In the wake of a "60 Minutes" expose on questionable proprietary school recruitment practices, a House education committee revisited the question of fraud and abuse in the federal student aid programs at a hearing held March 1. Among those testifying before the House Committee on Education and the Workforce was U.S. Department of Education deputy inspector general Thomas Carter. The department, he reported, continues to find cases of fraud throughout higher education, but 75 percent of them are in the for-profit sector.

His advice to Congress: Don't rush to throw out or reduce the rules in place to protect students and taxpayers. "I would go slowly on eliminating any rule before I knew what the effect of eliminating that rule would be," he said, unless there were substitute rules made for addressing the problem.

Earlier this year, committee Republicans, led by chair Rep. John Boehner (R-Ohio), introduced H.R. 609, the College Access and Opportunity Act, as part of the effort to reauthorize the Higher Education Act. The bill would lift restrictions put in place in the early 1990s to address a raft of fraud cases and high student loan default rates in the for-profit sector.

In addition to Carter, the committee heard from two representatives of the for-profit school industry and two witnesses who documented their experiences with the fraud and abuse problems.  Rep. Maxine Waters, (D-Calif) charged that thousands of her Central Los Angeles constituents have been "ripped off" by the unethical and illegal tactics of proprietaries.

In 2002-04, she said, the student loan default rate for students in the for-profit schools there was 44.6 percent. "The greater the needs of students, the greater the default rate," she said. It's a scandal the Department of Education is failing to address adequately, she said, and she called for strict and enforced liability provisions that would require for-profits to list—"book, chapter and verse"—their completion rates, job placement rates and names of companies taking the specific placements.

On Feb. 25, the AFT announced the formation of a coalition of groups representing students, faculty, consumer advocates and admission and enrollment officers to oppose HR 609's elimination of student aid protection rules (see earlier story). [Barbara McKenna]

March 3, 2005