States Scrutinize For-Profit Colleges

  • April 18, 2012
  • By Ben Wieder

Rhode Island legislators are considering whether to give preliminary approval for the country's second for-profit osteopathic medical school. 

The proposed Rhode Island School of Osteopathic Medicine would become the state's only current degree-granting for-profit college if it also wins final approval from the state's Board of Governor's for Higher Education. It's the second proposal for a for-profit college in the state this session, according to Larry Berman, spokesman for the House of Representatives. The first, Utah-based Neumont University, decided to shift its focus to Massachusetts after the House didn't fast-track the plan, Berman said. 

The osteopathic medical school proposal has already drawn fire. It's opposed by Brown University, the state's only current medical school, Berman said, and Daniel Egan, president of Rhode Island's Association of Independent Colleges & Universities, called the for-profit sector of education “predatory and troubled,” according to the Providence Journal. 

The bill is mum on details, but one of its sponsors, Representative Joseph McNamara, says the new college would have lower tuition than most traditional medical schools and be a boon to the state and local economy, particularly because of its for-profit status. 

“The fact that a medical school would come in and pay taxes for the services they are receiving in my eyes is very impressive,” McNamara said. 

Rhode Island's deliberations come as more states are taking a harder look at the fast-growing for-profit college sector. 

While some for-profits have attracted federal attention in recent years for higher borrower default rates and questionable marketing practices, states are only more recently taking a harder look at the sector, according to a report released last week by the American Association of State Colleges and Universities. 

Jack Conway, Kentucky's attorney general, is leading a multi-state investigation into the business practices of for-profit colleges. Additionally, he has sued three for-profit colleges in his state, charging violations of consumer protection laws and illegal student recruitment practices. Illinois Attorney General Lisa Madigan also brought suit against the for-profit Westwood College this January, according to the report. 

A ruling issued in 2010 by the U.S. Department of Education stressed the role that states must play in approving for-profit colleges, but the AASCU report found that state regulatory agencies are often lax in their oversight of for-profit colleges. 

“Some states may have a very rigorous approach that involves a team of examiners,” said the report's author, Thomas Harnisch. “Other states have a more laissez-faire approach and view [for-profit colleges] more as businesses than education institutions.” 

He says that regulatory agencies are frequently underfunded and understaffed, particularly in financial and legal areas. 

The report notes that a number of states are considering or have recently passed legislation that could bolster oversight of for-profit colleges. 

Kentucky legislators passed a bill to close the state's Board of Proprietary Education and replace it with a Kentucky Commission on Proprietary Education. The commission would have a fund to compensate students if their for-profit college closes, as has happened several times in the state. Also, the commission would not be controlled by a majority of for-profit officials, as had been the case in the previous board. 

A bill signed in Maryland last year by Governor Martin O'Malley makes deceptive student recruiting illegal and requires for-profits to disclose more data. A West Virginia law signed last year also requires more disclosure. 

But while states might now be focusing more attention on for-profit colleges, Wendy Fernando, a spokeswoman for the American Association of Colleges of Osteopathic Medicine, says that the Rhode Island proposal, and the growth of the for-profit sector, is symptomatic of broader issues in higher education. 

“It's not really about medical education,” she says. “Part of the reason for that expansion is that public financing for higher education has remained static, or even declined in real dollars.”

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