gilbert Caro is doing now with his DeVry master of business administration degree? He is a prison guard in Joliet, IL.
While Gilbert has a good job, he certainly didn't need $100,000 in debt to be a prison guard. It is far from what he was promised by DeVry when he signed up. Gilbert, like so many other students who go to for- profit colleges, was lured in by an amazing marketing campaign, flashy advertisements and empty promises.
In 2016, DeVry University, a for-profit school, agreed to a $100 million settlement with the Federal Trade Commission for misleading ``prospective students with ads that touted high employment success rates and income levels upon graduation.''
DeVry is not alone. For-profit college giants like Corinthian and ITT Tech collapsed after they were caught engaging in similar deceptive, disgusting practices. The predatory practices of these and other for- profit colleges have left tens of thousands of students across the country, just like Gilbert Caro, with worthless degrees and a mountain of debt.
In fact, during the early part of this century, when for-profit colleges acted with near impunity, just the students from the for- profit colleges and universities accounted for 47 percent of all student loan defaults. Ten percent of the students coming out of high school went to for-profit colleges, and 47 percent of the student loan defaults were those same students--10 and 47. Why? Because they were overcharged for worthless degrees. That is why.
The University of Phoenix students held almost $35 billion in cumulative debt. When I look at their flashy advertising and the commercials about how life is going to be perfect if you sign up at the University of Phoenix, it is hard for me to imagine how many of those students are burdened with debt they will never be able to repay.
We also know what open season means for the for-profit college industry and its executives and investors. Between 1998 and 2008, enrollment at for-profit colleges exploded by 225 percent--a lot of advertising, a lot of marketing, a lot of recruiting. With it came exploding profits for these schools.
By 2009, the seven largest publicly traded for-profit college companies were worth a combined $51 billion--2009, $51 billion.
In 2010, the University of Phoenix alone enrolled nearly half a million students, more than the combined enrollment of all the Big Ten universities.
When former Senate HELP Committee Chairman Tom Harkin released his seminal report on the industry in 2012, for-profit colleges had grown to take in an incredible $32 billion a year in Federal taxpayer dollars, 25 percent of all Federal aid in education, despite enrolling only 10 percent of the students that went to college after high school.
For-profit colleges and universities are the most heavily subsidized private businesses in America that exist. No one rivals them. No other industry is even close, and 80, 85, 90, 95 percent of the revenue of these so-called private, for-profit universities ends up coming out of the Federal Treasury.
John Murphy, the cofounder of the University of Phoenix, talks about those days by saying that what started off as a serious venture to educate students soon became too focused on ``chasing stock prices.''
To pump up those stock prices, companies needed students and they needed Federal student aid dollars. They proved that they would do and promise nearly anything to get ``the juice,'' as Mr. Murphy, the cofounder of the University of Phoenix, called it.
Boy, is this industry itching for the Trump administration to return to those bad old days. The Chicago Tribune reports that since the November 8 election, the stock prices of DeVry University, a for-profit college, have increased 52 percent.
In a recent New York Times article by Patricia Cohen entitled ``For- Profit Schools, an Obama Target, See New Day Under Trump,'' the paid spokesman for the for-profit college industry, former Congressman Steve Gunderson, said he ``has repeatedly spoken with members of Trump's transition team . . . White House domestic policy advisers . . . and congressional Republicans.''
He is truly an insider. Mr. Gunderson promised: ``We're going to get some regulatory relief.''
Sadly, it looks like he is right. Take for example the delay of the gainful employment regulation. The Obama administration spent years writing and rewriting regulations to ensure that career training programs meet the statutory requirement to prepare students for ``gainful employment.''
Is that a radical idea--that if the Federal Government is going to provide grants and loans for a student to go to a school, the school should provide education and training that would lead to ``gainful employment''?
My colleague from Oklahoma was on the floor a little while ago talking about overregulation, too many rules, and the impacts on small business. I would say that I am prepared to stand up and defend what the Obama administration did in saying that if you were going to lure a young man like Gilbert Caro into a school and put him $100,000 in debt for a master's of business administration, he ought to at least end up with a job that is consistent with his education.
Today, Mr. Caro is a prison guard with $100,000 of debt and a business administration degree of no value to him.
The gainful employment rule cuts off title IV funding for programs where graduates' ratio of student debt to earnings is too high. Literally, the students are too deeply in debt.
Prior to leaving office, the Obama Department of Education released the first set of gainful employment data. It showed that the graduates of public undergraduate certificate programs, like community colleges, earn $9,000 more than their for-profit counterparts on average.
Think about that. You go to the virtually free community college, get a certificate, and you are going to earn $9,000 more than if you get deeply in debt at one of the for-profit schools seeking the same degree. Of the programs that saddle students with too much debt compared to the income its students receive after their program, 98 percent of the violators were for-profit colleges.
This is not just a chance occurrence. It is a pattern. The rule is meant to protect students from taking on debt to attend programs that don't lead to a good-paying job. The rule is also meant to prevent billions in taxpayers' dollars on worthless programs.
Many for-profit colleges receive more than 90 percent of the revenue straight from Federal taxpayers. My Republican colleagues are committed to the free market system. So am I. I am committed to capitalism. I believe in it. Though, I think there is need for us to have regulation when it gets out of hand. That is why we have an antitrust division, for example.
In this circumstance, to argue that these are just private companies that are doing what ordinary people do when they start a business is to ignore the obvious. These for-profit colleges could not exist if they weren't receiving 80, 85, 90, and 95 percent of their revenue directly from the Federal Treasury.
In recent testimony before a House subcommittee, the Department of Education inspector general agreed that the gainful employment regulation ``is a good rule in terms of protecting [students] and protecting taxpayers.''
I sent a letter--along with Senators Patty Murray, Elizabeth Warren, and nine other colleagues--expressing our concerns to Secretary DeVos about her delaying this rule. In our letter, we made clear that these delays undermine the rule and are going to be a danger to students and taxpayers.
It is also a betrayal of students not to ensure that they are treated fairly after they have been taken advantage of by for-profit schools.
Today, POLITICO reported that the Trump administration has dramatically slowed, if not stopped, processing applications from tens of thousands of students seeking to have their Federal student loans discharged after they have been defrauded by for-profit colleges.
Think about that. A student is about to sign up for a for-profit school.
Maybe he doesn't know much about higher education. His parents say: Listen, if you can get a Pell grant and a Federal student loan, this must be a really good school.
He is defrauded into signing up for a school that is too expensive and offers a worthless degree, and then they turn around and that school goes bankrupt. Now the student has the debt, no degree, and we are left holding the bag. What has happened in previous cases is the Federal Government stepped in and discharged the students from the debt if they were defrauded into signing up for the college.
Secretary Betsy DeVos has decided to slow that down--to slow down the discharge of these students' debt. Students who were misled or defrauded by their schools are eligible for discharge of their Federal student loans under the Higher Education Act--the law as it now exists. Yet during her confirmation process, Secretary DeVos would not commit to providing this relief to students--relief already specified in law-- and has now effectively stopped processing the claims.
On the day before President Trump took office, more than 3,200 Illinois students applied to the Department of Education for relief. While the Department fails to process these claims, these students are left in the lurch. It adds insult to injury that students taken advantage of by for-profit colleges, nominally supervised and regulated by the Federal Government, are now being ignored by the Federal Government's Department of Education. That is unacceptable. It is unfair, and the Trump administration should change it.
We've started to see the true colors of the administration and Secretary DeVos when it comes to these students who have been victimized. As feared, the Department has thus far put for-profit and other commercial interests ahead of students and taxpayers.
Mr. President, I yield the floor.