Current Higher Education Law Unfair to Proprietary Schools & Students, Must be Reformed, Witnesses Tell Congress

June 17, 2004

Proprietary schools enroll a larger share of minority, low-income, and non-traditional students than other schools, and should be treated more equitably under current law, witnesses said.

Education & the Workforce Committee Chairman John Boehner (R-OH) said, “There is a problem when schools serving some of the neediest students are treated like a second class. There is a problem when the federal government creates incentives for schools to raise tuition or leave inner cities. And there is a problem when innovation is stifled through outdated regulations.”

Witnesses discussed provisions in current law that restrict proprietary colleges and universities from participating fully in programs aimed at serving students, and as a consequence, limit access, services, or opportunities for students at these schools. The College Access & Opportunity Act, introduced in May by Chairman Boehner and 21st Century Competitiveness Subcommittee Chairman Howard P. “Buck” McKeon (R-CA), includes reforms that would remove outdated barriers and burdensome restrictions to ensure students across higher education sectors are treated equitably.

The witnesses discussed the role proprietary schools play in providing high quality education to students pursuing the skills and knowledge to compete in a changing marketplace. Dwight Smith, president and CEO of Sophisticated Systems in Columbus, Ohio, testified on his success employing graduates of proprietary institutions, and urged the panel to remove restrictions that unfairly impact students at these schools.

“In order to achieve our success, we need to employ individuals with the appropriate technology and business skills that will help our customers achieve their goals. These types of graduates are hard to find. There continues to be a shortage of workers with the requisite skills to compete in the knowledge economy,” said Smith.

“More than ever, we need to promote and reward success in the areas of workforce education and training. If an institution is doing a good job of preparing students and providing businesses with quality employees, this is clearly in the nation’s interest,” continued Smith. “When hiring an employee, I look for a skilled applicant that can meet my needs and improve my company. It seems to me this ought to be the objective of our education policy as well. Any qualified and accredited institution that meets all the necessary standards and is producing quality graduates is making our nation stronger and providing public benefit.”

Current higher education law includes restrictions on the use of distance education, including a limit on the number of students who can be enrolled or the number of courses that can be offered via distance learning. Andrew Rosen, president and COO of Kaplan Inc. and president of Kaplan College, described the value of distance learning, and explained the need to remove current restrictions to ensure higher education policy is keeping pace with advances in technology.

“[R]eauthorization of the Higher Education Act presents an unprecedented opportunity to ensure that quality education and training options are available to all motivated students. Most of our online students are adults with families, and many are working single parents. They are eager to improve their education at times that traditional classroom learning would not be an option because of their job and family responsibilities. For them, online education is the only way to advance in their careers and better provide for their families,” explained Rosen.

In addition to restrictions that hamper the ability of institutions to offer innovative learning opportunities, witnesses explained how rules applied only to proprietary schools may actually create a disincentive to serve needy students. Corinthian Colleges’ David Moore explained how the 90/10 rule, which requires proprietary schools to show at least 10 percent of revenues come from sources outside of federal student aid, can actually pressure schools to increase tuition or move away from inner cities or other areas where students are likely to have the greatest financial need.

Moore also explained why reforms are needed as a basic principle of fairness, particularly for needy, minority, and non-traditional students. “[W]ith the growing demand for a skilled workforce, institutions that have a mission of workforce education and training have a more valuable role than ever to play in higher education. That role is to educate and train non-traditional students to fill skilled workforce needs. Institutions that serve these non-traditional students should be encouraged and facilitated, not hamstrung with outdated and outmoded restrictions.”

“For-profit institutions address the needs of the non-traditional student population, and prepare and certify them as ready for entry and advancement in the work force. For-profit colleges enroll a disproportionate number of minority, lower-income and other non-traditional students compared to non-profit and public institutions,” Moore continued. “For-profit institutions also account for a disproportionate share of degrees earned by minority students. Moreover, non-traditional students have greater success at for-profit institutions as measured by such outcomes as student completion rates.”

“At a time when more students than ever are choosing to go to college, millions of adults are interested in going back to school, and changing technology requires workers to train and retrain to compete in a changing marketplace, we should be taking steps to expand access to all sectors of higher education,” said Boehner.

Alexa Marrero or
Dave Schnittger
Telephone: (202) 225-4527