While Gov. Walker’s cuts to the University of the Wisconsin system are making headlines, part of his 2015-17 budget also includes disbanding a number of state agencies. One of those, the Educational Approval Board, approves for-profit colleges that seek to enter the state. It bills itself as a consumer protection board of sorts, and annually evaluates the for-profit colleges already operating in the state. Walker said the board creates a “regulatory and fiscal burden” on for-profit colleges. The federal government, however, is taking the opposite course as signaled in October by its enhanced regulation of the schools. According to the U.S. Department of Education, students at for-profit schools nationwide only make up 13 percent of the total student population at institutions of higher education, but that 13 percent also accounts for 31 percent of all student loans and close to half of all student-loan defaults.
As we wrote about in 2012, for-profit colleges in Wisconsin and across the country have come under fire for what opponents describe as predatory targeting of low-income students who must then take out private and federal loans to fund their educations, which often result in low rates of job placement. (The Department of Education contests that students at public community colleges have low rates of borrowing. In the 2012-2013 school year, 58 percent of Milwaukee Area Technical College Students received federal loans.)
In fact, for-profit school operator Corinthian Colleges Inc., which opened the failed Everest College in Milwaukee and is now offering students across the country a $480 million loan forgiveness program, reported in 2010 that 83.1 percent of its revenue came from federal student loan dollars. That year the company earmarked 13.5 percent of its revenue for profit, which totaled nearly $241 million. In June, 2013, Milwaukee’s Common Council passed an ordinance with stricter criteria for for-profit colleges which hope to gain any financial assistance from the city in the form of direct assistance, loans or tax-incremental financing. And in October, Wisconsin Attorney General J.B. Van Hollen moved to sue Corinthian for the Everest debacle. Just this week, half of Corinthian’s schools were sold for $24 million to a student loan debt collector, which plans to convert them to nonprofit schools.
At one point, the EAB established an advisory committee that set out to create lofty standards for for-profit school performance, including “a 60% combined program completion and tranfers-out rate and a 60% graduate employment rate,” but the committee was shuttered in March, 2013. The EAB also oversaw the transitions for students affected by school closings, with the latest example of Brookfield’s Anthem College campus that closed in July citing financial issues.
According to the Wisconsin State Journal, 60,000 students attend 244 for-profit schools across the state. In his budget, Walker transferred the approval of for-profit colleges to Department of Financial Institutions and Professional Standards, a new agency, and “certain consumer protection functions” will now be handled by the Department of Agriculture, Trade and Consumer Protection (DATCP).
State Authorization Reciprocity Agreements, known as SARA, is national council created by the Lumina Foundation that streamlines the vetting of schools that have a presence in multiple states while simultaneously ensuring some level of consumer protection. The state of Wisconsin has many online-only schools based in other states, but is not a member of SARA. In what will likely be its last student outcomes report, the EAB produced unflattering findings about drop-out rates at for-profit colleges in addition to online-only schools. Approval and data collection for these online-only schools would fall under SARA, according to the report, if Wisconsin were to adopt the agreements.
“If Wisconsin loses its ability to collect student outcomes from these institutions because of SARA, the EAB’s ability to fulfill its statutory consumer protection responsibility will be limited,” the report said. But now that consumer protection and approval have been essentially split between the new agency and DATCP, it remains to be seen whether one or both of these agencies will soon be wondering the same thing.
