The for-profit scam

Colleges that operate for profit desperately need regulation.

Daily Editorial Board

The U.S. House of Representatives voted Friday to amend a spending bill in order to block proposed regulations of the for-profit college industry designed to protect students. The Senate will take up an analogous bill this week.

The amendment, sponsored by Minnesota Republican John Kline, is a reaction to proposed regulations drawn up by the Department of Education. The regulations would prevent for-profit institutions from receiving federal financial aid âÄî which comprises up to 90 percent of for-profit collegesâÄô revenue âÄî if students have too high a debt-to-income ratio or default rate. Students at for-profit colleges currently default on loans at twice the rate of other college students.

The for-profit college industry desperately needs this regulation. An undercover investigation of 15 for-profit colleges by the Government Accountability Office found that all 15 used deceptive or questionable recruiting practices and that four of the 15 engaged in outright fraud. Students are lured in with false promises and graduate or drop out unable to pay off their loans. These coercive and exploitative practices must stop.

WeâÄôve seen what can happen without sufficient regulation of an industry that is based on predatory lending, issuing debt that borrowers cannot pay and fraudulent practices. These are exactly the conditions that led to the mortgage crisis and subsequent global financial collapse. Have we not learned our lesson?

The for-profit college industry needs regulation, and KlineâÄôs amendment blocks sensible reforms that would protect students from deception and fraud. The Senate should refuse to pass any similar amendment and pass the DOEâÄôs suggested reforms instead.