On September 13, TCF senior fellow Robert Shireman submitted the following comment in response to the DeVos Education Department’s proposal to allow for-profit higher education companies to draw direct funding from the federal government. In his commentary, Shireman outlines the original intention of the Higher Education Act in allowing such allocations only as exceptions, and explains how throwing that door wide open dismantles one of the Act’s chief protections of both student borrowers and taxpayers’ money.
As an appendix, Shireman included TCF’s historical series The Cycle of Scandal at For-Profit Colleges, which can be read here. A coalition of advocates that includes TCF fellow Yan Cao also submitted a comment, available here.
For the past fifty-three years, due to a history of abuses in for-profit higher education, Congress has excluded for-profit institutions, as a category, from receiving direct funding through the Higher Education Act (HEA). To the extent that owners of schools are allowed to draw down funds from the U.S. Treasury under Title IV, it is on an exception basis: only when they can demonstrate that the program in which the eligible student is enrolled is worthy of federal funding because it prepares the student for “gainful employment in a recognized occupation.”
In its notice of proposed rulemaking (NPRM), the department declares its opposition to this statutory treatment of for-profit institutions, and signals its intention to administer the HEA as if was written differently. While making its case against the HEA’s gainful employment exception, the department’s proposed rule falsely portrays the legal requirements for institutional eligibility; misstates the purpose of the Title IV programs; and misleads the public about the justifications for the 2011 and 2014 gainful employment rules. These deficiencies in the department’s reasoning, explicated below, are in addition to the numerous factual and logical errors that have been pointed out in comments submitted by others.
The department should abandon its poorly-reasoned NPRM and fully implement the 2014 rule as written.
A. The Proposed Rule Falsely Portrays the Legal Requirements for Institutional Eligibility
The proposed rule describes the difference between higher education sectors—public, nonprofit, and for-profit—as a matter of “tax status.” While the allusion to the tax treatment of nonprofits is frequently used as a shorthand for the different entities’ corporate accountability and control requirements, in the context of this proposed rule the use of the term “tax status” by the department is false and misleading.
The HEA does not make any reference to tax status. Instead, institutional eligibility is offered to entities that are either public or are nonprofit corporations “no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.” In the HEA, Congress was concerned about the way that private inurement—people at institutions siphoning off money for themselves—can steer schools wrong when they are using federal money.
Department officials, by using the term tax status, are attempting to create the impression that “nonprofit” is an invidious distinction, when in fact the differences that separate public, nonprofit, and for-profit institutions are fundamentally important accountability and financial requirements, not anything about taxes, as shown in the table on the following page. (The term tax status is used in common parlance not because tax treatment is a defining characteristic but because a donor’s tax exemption under federal tax law depends on the same type of prohibition on private inurement as is required by the HEA).
As the attached history series shows, Congress has found, time and again, that postsecondary institutions not subject to the prohibition on private inurement, i.e. those that are for-profit, are much more likely to take unfair advantage of students and taxpayers. The department’s effort to deny that fact by pointing to nonprofits behaving badly is nonsensical: those incidents are “[w]ell-publicized” precisely because they are rare and unexpected at nonprofit institutions. They are the exceptions that prove the rule: to wit, the department itself has estimated a “level of school misconduct” for proprietary institutions that is seven times higher than the rate for public and other nonprofit institutions.
|
Public
|
Nonprofit |
For-Profit
|
| Who is responsible for governing the institutions, including setting tuition rates and budgets? |
Elected and appointed state officials |
Trustees |
Owners |
| What are they allowed to spend money on? |
Education or another public purpose |
Education or a charitable purpose |
Anything, including distributions of profit to owners |
| Can top-level decision-makers personally profit from the operations of the institution? |
Generally no |
Generally no |
Yes |
| Do colleges have access to equity markets to invest and expand? |
No |
No |
Yes |
| Is there a financial backstop if something goes wrong and the college becomes bankrupt? |
Taxpayers |
No |
No |
By eliminating the gainful employment rule, for-profit colleges will be held to lower standards than public and nonprofit schools, which have strict financial controls and accountability, as summarized above. As the department’s own data show, borrowers who enroll at for-profit colleges are far more likely to end up feeling that they were defrauded by their school than do borrowers who attended nonprofit or public institutions.
The department notes that the problem of fraud and abuse is sometimes described as one that is caused by “bad actors.” But while it is likely that the for-profit sector’s financial freedoms would attract more charlatans, the primary reason that for-profit schools are more hazardous is more mundane: the ban on private inurement steers nonprofits toward more pro-student decisions and behaviors. Everyday business decisions, focused intently on producing net revenue for growth and profit, cause for-profit colleges to engage in more predatory behavior than do institutions where the profit motive is muted.
The tactics for taking unfair advantage of education consumers are numerous. Here are seven common in federally-funded higher education.
1. Seeking trust by proxy. Education is a trust product: consumers cannot possibly know whether their expectations match the design, intentions, or capabilities of the seller. To gain the confidence of potential buyers, schools frequently use the fact of the availability of federal aid. For example, the parent of an ITT student says school officials told her daughter that “since the government sponsored the loan, the education it bought would be great. After all, the government doesn’t make loans for homes that are about to fall down.” The Federal Trade Commission cited this problem of implied government endorsement in its major study years ago: “[I]n claiming that the school is ‘approved’ for VA training, or ‘approved under the GI Bill,’” schools “use the aura of the federal stamp of approval. The clear implication of advertising of this nature is that the United States Government has examined these institutions and is vouching for them.”
In addition to the government hook, schools frequently seek to associate themselves with respected companies or with big-name universities. For example, a recruiter for the online division of Kaplan University used as a selling point that “Kaplan is very well regarded. It is owned by the Washington Post. . . . It is the Harvard of online schools.” Warning that other online schools’ credits might not transfer, she said Kaplan’s accreditation means it is “a college like Boston College, William and Mary, the University of Illinois.” A Kaplan recruiter in Florida testified that recruiters learned early on to cite name-brand colleges. “If the student was calling from Michigan, we were told we had to say, ‘We have the same accreditation that the University of Michigan has or Michigan State.’ If we were calling someone from California, it would be ‘the same as USC or Stanford.’”
2. Advisors who care about you. One of the most common strategies of predatory colleges is to train their advisors to create the impression that they are a target’s friend and advisor. Rose Grier, a former student at Argosy University, looked back on the salesman that got her to enroll and realized, “The guy was so slick, and I almost felt like he was my friend. . . . By the time the whole thing was done, I was like calling him by his first name, and we were laughing.” In a U.S. Senate investigation of the largest for-profit college companies, the caring-friend strategy was common in sales training materials. For example, ITT Tech sales training documents from 2010 told employees that “Everything you do relies on your ability to establish rapport,” so “Be sincerely interested in them” and get them talking. Kaplan recruiters were trained that pretending to be a friend was the key to closing a deal: “Making conversation and making the student feel comfortable. Making them feel like they were your friends before you went in to actually getting them to enroll.”
The friend-and-advisor strategy has been around for a long time. The schools run by McGraw-Hill in the 1970s were blunt about their recruiters’ task: to “disarm” prospects, “You need to [e]stablish yourself as a counselor or advisor, not a money-grabbing, hit-and-run, fast buck artist. Overcome his natural suspicions.”
3. The “yes” ladder. In her study of for-profit schools, sociologist Tressie McMillan Cottom noticed that recruiters tended to ask a lot of questions that were difficult to answer any way but “Yes”:
On eleven separate occasions at nine schools, the [recruiter] said of a job board, “You think this career board might help you keep an eye out for a better job?” These types of questions were phrased so that a negative response would either be a non sequitur. . . . Or would violate a social norm, like admitting that you didn’t really want to keep an eye out for a better job.
This “yes!” technique, it turns out, is part of recruiters’ training. DeVry University materials called it “The Tie Down: The purpose behind this questioning technique is to get the prospect to say yes as many times as you possibly can throughout the call so that when you ask for final yes it almost seems ridiculous that they would say no.” One example of the question type in the training document was, “Do you think getting your BSN would help you achieve your goal?”
4. Success is (almost) guaranteed. Several colleges have run into legal problems as a result of using job placement data that were fudged. But schools do not need to cite data in order to create the impression, wrong but strong, that getting a good job will be almost a slam dunk for the student. Cottom’s job board, above, is reminiscent of the FTC’s finding in 1976 that for-profit schools create “the inference of employability by emphasizing the size, scope, or efficacy of its ‘placement’ mechanism.”
In an exchange caught on video in 2010, a recruiter at a school in Florida tells a prospective student, “So I know medical assistants that are making sixty-eight, sixty-nine thousand a year, and they only went to school for nine months.” The claim, if true, is not even close to typical, since in Florida nine out of ten medical assistants make less than $39,000 per year. But the misleading message was delivered effectively in a way that would be difficult to prosecute as a deception intended by the company.
5. The hard-sell. At the urging of President George H.W. Bush, Congress in 1992 prohibited the payment of bounties to admissions staff by schools that take federal aid. But even without paying bounties, schools have plenty of tools they can use to push recruiters to sell, sell, sell. Quota systems, for example, “virtually force… salespeople to enroll unqualified students.” Salespeople never get fired for predatory recruitment; instead, “termination appears to be a sanction invoked only when a salesman fails to make enough sales.”
In a case against Ashford University, the California attorney general quotes an admissions supervisor who said, “I had worked in the sales industry for many years. But Ashford had the most aggressive sales floor I have ever seen.” Recruiters were forced to stand at their desks if they missed their targets, and one manager “even saved the key cards of terminated Admissions staff on a keyring, which she rattled in front of reports to remind them of their obligations to hit their metrics or else.”
Similarly, a suit against Education Management Corporation, owner of the Art Institutes and other colleges, alleged that
- The company had a “boiler-room style sales culture” in which recruiters were instructed to use high-pressure sales techniques and inflated claims about career placement to increase student enrollment, regardless of applicants’ qualifications.
- Recruiters were encouraged to enroll even applicants who were unable to write coherently, who appeared to be under the influence of drugs or who sought to enroll in an online program but had no computer.
- Recruiters were also led to exploit applicants’ psychological vulnerabilities—for example, a parent’s hopes of moving a child out of a dangerous neighborhood.
6. The courage to make your life better! The courage strategy essentially turns the tables on prospective students, using their insecurities to make them feel that they need to sell themselves to the school. One for-profit school advised its sales team, after befriending a prospect, to clinch the sale by saying, “You have been so close to living an amazing life so many times in your life but always come up just a little short, let us help make sure that never happens again.” DeVry University had similar advice for its recruiters—“Replace the fear of trying with a greater fear of not succeeding.”
In 1976, the FTC described the strategy as a “highly developed and successful sales pitch . . . undermining the natural sales resistance and forcing the individual to prove his or her worth to the salesperson, instead of the salesperson proving the worth of the course to the prospect.” The “courage” strategy had multiple effective uses, including negating bad job placement numbers by putting the onus back on the student. The FTC cited a large school that would tell prospects, “Of course, no school—not even ICS—can guarantee you a better job. We can’t make you smarter than you already are, and we can’t make you ambitious if you’re lazy.”
The FTC emphasized that the problem were made much worse by federal aid: “the availability of federal loans and grants has worsened the shoddy recruitment, advertising, and enrollment practices of the proprietary schools industry . . . allow[ing] marginal schools to add thousands of students to heir rolls without regard for proper career training.” Students assumed that federal aid was a federal endorsement, weakening their sales resistance. “The natural and logical reaction” of the industry to the wide availability of federal loans is to “oversell.”
7. Playing by the rules, but only by the rules. When things go wrong at a for-profit firm it is frequently the result of the company and the regulatory agency both focusing on “mere compliance” with rules rather than “good compliance.” A narrow focus on profit and legal compliance leads to a
checkbox mentality that gives the illusion of reducing risk without really doing so. Moreover, unless an organization is careful, a compliance-focused approach to eliminating unethical behavior can stunt a company’s efforts to innovate and to take intelligent risks.
This problem is particularly acute in for-profit education, where the goal of quality education is difficult to measure while goals like new starts and profit can be tracked easily. Numerous for-profit college officials have acknowledged that they have found that their organizations seem to naturally pull in a narrow compliance direction and short-term profit rather than driving for what’s best for long term. To battle this tendency, as executives they must “work very hard to avoid succumbing to these short-term temptations.” A co-founder of the University of Phoenix blames investor pressures and a narrow focus on the stock price for that institution’s fall from quality in the 1990s to “chronic educational failures” in the 2000s.
Without government aid, the problems would not have grown to affect hundreds of thousands of students. Government programs can easily go awry when they attempt to use profit-making entities to pursue hard-to-define goals, as the economist Eduardo Porter has explained:
Profit is one of the most potent incentives known to man—a powerful tool to align managers’ interests with corporate goals. But it also has drawbacks. With earnings as the overriding, nonnegotiable priority, private enterprise often has little wiggle room to handle the tension between conflicting objectives…
This suggests a good rule of thumb to determine when a private company will outperform the public sector: if the task is clear-cut and it’s possible to define concrete goals and reward those who meet them, the private sector will probably do better.
But if the objectives are complex and diffuse—making it difficult to align profit with goals without undermining some other desirable outcome—the profit motive could well make conflicts more difficult to manage.
For-profit colleges are so frequently caught crossing the legal lines because they tend to operate so close to those legal lines. When the line is a speed limit that’s fine. But when it is false and deceptive advertising or educational malpractice, the goal of public policy must be for institutions to steer far away from the line. But that directive, because it is not clear-cut and concrete, is, as Porter explains, difficult territory for for-profit firms to manage.
B. The Department Misstates the Purpose of the Title IV Programs
The purpose of Title IV is laid out quite clearly at the beginning of title, in authorizing the grant programs. It says that the purpose is “to assist in making available the benefits of postsecondary education to eligible students…” (emphasis added). In its NPRM, the department makes up a different purpose, declaring that “the primary purpose of the title IV, HEA programs is to ensure that low-income students have the same opportunities and choices in pursuing higher education as their higher-income peers.” The department eliminates from its purpose the fact that the HEA, presumably because it is steering taxpayer dollars, is concerned not only with access but with quality: benefits for students.
Oddly, the source the department cites for its description of the purpose of Title IV does not include anything like the department’s version. Furthermore, the source is quite clear that the idea that choice would assure quality, the simplistic notion currently being pushed by the department, “was a dubious proposition from the start.”
Federal student aid programs have been plagued by institutions that defraud both taxpayers and students, offering programs of little or no educational or vocational value, or that are so poorly managed they do not serve students effectively. High student loan default rates, as well as low completion and placement rates for students who receive aid, have reflected these problems and galvanized public concern.
Much of the trouble has come in the for-profit sector; but the baggage of fraud and abuse has encumbered the entire student aid effort and triggered tighter rules affecting all of postsecondary education. In part, this reflects successful lobbying by the proprietary school industry, which has blocked proposals to remove trade schools from participating in Title IV programs or authorize separate regulatory controls over them…
While the concept of access has shaped congressional policy:
we have learned that access does not assure quality; in fact, access can ill-serve students if they do not complete their education or graduate without the skills they need to succeed.
Low-income, at-risk students are actually the most ill-served when student aid incentives encourage their enrollment in programs subject to minimal quality control. In such programs they have, at best, only modest chances of success; at worst, they are left with no job, a defaulted loan, and a bad credit record.
The HEA is not indifferent to the idea that low-income students should have access to the same programs as higher-income students. But not in the way the NPRM describes. Instead, Congress explicitly sought to ensure that schools did not enroll solely low-income students reliant on federal aid. The GI Bill’s 85–15 rule, which was the progenitor of the HEA’s 90–10 rule, was “intended to allow the free market mechanism to prove the worth of the course offered, by requiring that it respond to the general dictates of an open market as well as to those with available Federal moneys to spend.” The 90–10, too, was adopted to ensure that low-income students were not being preyed upon by schools that were so inadequate that they were incapable of attracting students whose tuition is being covered by employers, families, or private scholarships. Unfortunately, the 90–10 rule is undermined by loopholes. A robust gainful employment rule likely would be much less necessary if the loopholes in the 90–10 rule were closed.
C. The Proposed Rule Misleads the Public About the Justifications for the Prior Rules
The department’s boldfaced insinuation that the previous administration misled the public with regard to the justification of the 8 percent test is a bald-faced lie. The association of for-profit colleges challenged the 8 percent test in court and lost. The court found:
[T]he Association considers the Department’s passing and failing debt thresholds to be arbitrary, and it takes specific issue with the 8% threshold attached to the Department’s debt-to-annual-earnings metric. See Pl.’s Mot. at 43–45. As the Association sees things, this number is inapt, because it is based on the acceptable debt load for individuals who also have a mortgage—something most recent graduates do not have to worry about. See id. at 43. But the Department is hardly alone in adopting the 8% figure as the tipping point for unbearably high student debt. As the final rule recognized, “the 8 percent cutoff has long been referred to as a limit for student debt burden. Several studies of student debt have accepted the 8 percent standard. [And] [s]ome State agencies have established guidelines based on this limit.” 79 Fed. Reg. at 64,919 (four footnotes citing studies omitted). Moreover, even experts who are critical of the 8% cutoff “acknowledge the widespread acceptance of [that figure] and conclude that . . . it is ‘not . . . unreasonable.’” Id. (quoting Sandy Baum & Saul Schwartz, How Much Debt is Too Much? Defining Benchmarks for Managing Student Debt 3 (2006)). The Association’s arguments on this score therefore present, at best, “a battle of experts—a battle conducted in an arena that is off limits to APA judicial review.” Envtl. Def. v. U.S. Army Corps of Eng’rs., 515 F. Supp. 2d 69, 82 (D.D.C. 2007).
More importantly, as an author of the cited study has pointed out, the department’s complaint about the 8 percent standard is illogical since the 8 percent is used in a way that creates a weaker rather than stronger standard. For example, if a borrower earned $10,000 and only the 20-percent-of-discretionary-earnings test was applied, then the guideline would be zero. The 8 percent allows for a loan burden of up to $800 for the year, a less stringent expectation. The NPRM is absolutely backwards to portray the 8 percent as unfair to schools: not including it would have made it far more difficult for a program to pass.
D. The Department Is Planning to Violate the Law
The department objects to the 2014 regulation on the basis that it “established bright-line standards” for GE programs. But the statutory provision itself calls for a clear distinction between programs that do and do not prepare students for gainful employment in a recognized occupation. If the department, in eliminating the line established by the regulation, cannot accept the reality that some sort of distinction is required by statute, and cannot explain what criterion it intends to use, then the department is declaring its intention to violate the law by not requiring anything at all. If department officials carry out this plan to ignore the statute they will be guilty, as I understand it, of violating the federal Antideficiency Act, which prohibits federal officials from allocating funds not authorized by law.
The department openly admits that its reason for repealing the 2014 GE regulation is because it “targets” for-profit institutions, and the department “does not believe it is appropriate to attached punitive actions to program-level outcomes published by some programs but not others.” The department claims the treatment of for-profits is “unfair,” but does not explain why that is so if private inurement is allowed at those institutions but is not allowed at nonprofits: a fundamental difference in accountability and financial incentives. Further, and more important, the department fails to explain how its professed belief squares with its statutory obligation.
The department has the right to seek chances to the statute, but it cannot legally flout it; to repeal the regulations because of an objection to the statute is tantamount to a declaration that the department is preparing a route for ignoring the statutory provision in its administration of the Title IV programs.
Sincerely,
Robert Shireman
Senior Fellow, The Century Foundation
Attachment 1
Excerpts from prior rules regarding the 8 percent test
These excerpts from the 2010 NPRM, the 2011 final rule, and the 2014 final rule show that that, contrary to the current NPRM’s assertion, the 8 percent standard was not based on a recommendation from the Baum–Schwartz study.
In the 2010 NPRM, the department adopted the 20-percent-of-discretionary income test recommended by Baum–Schwartz but noted that:
we cannot rely solely on this approach because any program would fail the debt measure if the average earnings of those completing the program were below 150 percent of the poverty guideline, regardless of the level of debt incurred. To avoid this consequence, we adopted the proposal made during negotiated rulemaking that borrowers should not devote more than 8 percent of annual earnings toward repaying their student loans. This percentage has been a fairly common credit-underwriting standard, as many lenders typically recommend that student loan installments not exceed 8 percent of the borrower’s pretax income so that borrowers have sufficient funds available to cover taxes, car payments, rent or mortgage payments, and household expenses. Other studies have also accepted the 8 percent standard, and some State agencies have established similar guidelines ranging from 5 percent to 15 percent of gross income. These percentages are derived from home mortgage underwriting criteria where total household debt should not exceed 38 to 45 percent of pretax income, with 30 percent being available for housing-related debt.
In the 2011 final rule, the department again explained:
With regard to the study by the College Board, economists Sandy Baum and Saul Schwartz preferred a debt service approach based on discretionary income rather than total income… In the July 26, 2010 NPRM, we adopted this suggestion as the primary measurement of affordable debt at most income levels. However, because a gainful employment program would fail the discretionary income ratio whenever the income of the students who completed the program was less than 150 percent of the poverty guideline, we proposed a second debt-to-earnings ratio where the annual loan payment would not exceed 8 percent of total income. As noted in the July 26, 2010 NPRM (see 75 FR 43620) and the Baum and Schwartz study, 8 percent is a commonly used standard for evaluating manageable debt levels.
And in the 2014 final rule, the department responded, again:
In their review of relevant literature, Baum and Schwartz specifically acknowledge the widespread acceptance of the 8 percent standard and conclude that, although it is not as precise as a standard based on a function of discretionary earnings, it is ‘‘not . . . unreasonable.’’ Further, drawing from their analysis of manageable debt in relation to discretionary earnings, Baum and Schwartz recommend a sliding scale limit for debt-to-earnings, based on the level of discretionary earnings, that results in a ‘‘maximum stricter than 8 percent.” More recently, financial regulators released guidance that debt service payments from all non-mortgage debt should remain below 12 percent of pretax income. In particular, current Federal Housing Administration (FHA) underwriting standards set total debt at an amount not exceeding 43 percent of annual income, a standard that, as noted by a commenter, was adopted by the CFPB in recently published regulations, with housing debt comprising no more than 31 percent of that total income, leaving 12 percent for all other debt, including student loan debt, car loans, and all other consumer debt.109 That 12 percent is consumed by credit card debt (2.25 percent) and by other consumer debt (9.75 percent), which includes student loan debt. 110 The 2010 Federal Reserve Board Survey of Consumer Finances found that student debt comprises ‘‘among families headed by someone less than age 35, 65.6 percent of their installment debt was education related in 2010.’’ Eight percent is an appropriate minimum standard because it falls reasonably within the 12 percent of gross income allocable to nonhousing debt under current lending standards as well as the 9.75 percent of gross income attributable to non-credit card debt.
The Department considered a number of data and research sources and authorities in formulating the D/E rates measure. In addition to the analysis and recommendation of Baum and Schwartz, we considered research on earnings gains by other scholars, including Cellini and Chaudhary, Kane and Rouse, Avery and Turner, and Deming, Goldin, and Katz. We also took into account lending ratios currently set by the FHA and the CFPB, as they estimate sustainable levels of non-housing debt. A 2001 study by King and Frishberg found that students tend to overestimate the percentage of income they will be able to dedicate to student loan repayment, and asserted that based on lender recommendations, ‘‘8 percent of income is the most students should be paying on student loan repayment . . . assuming that most borrowers will be making major purchases, such as a home, in the 10 years after graduation.’’ Other studies have acknowledged or used the 8 percent standard as the basis for their work. In 2004, Harrast analyzed undergraduates’ ability to repay loans and cited the 8 percent standard to define excess debt as the difference between debt at graduation and lender-recommended levels for educational loan payments, finding that in all but a few cases, graduates in the upper debt quartile exceed the recommended level by a ‘‘significant margin.’’ Additionally, King and Bannon issued a report in 2002 acknowledging the 8 percent standard, and used it as the basis to estimate that 39
percent of all student borrowers graduate with unmanageable student loan debt. Several studies have proposed alternate measures and ranges for benchmarking debt burden, yet still acknowledge the 8 percent threshold as standard practice. In studying the repercussions from increasing student loan limits for Illinois’ students, the Illinois Student Assistance Commission noted in 2001 that other studies capture a range from 5 percent to 15 percent of gross income, but still indicated ‘‘it is generally agreed that when this ratio exceeds 8 percent, real debt burden may occur.’’ The Commission also credited the National Association of Student Financial Aid Administrators (NASFAA) with adopting the 8 percent standard in 1986, after which it picked up wide support in the field.292 A 2003 study by Baum and O’Malley analyzing how borrowers perceive their own levels of debt, recognized 8 percent standard for student loan debt but noted that ‘‘many loan administrators, lenders, and observers anecdotally suggest that a range of 8 to 12 percent may be considered acceptable.’’ This study also suggested that graduates devoting 7 percent or more of their income to student loan payments are much more likely to report repayment difficulty than those devoting smaller percentages of their incomes to loan payments. This is based on borrowers’ perceptions that repayment will rarely be problematic when payments are between 7 and 17 percent. In a 2012 study analyzing whether students were borrowing with the appropriate frequency and volume, Avery and Turner noted that 8 percent was both the most commonly referenced standard and a ‘‘manageable’’ one, but referenced a 2003 GAO study that set the benchmark at 10 percent.
Attachment 2
The full essay series on the history of federal aid and for-profit colleges is available electronically at https://tcf.org/topics/education/the-cycle-of-scandal-at-for-profit-colleges/.
Federal Dollars to For-Profit Colleges Must Remain the Exception, Not the Rule
On September 13, TCF senior fellow Robert Shireman submitted the following comment in response to the DeVos Education Department’s proposal to allow for-profit higher education companies to draw direct funding from the federal government. In his commentary, Shireman outlines the original intention of the Higher Education Act in allowing such allocations only as exceptions, and explains how throwing that door wide open dismantles one of the Act’s chief protections of both student borrowers and taxpayers’ money.
As an appendix, Shireman included TCF’s historical series The Cycle of Scandal at For-Profit Colleges, which can be read here. A coalition of advocates that includes TCF fellow Yan Cao also submitted a comment, available here.
For the past fifty-three years, due to a history of abuses in for-profit higher education, Congress has excluded for-profit institutions, as a category, from receiving direct funding through the Higher Education Act (HEA).1 To the extent that owners of schools are allowed to draw down funds from the U.S. Treasury under Title IV, it is on an exception basis: only when they can demonstrate that the program in which the eligible student is enrolled is worthy of federal funding because it prepares the student for “gainful employment in a recognized occupation.”
In its notice of proposed rulemaking (NPRM), the department declares its opposition to this statutory treatment of for-profit institutions, and signals its intention to administer the HEA as if was written differently. While making its case against the HEA’s gainful employment exception, the department’s proposed rule falsely portrays the legal requirements for institutional eligibility; misstates the purpose of the Title IV programs; and misleads the public about the justifications for the 2011 and 2014 gainful employment rules. These deficiencies in the department’s reasoning, explicated below, are in addition to the numerous factual and logical errors that have been pointed out in comments submitted by others.
The department should abandon its poorly-reasoned NPRM and fully implement the 2014 rule as written.
A. The Proposed Rule Falsely Portrays the Legal Requirements for Institutional Eligibility
The proposed rule describes the difference between higher education sectors—public, nonprofit, and for-profit—as a matter of “tax status.”2 While the allusion to the tax treatment of nonprofits is frequently used as a shorthand for the different entities’ corporate accountability and control requirements, in the context of this proposed rule the use of the term “tax status” by the department is false and misleading.
The HEA does not make any reference to tax status. Instead, institutional eligibility is offered to entities that are either public or are nonprofit corporations “no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.”3 In the HEA, Congress was concerned about the way that private inurement—people at institutions siphoning off money for themselves—can steer schools wrong when they are using federal money.
Department officials, by using the term tax status, are attempting to create the impression that “nonprofit” is an invidious distinction, when in fact the differences that separate public, nonprofit, and for-profit institutions are fundamentally important accountability and financial requirements, not anything about taxes, as shown in the table on the following page. (The term tax status is used in common parlance not because tax treatment is a defining characteristic but because a donor’s tax exemption under federal tax law depends on the same type of prohibition on private inurement as is required by the HEA).4
As the attached history series shows, Congress has found, time and again, that postsecondary institutions not subject to the prohibition on private inurement, i.e. those that are for-profit, are much more likely to take unfair advantage of students and taxpayers. The department’s effort to deny that fact by pointing to nonprofits behaving badly5 is nonsensical: those incidents are “[w]ell-publicized” precisely because they are rare and unexpected at nonprofit institutions. They are the exceptions that prove the rule: to wit, the department itself has estimated a “level of school misconduct” for proprietary institutions that is seven times higher than the rate for public and other nonprofit institutions.6
Public
For-Profit
By eliminating the gainful employment rule, for-profit colleges will be held to lower standards than public and nonprofit schools, which have strict financial controls and accountability, as summarized above. As the department’s own data show, borrowers who enroll at for-profit colleges are far more likely to end up feeling that they were defrauded by their school than do borrowers who attended nonprofit or public institutions.9
The department notes that the problem of fraud and abuse is sometimes described as one that is caused by “bad actors.”10 But while it is likely that the for-profit sector’s financial freedoms would attract more charlatans, the primary reason that for-profit schools are more hazardous is more mundane: the ban on private inurement steers nonprofits toward more pro-student decisions and behaviors.11 Everyday business decisions, focused intently on producing net revenue for growth and profit, cause for-profit colleges to engage in more predatory behavior than do institutions where the profit motive is muted.
The tactics for taking unfair advantage of education consumers are numerous. Here are seven common in federally-funded higher education.
1. Seeking trust by proxy. Education is a trust product: consumers cannot possibly know whether their expectations match the design, intentions, or capabilities of the seller.12 To gain the confidence of potential buyers, schools frequently use the fact of the availability of federal aid. For example, the parent of an ITT student says school officials told her daughter that “since the government sponsored the loan, the education it bought would be great. After all, the government doesn’t make loans for homes that are about to fall down.”13 The Federal Trade Commission cited this problem of implied government endorsement in its major study years ago: “[I]n claiming that the school is ‘approved’ for VA training, or ‘approved under the GI Bill,’” schools “use the aura of the federal stamp of approval. The clear implication of advertising of this nature is that the United States Government has examined these institutions and is vouching for them.”14
In addition to the government hook, schools frequently seek to associate themselves with respected companies or with big-name universities. For example, a recruiter for the online division of Kaplan University used as a selling point that “Kaplan is very well regarded. It is owned by the Washington Post. . . . It is the Harvard of online schools.” Warning that other online schools’ credits might not transfer, she said Kaplan’s accreditation means it is “a college like Boston College, William and Mary, the University of Illinois.”15 A Kaplan recruiter in Florida testified that recruiters learned early on to cite name-brand colleges. “If the student was calling from Michigan, we were told we had to say, ‘We have the same accreditation that the University of Michigan has or Michigan State.’ If we were calling someone from California, it would be ‘the same as USC or Stanford.’”16
2. Advisors who care about you. One of the most common strategies of predatory colleges is to train their advisors to create the impression that they are a target’s friend and advisor. Rose Grier, a former student at Argosy University, looked back on the salesman that got her to enroll and realized, “The guy was so slick, and I almost felt like he was my friend. . . . By the time the whole thing was done, I was like calling him by his first name, and we were laughing.”17 In a U.S. Senate investigation of the largest for-profit college companies, the caring-friend strategy was common in sales training materials.18 For example, ITT Tech sales training documents from 2010 told employees that “Everything you do relies on your ability to establish rapport,” so “Be sincerely interested in them” and get them talking.19 Kaplan recruiters were trained that pretending to be a friend was the key to closing a deal: “Making conversation and making the student feel comfortable. Making them feel like they were your friends before you went in to actually getting them to enroll.”20
The friend-and-advisor strategy has been around for a long time. The schools run by McGraw-Hill in the 1970s were blunt about their recruiters’ task: to “disarm” prospects, “You need to [e]stablish yourself as a counselor or advisor, not a money-grabbing, hit-and-run, fast buck artist. Overcome his natural suspicions.”21
3. The “yes” ladder. In her study of for-profit schools, sociologist Tressie McMillan Cottom noticed that recruiters tended to ask a lot of questions that were difficult to answer any way but “Yes”:
On eleven separate occasions at nine schools, the [recruiter] said of a job board, “You think this career board might help you keep an eye out for a better job?” These types of questions were phrased so that a negative response would either be a non sequitur. . . . Or would violate a social norm, like admitting that you didn’t really want to keep an eye out for a better job.22
This “yes!” technique, it turns out, is part of recruiters’ training. DeVry University materials called it “The Tie Down: The purpose behind this questioning technique is to get the prospect to say yes as many times as you possibly can throughout the call so that when you ask for final yes it almost seems ridiculous that they would say no.” One example of the question type in the training document was, “Do you think getting your BSN would help you achieve your goal?”23
4. Success is (almost) guaranteed. Several colleges have run into legal problems as a result of using job placement data that were fudged. But schools do not need to cite data in order to create the impression, wrong but strong, that getting a good job will be almost a slam dunk for the student. Cottom’s job board, above, is reminiscent of the FTC’s finding in 1976 that for-profit schools create “the inference of employability by emphasizing the size, scope, or efficacy of its ‘placement’ mechanism.”24
In an exchange caught on video in 2010, a recruiter at a school in Florida tells a prospective student, “So I know medical assistants that are making sixty-eight, sixty-nine thousand a year, and they only went to school for nine months.” The claim, if true, is not even close to typical, since in Florida nine out of ten medical assistants make less than $39,000 per year.25 But the misleading message was delivered effectively in a way that would be difficult to prosecute as a deception intended by the company.
5. The hard-sell. At the urging of President George H.W. Bush, Congress in 1992 prohibited the payment of bounties to admissions staff by schools that take federal aid.26 But even without paying bounties, schools have plenty of tools they can use to push recruiters to sell, sell, sell. Quota systems, for example, “virtually force… salespeople to enroll unqualified students.” Salespeople never get fired for predatory recruitment; instead, “termination appears to be a sanction invoked only when a salesman fails to make enough sales.”27
In a case against Ashford University, the California attorney general quotes an admissions supervisor who said, “I had worked in the sales industry for many years. But Ashford had the most aggressive sales floor I have ever seen.” Recruiters were forced to stand at their desks if they missed their targets, and one manager “even saved the key cards of terminated Admissions staff on a keyring, which she rattled in front of reports to remind them of their obligations to hit their metrics or else.”28
Similarly, a suit against Education Management Corporation, owner of the Art Institutes and other colleges, alleged that
6. The courage to make your life better! The courage strategy essentially turns the tables on prospective students, using their insecurities to make them feel that they need to sell themselves to the school. One for-profit school advised its sales team, after befriending a prospect, to clinch the sale by saying, “You have been so close to living an amazing life so many times in your life but always come up just a little short, let us help make sure that never happens again.”30 DeVry University had similar advice for its recruiters—“Replace the fear of trying with a greater fear of not succeeding.”31
In 1976, the FTC described the strategy as a “highly developed and successful sales pitch . . . undermining the natural sales resistance and forcing the individual to prove his or her worth to the salesperson, instead of the salesperson proving the worth of the course to the prospect.” The “courage” strategy had multiple effective uses, including negating bad job placement numbers by putting the onus back on the student. The FTC cited a large school that would tell prospects, “Of course, no school—not even ICS—can guarantee you a better job. We can’t make you smarter than you already are, and we can’t make you ambitious if you’re lazy.”32
The FTC emphasized that the problem were made much worse by federal aid: “the availability of federal loans and grants has worsened the shoddy recruitment, advertising, and enrollment practices of the proprietary schools industry . . . allow[ing] marginal schools to add thousands of students to heir rolls without regard for proper career training.” Students assumed that federal aid was a federal endorsement, weakening their sales resistance. “The natural and logical reaction” of the industry to the wide availability of federal loans is to “oversell.”33
7. Playing by the rules, but only by the rules. When things go wrong at a for-profit firm it is frequently the result of the company and the regulatory agency both focusing on “mere compliance” with rules rather than “good compliance.”34 A narrow focus on profit and legal compliance leads to a
checkbox mentality that gives the illusion of reducing risk without really doing so. Moreover, unless an organization is careful, a compliance-focused approach to eliminating unethical behavior can stunt a company’s efforts to innovate and to take intelligent risks.35
This problem is particularly acute in for-profit education, where the goal of quality education is difficult to measure while goals like new starts and profit can be tracked easily. Numerous for-profit college officials have acknowledged that they have found that their organizations seem to naturally pull in a narrow compliance direction and short-term profit rather than driving for what’s best for long term. To battle this tendency, as executives they must “work very hard to avoid succumbing to these short-term temptations.”36 A co-founder of the University of Phoenix blames investor pressures and a narrow focus on the stock price for that institution’s fall from quality in the 1990s to “chronic educational failures” in the 2000s.37
Without government aid, the problems would not have grown to affect hundreds of thousands of students. Government programs can easily go awry when they attempt to use profit-making entities to pursue hard-to-define goals, as the economist Eduardo Porter has explained:
Profit is one of the most potent incentives known to man—a powerful tool to align managers’ interests with corporate goals. But it also has drawbacks. With earnings as the overriding, nonnegotiable priority, private enterprise often has little wiggle room to handle the tension between conflicting objectives…
This suggests a good rule of thumb to determine when a private company will outperform the public sector: if the task is clear-cut and it’s possible to define concrete goals and reward those who meet them, the private sector will probably do better.
But if the objectives are complex and diffuse—making it difficult to align profit with goals without undermining some other desirable outcome—the profit motive could well make conflicts more difficult to manage.38
For-profit colleges are so frequently caught crossing the legal lines because they tend to operate so close to those legal lines.39 When the line is a speed limit that’s fine. But when it is false and deceptive advertising or educational malpractice, the goal of public policy must be for institutions to steer far away from the line. But that directive, because it is not clear-cut and concrete, is, as Porter explains, difficult territory for for-profit firms to manage.
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B. The Department Misstates the Purpose of the Title IV Programs
The purpose of Title IV is laid out quite clearly at the beginning of title, in authorizing the grant programs. It says that the purpose is “to assist in making available the benefits of postsecondary education to eligible students…” (emphasis added).40 In its NPRM, the department makes up a different purpose, declaring that “the primary purpose of the title IV, HEA programs is to ensure that low-income students have the same opportunities and choices in pursuing higher education as their higher-income peers.”41 The department eliminates from its purpose the fact that the HEA, presumably because it is steering taxpayer dollars, is concerned not only with access but with quality: benefits for students.
Oddly, the source the department cites for its description of the purpose of Title IV does not include anything like the department’s version. Furthermore, the source is quite clear that the idea that choice would assure quality, the simplistic notion currently being pushed by the department, “was a dubious proposition from the start.”
Federal student aid programs have been plagued by institutions that defraud both taxpayers and students, offering programs of little or no educational or vocational value, or that are so poorly managed they do not serve students effectively. High student loan default rates, as well as low completion and placement rates for students who receive aid, have reflected these problems and galvanized public concern.
Much of the trouble has come in the for-profit sector; but the baggage of fraud and abuse has encumbered the entire student aid effort and triggered tighter rules affecting all of postsecondary education. In part, this reflects successful lobbying by the proprietary school industry, which has blocked proposals to remove trade schools from participating in Title IV programs or authorize separate regulatory controls over them…42
While the concept of access has shaped congressional policy:
we have learned that access does not assure quality; in fact, access can ill-serve students if they do not complete their education or graduate without the skills they need to succeed.
Low-income, at-risk students are actually the most ill-served when student aid incentives encourage their enrollment in programs subject to minimal quality control. In such programs they have, at best, only modest chances of success; at worst, they are left with no job, a defaulted loan, and a bad credit record.43
The HEA is not indifferent to the idea that low-income students should have access to the same programs as higher-income students. But not in the way the NPRM describes. Instead, Congress explicitly sought to ensure that schools did not enroll solely low-income students reliant on federal aid. The GI Bill’s 85–15 rule, which was the progenitor of the HEA’s 90–10 rule, was “intended to allow the free market mechanism to prove the worth of the course offered, by requiring that it respond to the general dictates of an open market as well as to those with available Federal moneys to spend.”44 The 90–10, too, was adopted to ensure that low-income students were not being preyed upon by schools that were so inadequate that they were incapable of attracting students whose tuition is being covered by employers, families, or private scholarships. Unfortunately, the 90–10 rule is undermined by loopholes.45 A robust gainful employment rule likely would be much less necessary if the loopholes in the 90–10 rule were closed.
C. The Proposed Rule Misleads the Public About the Justifications for the Prior Rules
The department’s boldfaced insinuation46 that the previous administration misled the public with regard to the justification of the 8 percent test is a bald-faced lie. The association of for-profit colleges challenged the 8 percent test in court and lost. The court found:
[T]he Association considers the Department’s passing and failing debt thresholds to be arbitrary, and it takes specific issue with the 8% threshold attached to the Department’s debt-to-annual-earnings metric. See Pl.’s Mot. at 43–45. As the Association sees things, this number is inapt, because it is based on the acceptable debt load for individuals who also have a mortgage—something most recent graduates do not have to worry about. See id. at 43. But the Department is hardly alone in adopting the 8% figure as the tipping point for unbearably high student debt. As the final rule recognized, “the 8 percent cutoff has long been referred to as a limit for student debt burden. Several studies of student debt have accepted the 8 percent standard.47 [And] [s]ome State agencies have established guidelines based on this limit.” 79 Fed. Reg. at 64,919 (four footnotes citing studies omitted). Moreover, even experts who are critical of the 8% cutoff “acknowledge the widespread acceptance of [that figure] and conclude that . . . it is ‘not . . . unreasonable.’” Id. (quoting Sandy Baum & Saul Schwartz, How Much Debt is Too Much? Defining Benchmarks for Managing Student Debt 3 (2006)). The Association’s arguments on this score therefore present, at best, “a battle of experts—a battle conducted in an arena that is off limits to APA judicial review.” Envtl. Def. v. U.S. Army Corps of Eng’rs., 515 F. Supp. 2d 69, 82 (D.D.C. 2007).48
More importantly, as an author of the cited study has pointed out, the department’s complaint about the 8 percent standard is illogical since the 8 percent is used in a way that creates a weaker rather than stronger standard. For example, if a borrower earned $10,000 and only the 20-percent-of-discretionary-earnings test was applied, then the guideline would be zero. The 8 percent allows for a loan burden of up to $800 for the year, a less stringent expectation. The NPRM is absolutely backwards to portray the 8 percent as unfair to schools: not including it would have made it far more difficult for a program to pass.
D. The Department Is Planning to Violate the Law
The department objects to the 2014 regulation on the basis that it “established bright-line standards” for GE programs.49 But the statutory provision itself calls for a clear distinction between programs that do and do not prepare students for gainful employment in a recognized occupation. If the department, in eliminating the line established by the regulation, cannot accept the reality that some sort of distinction is required by statute, and cannot explain what criterion it intends to use, then the department is declaring its intention to violate the law by not requiring anything at all. If department officials carry out this plan to ignore the statute they will be guilty, as I understand it, of violating the federal Antideficiency Act, which prohibits federal officials from allocating funds not authorized by law.50
The department openly admits that its reason for repealing the 2014 GE regulation is because it “targets” for-profit institutions,51 and the department “does not believe it is appropriate to attached punitive actions to program-level outcomes published by some programs but not others.”52 The department claims the treatment of for-profits is “unfair,” but does not explain why that is so if private inurement is allowed at those institutions but is not allowed at nonprofits: a fundamental difference in accountability and financial incentives. Further, and more important, the department fails to explain how its professed belief squares with its statutory obligation.
The department has the right to seek chances to the statute, but it cannot legally flout it; to repeal the regulations because of an objection to the statute is tantamount to a declaration that the department is preparing a route for ignoring the statutory provision in its administration of the Title IV programs.
Sincerely,
Robert Shireman
Senior Fellow, The Century Foundation
Attachment 1
Excerpts from prior rules regarding the 8 percent test
These excerpts from the 2010 NPRM, the 2011 final rule, and the 2014 final rule show that that, contrary to the current NPRM’s assertion, the 8 percent standard was not based on a recommendation from the Baum–Schwartz study.
In the 2010 NPRM, the department adopted the 20-percent-of-discretionary income test recommended by Baum–Schwartz but noted that:
we cannot rely solely on this approach because any program would fail the debt measure if the average earnings of those completing the program were below 150 percent of the poverty guideline, regardless of the level of debt incurred. To avoid this consequence, we adopted the proposal made during negotiated rulemaking that borrowers should not devote more than 8 percent of annual earnings toward repaying their student loans. This percentage has been a fairly common credit-underwriting standard, as many lenders typically recommend that student loan installments not exceed 8 percent of the borrower’s pretax income so that borrowers have sufficient funds available to cover taxes, car payments, rent or mortgage payments, and household expenses. Other studies have also accepted the 8 percent standard, and some State agencies have established similar guidelines ranging from 5 percent to 15 percent of gross income. These percentages are derived from home mortgage underwriting criteria where total household debt should not exceed 38 to 45 percent of pretax income, with 30 percent being available for housing-related debt.53
In the 2011 final rule, the department again explained:
With regard to the study by the College Board, economists Sandy Baum and Saul Schwartz preferred a debt service approach based on discretionary income rather than total income… In the July 26, 2010 NPRM, we adopted this suggestion as the primary measurement of affordable debt at most income levels. However, because a gainful employment program would fail the discretionary income ratio whenever the income of the students who completed the program was less than 150 percent of the poverty guideline, we proposed a second debt-to-earnings ratio where the annual loan payment would not exceed 8 percent of total income. As noted in the July 26, 2010 NPRM (see 75 FR 43620) and the Baum and Schwartz study, 8 percent is a commonly used standard for evaluating manageable debt levels.54
And in the 2014 final rule, the department responded, again:
In their review of relevant literature, Baum and Schwartz specifically acknowledge the widespread acceptance of the 8 percent standard and conclude that, although it is not as precise as a standard based on a function of discretionary earnings, it is ‘‘not . . . unreasonable.’’ Further, drawing from their analysis of manageable debt in relation to discretionary earnings, Baum and Schwartz recommend a sliding scale limit for debt-to-earnings, based on the level of discretionary earnings, that results in a ‘‘maximum stricter than 8 percent.” More recently, financial regulators released guidance that debt service payments from all non-mortgage debt should remain below 12 percent of pretax income. In particular, current Federal Housing Administration (FHA) underwriting standards set total debt at an amount not exceeding 43 percent of annual income, a standard that, as noted by a commenter, was adopted by the CFPB in recently published regulations, with housing debt comprising no more than 31 percent of that total income, leaving 12 percent for all other debt, including student loan debt, car loans, and all other consumer debt.109 That 12 percent is consumed by credit card debt (2.25 percent) and by other consumer debt (9.75 percent), which includes student loan debt. 110 The 2010 Federal Reserve Board Survey of Consumer Finances found that student debt comprises ‘‘among families headed by someone less than age 35, 65.6 percent of their installment debt was education related in 2010.’’ Eight percent is an appropriate minimum standard because it falls reasonably within the 12 percent of gross income allocable to nonhousing debt under current lending standards as well as the 9.75 percent of gross income attributable to non-credit card debt.55
The Department considered a number of data and research sources and authorities in formulating the D/E rates measure. In addition to the analysis and recommendation of Baum and Schwartz, we considered research on earnings gains by other scholars, including Cellini and Chaudhary, Kane and Rouse, Avery and Turner, and Deming, Goldin, and Katz. We also took into account lending ratios currently set by the FHA and the CFPB, as they estimate sustainable levels of non-housing debt. A 2001 study by King and Frishberg found that students tend to overestimate the percentage of income they will be able to dedicate to student loan repayment, and asserted that based on lender recommendations, ‘‘8 percent of income is the most students should be paying on student loan repayment . . . assuming that most borrowers will be making major purchases, such as a home, in the 10 years after graduation.’’ Other studies have acknowledged or used the 8 percent standard as the basis for their work. In 2004, Harrast analyzed undergraduates’ ability to repay loans and cited the 8 percent standard to define excess debt as the difference between debt at graduation and lender-recommended levels for educational loan payments, finding that in all but a few cases, graduates in the upper debt quartile exceed the recommended level by a ‘‘significant margin.’’ Additionally, King and Bannon issued a report in 2002 acknowledging the 8 percent standard, and used it as the basis to estimate that 39
percent of all student borrowers graduate with unmanageable student loan debt. Several studies have proposed alternate measures and ranges for benchmarking debt burden, yet still acknowledge the 8 percent threshold as standard practice. In studying the repercussions from increasing student loan limits for Illinois’ students, the Illinois Student Assistance Commission noted in 2001 that other studies capture a range from 5 percent to 15 percent of gross income, but still indicated ‘‘it is generally agreed that when this ratio exceeds 8 percent, real debt burden may occur.’’ The Commission also credited the National Association of Student Financial Aid Administrators (NASFAA) with adopting the 8 percent standard in 1986, after which it picked up wide support in the field.292 A 2003 study by Baum and O’Malley analyzing how borrowers perceive their own levels of debt, recognized 8 percent standard for student loan debt but noted that ‘‘many loan administrators, lenders, and observers anecdotally suggest that a range of 8 to 12 percent may be considered acceptable.’’ This study also suggested that graduates devoting 7 percent or more of their income to student loan payments are much more likely to report repayment difficulty than those devoting smaller percentages of their incomes to loan payments. This is based on borrowers’ perceptions that repayment will rarely be problematic when payments are between 7 and 17 percent. In a 2012 study analyzing whether students were borrowing with the appropriate frequency and volume, Avery and Turner noted that 8 percent was both the most commonly referenced standard and a ‘‘manageable’’ one, but referenced a 2003 GAO study that set the benchmark at 10 percent.56
Attachment 2
The full essay series on the history of federal aid and for-profit colleges is available electronically at https://tcf.org/topics/education/the-cycle-of-scandal-at-for-profit-colleges/.
Notes