03.10.11

Durbin Statement on HELP Committee Hearing Investigating For-Profit Colleges

[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) today submitted a statement for the record at a Senate Health, Education, Labor and Pensions Committee hearing chaired by Senator Tom Harkin (D-IA) on Bridgepoint Education, Inc, a for-profit college company. In his statement, Durbin focused on accreditation agencies which, he says, serve as the gateway to federal funding.

 

“As Congress works to reduce the federal deficit, we are appropriately scrutinizing federal spending,” Durbin said. “We must do more to provide assurance to taxpayers about the value of their investment in higher education. Accrediting agencies also must provide assurance to taxpayers and students that federal financial aid funding is only going to institutions of quality and rigor that produce good outcomes for students. Students deserve more than what some of these colleges are currently providing.”

 

Yesterday, Durbin called on the Department of Veterans Affairs (VA) to take more aggressive steps to identify colleges and universities that have taken advantage of GI Bill benefits and to remove them from the program. Specifically, Durbin asked the Secretary of the VA, Eric Shinseki, to look into the fourteen other Westwood College campuses including the four that are located in Illinois. Durbin also called on the Secretary of Defense, Robert Gates, to do more to protect students and taxpayers from the worst excesses of the for-profit industry. According to a recent GAO study, the Department of Defense lacks basic oversight mechanisms of its Tuition Assistance program having less than a third of the courses offered to military members reviewed.

 

[The text of Durbin’s full statement is below]

Senator Richard J. Durbin

Statement for the Record

“Bridgepoint Education, Inc.: A Case study in For-Profit Education and Oversight”

HELP Committee, March 10, 2011

 

I would like to thank Senator Harkin for holding this hearing. The Chairman has held a series of hearings on for-profit colleges, and I commend him for his continued commitment to tackling this important issue. The Chairman and I share many concerns about practices in the for-profit higher education sector, as well as a lack of proper oversight of these institutions. I commend this Committee for its continued work in the area proprietary schools.

 

As I have said before, there are many good for-profit colleges that provide a valuable education to students. There is much that traditional colleges could learn from the flexibility and innovations of for-profit colleges, but we know that some for-profit colleges are failing students.

 

We know that 25 percent of for-profit college students will default on their federal loans within three years of leaving school. We know that for-profit colleges account for nearly half of all total defaults on student loans. I have spoken with these students—young people whose lives may be ruined by student loan debt they will never pay off.

 

There are bad actors in this industry, despite the claims of every lobbyist that their client is one of the good ones. Today, Chairman Harkin is profiling Bridgepoint Education. He will highlight practices taking place at this school that should make everyone question the investment of federal dollars there, as well as the efficacy of the current regulatory system.

 

Bridgepoint Education was founded in 1999. It purchased a small school in Iowa in 2005 and changed its name to Ashford University. The small campus quickly became a large online operation, still carrying the original school’s valuable regional accreditation with the Higher Learning Commission. Enrollment jumped from 332 students in 2005 to over 77,000 in 2010.

 

Profits have also skyrocketed. In 2010, Bridgepoint earned $216 million in profits while taking in over 85 percent of revenues from federal taxpayers. Very little of that money is being invested in student success. Bridgepoint only spends 40 oercent of revenues on instruction, faculty, and student services. The rest goes to profits and marketing. Only one career counselor is on hand to assist students with career placement: one counselor for 77,000 students.

 

Congress needs to take a serious look at whether federal financial aid dollars that are meant to provide students a chance at a higher education should be spent on billboards, television commercials, advertisements on the sides of buses, heavy-handed recruiting, and lining the pockets of investors.

 

Colleges that focus more on shareholders than students do not produce good outcomes. Ashford University, owned by Bridgepoint, has a 3-year student loan default rate of nearly 20 percent. When the promises made to students are not fulfilled, they find themselves left with tens of thousands of dollars in student loan debt and a worthless degree. If that student defaults on that loan, the taxpayers are left holding the bag.

 

Despite all the evident problems at Bridgepoint, Ashford University retains its regional accreditation, awarded before the school was purchased and transformed.

 

Accreditation agencies serve as the gateway to federal funding. The federal government, taxpayers, and students depend on their judgment and deserve assurances that accreditors are weeding out low-performing institutions. Looking at the current state of higher education, it is reasonable to question whether accreditation agencies have been living up to their responsibility. Examples such as the one highlighted today raise serious questions about the rigor of the accreditation process.

 

As Congress works to reduce the federal deficit, we are appropriately scrutinizing federal spending. We must do more to provide assurance to taxpayers about the value of their investment in higher education. Accrediting agencies also must provide assurance to taxpayers and students that federal financial aid funding is only going to institutions of quality and rigor that produce good outcomes for students. Students deserve more than what some of these colleges are currently providing

 

Again, I thank the Chairman for holding this hearing and I look forward to continuing to work with him to address this important issue.