Corinthian has responded to this abysmal record not by restructuring programs, lowering tuition or putting money into helping students find jobs that allow them to repay their loans, but by putting tens of millions of dollars into “default management” operations. The company recently told investors, “We substantially expanded our default management program at both the campus and corporate levels, and we are seeing the benefit of that investment.”
Using call centers and contractors, the company tracks down former students and encourages them to sign up for forbearances and deferments. These temporary solutions improve Corinthian’s statistics by pushing students who are at risk of default outside of the window measured by the Department of Education. This solution works for Corinthian and its shareholders, but it is not necessarily in the best interest of students.
Some for-profit colleges have succeeded in building a highly profitable business structure while failing to provide the student support, learning environment and career services that will enable their students to graduate and succeed. At their best, for-profit colleges provide opportunities for traditionally underserved students to pursue postsecondary education. This is highly desirable and deserves taxpayer support. But the federal government must be vigilant to ensure that poor-performing for-profit schools with huge dropout and student-default rates are not allowed to continue to receive billions of dollars in federal taxpayer subsidies each year.
I am determined to draft legislation to reform federal oversight of for-profit higher education. This effort deserves bipartisan support. The challenge is to crack down on the bad actors and abusive practices, while preserving the positive options and innovations that some for-profit colleges have pioneered.
Sen. Tom Harkin (D-Iowa) is chairman of the Health, Education, Labor and Pensions Committee.