Harkin: Protect against abuses by for-profit colleges

Few business sectors are as scandal-plagued as the one that sells postsecondary education to earn a profit. Many of the most famous of these businesses are either defunct after being broadly accused of deception (Corinthian) or are being sued or probed by federal and state government agencies (University of Phoenix, ITT and DeVry, for example). More than 30 state attorneys general have banded together to investigate these corporations.

And talk about corporate welfare.  Almost all of their profits come from billions of dollars in taxpayer-funded student loans, which is why these businesses target veterans, single mothers, and low-income and first generation students in their aggressive sales campaigns.

What do the taxpayers and the students get in exchange for the billions of dollars flowing into executives and private equity fund pockets?

Too often, worse than nothing. Too few for-profit college students graduate and of those that do, few can pay back their loans or get the good jobs promised by slick ads, especially compared with students who enroll in public or nonprofit colleges. For-profit students too frequently end up both without an education, drowning in debt that cannot be discharged in bankruptcy.

Only the massive political clout of these companies in Washington has allowed these abuses of our veterans, our first generation college students, and low-income students to endure on the taxpayer’s dime.

I should know. As a U.S. senator I led the investigation that first exposed many of their misdeeds.

The good news is that many states have recently moved to enact better protections and the Department of Education is taking some steps in the right direction to protect students.

The bad news is that a bizarre alliance of public, non-profit and for-profit colleges is pushing a benign-sounding model statute that undoes these new state protections to make it easier for all types of colleges to expand lucrative online programs.

It is called the State Authorization Reciprocity Agreement, or SARA.  Here’s how it works.

Typically, colleges are regulated by the state where the college is located, to protect the students that live within the state’s borders. But online schools can be located far away from the students they serve. So, if the University of Iowa wants to offer an online program to students in all 50 states, should it have to comply with 50 different regulatory regimes?

The way SARA addresses this legitimate question is to say that only the state’s laws where the institution is physically located govern its online offerings. Under SARA, if an Iowan has a problem with the online program of a school headquartered in Arizona, the Iowa student would enjoy only as much or as little protection as Arizona law provides. The Iowa student could only complain to Arizona regulators to get relief.

Unlike public institutions such as UC Berkeley or non-profits like Harvard that are firmly based in a state, the for-profits can base themselves in states with weak consumer laws that lack the resources to handle thousands of complaints from students in California and New York, for example.

One may ask, why not just have one set of rules for the public and non-profits that aren’t being investigated or sued by more than 30 state AGs, and another for where the problem lies: namely, the big businesses?

The answer will shock you.

For reasons that fly in the face of the philanthropic mission of the public and nonprofit institutions, the model act they helped draft actually forbids states from regulating differently based on sector. That’s right. Under SARA, Massachusetts is forced to regulate Harvard the same as it regulates ITT. If it doesn’t, then Massachusetts is kicked out of SARA and Harvard has to get approval from each state to offer online education.

This is simply not the way it should work.

The non-profits and public institutions need to place their mission of education over their desire to grow lucrative online programs. They need to insist that SARA be redrafted to allow states to pass laws based upon where the evidence shows protection is needed: the for-profits.

Every state that has enacted SARA needs to revisit it.  New York, for example, has no idea whether the other 49 states’ laws or regulators can adequately protect New Yorkers.  Any state that has enacted SARA has just done the equivalent of hiring someone to do an important job — protecting the students in their state from possibly predatory businesses —  without checking their resume or references.

That’s not reciprocity. That’s abdication.

And no state should enact SARA until it allows states to regulate the bad guys more strictly than the good guys.

Retired U.S. Sen. Tom Harkin represented Iowa in Congress for nearly four decades and led the Senate Health Education Labor and Pensions Committee, which published the first investigation of for-profit colleges, from 2009 to 2014.