The for-profit higher-education sector has a history of troubles.
But industry advocates say problem schools like the Business Computer Training Institute are the exception, not the rule.
“BCTI has become a four-letter word for us,” said Gena Wikstrom, executive director of the Washington Federation of Private Career Schools and Colleges. The group represents mostly for-profit vocational schools.
Wikstrom called BCTI’s abrupt closure last year, which stranded hundreds of students, “unconscionable.” And she said its efforts to recruit at welfare and unemployment offices were not viewed favorably in the industry.
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Wikstrom said other schools hate to see cases like BCTI because they cast the industry in a bad light that is not deserved.
She cited the low number of student complaints in an industry that serves nearly 30,000 students a year in Washington. The state last year received just 39 complaints about those schools.
“Over the years, it’s a very, very, very small and rare thing that happens,” Wikstrom said. “The perception is this happens regularly, and that’s erroneous.”
loan default rates higher
The industry has spurred important innovations, like offering convenient class times and locations. And it has opened doors to working people and minorities, she said.
But the industry also has attracted unsavory operators. Critics say some schools target low-income people because they are eligible for financial aid. Sometimes students don’t get their money’s worth from low-quality programs.
Those students often drop out or can’t get a decent job if they graduate. But they still owe thousands of dollars in student loans, and many can’t pay. When students default on federally backed loans, taxpayers often cover the debts.
Student default rates at for-profit schools are higher than at traditional public and nonprofit colleges.
In 2004, nearly 9 percent of students who borrowed money to attend for-profit schools defaulted, compared to 5 percent at public schools and 3 percent at private, nonprofit schools.
Default rates at for-profit institutions soared in the 1980s and early ’90s, reaching 26 percent in 1991.
In 1991 a U.S. Senate investigation found for-profit schools with well-developed recruiting and financial aid operations but poorly taught classes. It also found deceptive recruiting practices, falsified financial aid records and aid given to ineligible students.
In recent years some of the industry’s biggest names – including the University of Phoenix, Career Education Corp. and Corinthian Colleges – have come under fire.
They’ve been subjected to federal or state investigations or lawsuits. The accusations vary from school to school, but include illegal or misleading recruiting practices and inflating enrollment to boost financial aid income.
Some of the accusations have been sustained, others have not, and others are still pending.
congress gets involved
In response to growing complaints, Congress in 1992 enacted a series of measures to crack down on abuses.
Among other things, it required them to get at least 15 percent of their revenue from sources other than the government’s main student grant and loan programs.
The idea was to weed out low-quality schools that can’t make at least some money from other sources.
The measures reduced default rates, and complaints subsided. But critics say Congress has since watered down regulations on for-profit schools. For example, regulations now require schools to get just 10 percent of their revenue from other sources.
The industry has continued to press for further changes to federal law and better access to public aid programs.
Bruce Leftwich, vice president of the Career Colleges Association, an industry group, said the industry favors strong ethics codes and accountability measures.
He said for-profit schools are more accountable than traditional colleges, because they must report to stockholders and students as well as federal and state regulators.
Leftwich said the industry wants only to be treated the same – and to have access to the same funding sources – as traditional colleges.
“We see this as our students getting their fair share of the pie,” Leftwich said.