May 25, 2017
May 25, 2017
Written testimony to the Senate Finance Higher Education Subcommittee
Chair Gardner, Vice Chair Williams, and members of the committee, thank you for the opportunity to submit written testimony on the state budget bill. I am a researcher with Policy Matters Ohio and I focus on policies that support working poor families.
When higher education goes wrong, once-hopeful students can be saddled with debt, no degree, fewer resources and less will to pursue education in the future. Costs, debt and earnings vary greatly depending on the type of institution running the program. Career training programs at for-profit institutions, also known as proprietary schools, have come under scrutiny for producing an outsized share of dubious outcomes:
Ohio does little to protect students and public dollars from these corporations. Rather, the state’s financial aid policy incentivizes risky enrollment. In 2016, the same year the corporation closed its campuses, the state sent more than $1.1 million in Ohio College Opportunity Grants (OCOG), the state’s only need-based student aid program, to ITT Tech. That is slightly more OCOG than the state’s entire two-year public system received in 2016. Ohio spent more than $7.3 million for financial aid to students at for-profit schools. Most of that spending ($6.3 million) was from the Ohio College Opportunity Grant. Another $717,561 came from National Guard Scholarships.
College Scorecard data show that 29 of the 32 for-profit schools that received OCOG funding had less than half their students pay even one dollar of principal on their loans three years after leaving the institution. Only 10 had more than 50 percent of their students earn more than the average high school graduate. This does not include ITT or Kaplan, which also received OCOG funds but was sold and rebranded last year.
The state’s need-based aid system preferences for-profit career colleges over more accountable and transparent public institutions. The sector is generally self-regulated in the state, operating largely outside the Ohio Department of Higher Education. This must be corrected. Ohio should eliminate student aid to the sector and institute real oversight measures. As it now operates, students and the state are spending millions on profit-seeking schools, truly a risky business.
Policy Matters Ohio recommends these changes:
The rules would also refund and restrict junk student disclosure fees, restrict military seals in advertising, and allow veterans to be reimbursed for all courses, including completed courses if a proprietary school closed. All but the prohibition and refunding of the junk “student success fee” were removed from the bill through the House Omnibus Amendment.
These changes would resolve the more shocking oversights in Ohio’s for-profit regulatory scheme and should be enacted.
Research by the Federal Reserve Bank of Philadelphia shows that enrollment losses in for-profit schools are offset by gains at local community colleges. The research eases concern that decreasing student aid to these schools would lead to lower rates of college going. The study also found that students who enrolled in community colleges after their for-profit school was sanctioned were less likely to default on their loans. Tightening the reins will not lead to worse outcomes for students, rather it would steer students toward a less risky path to credentials.
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