Washington
After more than a year of examining problems in the for-profit college sector, Sen. Tom Harkin, Democrat of Iowa, appears to be closing in on some solutions.
At a roundtable discussion with representatives and critics of the colleges on Thursday, Mr. Harkin, the chairman of the Senate education committee, said he was working with the Armed Services Committee to include military aid in the federal share of the 90/10 rule. The rule requires for-profit colleges to receive 10 percent of their revenue from nonfederal sources to be eligible to participate in the student-aid programs.
"It's all taxpayer dollars, so shouldn't it all be treated the same?" he asked.
The proposal met with support from Holly Petraeus, director of the Office of Servicemember Affairs in the newly formed Consumer Financial Protection Bureau, who said for-profits often view veterans and service members as "dollar signs wearing a uniform."
"As long as they're in that 10 percent, they're going to be aggressively recruited," she said.
Ms. Petraeus, the wife of the four-star Army general, David H. Petraeus, who was recently confirmed as director of the CIA, also called for more disclosure around cost and student outcomes, saying members of the military need "more clarity upfront."
"The sad truth is that a lot of them are signing up based on advertising and word of mouth," she said. If the colleges "wrap themselves in the flag and say they cater to the military, they get picked."
Mr. Harkin also hinted that he might seek to limit the share of federal aid that the colleges can use to market to prospective students, arguing that there was an "imbalance" in the amounts for-profits are spending on advertising compared with instruction.
"Should we be looking at how much federal money is being used for marketing, and if money is fungible, how do you do that?" he asked the panel.
Barmak Nassirian, an associate executive director for the American Association of Collegiate Registrars and Admissions Officers, said Congress should cap spending on marketing at a college's nonfederal revenue.
Robert Shireman, the former deputy under secretary of education, suggested that lawmakers bar colleges receiving large amounts of federal aid from charging more than double what they spend on instruction—"something more definable and auditable."
But Daniel Hamburger, the president and chief executive of DeVry, said a better approach would be to focus on student outcomes.
"You want a college who is doing the right things to tell the world about it, which is advertising," he said. "I would suggest we focus on output measures."
He argued for using data on student learning, completion rates, licensure, job placement, and loan-repayment rates to "flag" colleges with potential problems.
Hayes Batson, president and chief executive of Regency Beauty Institute, took the idea a step further, suggesting that Congress set "thresholds" for Title IV participation based on student completion, licensure, and placement rates. He also proposed replacing the "current patchwork of regulations" with a system built on standardized disclosures.
"There are ways we can take the enormous complexity in our system and boil it down to get a much better alignment in incentives," he said.
Mr. Harkin praised the plan, calling it "as lucid a response as I've heard in any of our meetings."
"Now we're getting to it," he said. "You have really given us something to think about."
"Did I earn the right to ask if you'll apply it to all of higher ed?" Mr. Batson asked.
"Absolutely," Mr. Harkin answered.
