On October 17, 2019, TCF policy associate Taela Dudley testified before New York City’s Department of Consumer Affairs, applauding the department for taking steps to protect students through newly proposed rules to prohibit deceptive advertising by for-profit colleges. Among other provisions, the rules would require disclosure of job placement rates and prohibit false or misleading representations. As Dudley explains, New York City’s students need these protections as urgently as ever, and their application will set an important precedent for other local governments to follow.
Thank you for this opportunity to submit comments on the importance of the proposed rules regarding deceptive advertising by for-profit educational institutions that have been put forth by the New York City Department of Consumer Affairs (DCA).
The Century Foundation (TCF) is a progressive, nonpartisan think tank that seeks to foster opportunity and reduce inequality at home and abroad. Our higher education team addresses issues of college affordability, consumer protection, and accountability, and has reviewed numerous local, state, and federal policies that seek to stem abuses by predatory for-profit post-secondary institutions.
DCA’s proposed rules are a critical step toward preventing—and hopefully one day eradicating—consumer harm inflicted on vulnerable students by predatory actors that are heavily concentrated within the for-profit sector of higher education.
DCA’s proposed rules are a critical step toward preventing—and hopefully one day eradicating—consumer harm inflicted on vulnerable students by predatory actors that are heavily concentrated within the for-profit sector of higher education.
As our prior research shows, a small handful of for-profit schools in New York have led more student loan borrowers into default than all of the CUNY and SUNY schools combined. According to research from the Center for an Urban Future, CUNY and SUNY educate ten times more students than do private, for-profit schools; and yet, for-profit schools produce more defaults.
Worse, some for-profit schools in New York are actually generating more defaults than degrees for their students. How can this be? For one thing, for-profit schools as a sector have a bad report card when it comes to helping students succeed. The majority of students who enroll in these schools will default within twelve years; for African-American students, three out of four students will default on their student loan debt. In fact, the worst actors across New York prey on black students: one degree-granting for-profit school purchased Google Ads for any student who searched for a historically black college or university (HBCU); another spent more advertising dollars on BET than it did on advertising in any other media outlet. Both of these schools fail the Obama-era test for “Gainful Employment” because they loaded students up with debt without increasing their earnings. Sadly, seven for-profit schools, which we identify in our report “Grading New York’s Colleges,” place nearly all of their students deep in debt only for those students to earn less than a high school graduate. For the worst programs in New York, graduates earn even less than the average high school drop-out, but still have to face high debt, the risk of default, debt collection lawsuits, frozen bank accounts, and years of wage garnishment.
It is no surprise that in the last year alone, DCA received 169 complaints against for-profit schools; 113 of these concerned misrepresentation and false advertising. The sheer number of complaints alleging misrepresentation highlights the need for oversight that curbs these deceptive practices concentrated in the for-profit sector.
An overwhelming number of the 169 complaints, 112, were against Berkeley College, with 71 concerning misrepresentation. There is a direct correlation between misrepresentation and poor student outcomes. Berkeley’s student outcomes were so poor that New York City sued the school in 2018 for deceptive and predatory lending and “voracious greed.” In a separate, recent lawsuit, former “admissions counselors” of Berkeley College alleged that each employee of Berkeley’s admissions office was evaluated “solely on the number of students they each successfully enrolled,” an illegal practice which underscores DCA’s findings that Berkeley recruiters would say whatever they thought a prospective student wanted to hear in order to convince them to enroll, regardless of the truth. Students should be able to trust their admissions counselors, without having to worry that the counselor is willing to trade their educational success for a bonus, a promotion, or a cushier job placement.
Federal data shows that as of March 2019, 6,000 New Yorkers had testified to being defrauded by the colleges that set up and benefit from their student loan or GI Bill dollars. While for-profit schools enroll around 6 percent of New Yorkers, they generated over 90 percent of student complaints of unlawful deception. The problem is clear from the numbers. And as the Trump administration stalls on providing relief to defrauded borrowers, New York must step up with protections to fill this gap and protect students from predatory for-profit schools.
As the Trump administration stalls on providing relief to defrauded borrowers, New York must step up with protections to fill this gap and protect students from predatory for-profit schools.
The New York State Education Department (NYSED) currently provides no relief to students who are ripped off by the largest for-profit chains in New York. DeVry University and Berkeley College, the schools that generated the most student complaints, are both outside the jurisdiction of the state’s modest tuition reimbursement program.
Through a public records request, The Century Foundation has obtained all of the records for student complaints and reimbursement requests that have been processed by NYSED within the last three years. While we are still analyzing the thousands of pages of complaints that NYSED has processed, one thing is abundantly clear: New York is not providing students with enough help when they are defrauded by predatory for-profit schools. NYSED has only distributed $200,000 in relief for all of the students who filed for relief in the past three years. That amount of money barely covers the sticker price for a four-year degree for a single student at New York’s most expensive for-profit schools. That’s because for low-income students, for-profit schools are more expensive than Ivy League degrees, and students get much less in return.
New York must do more to protect students from being tricked and trapped into a life-long debt sentence when they are only seeking a path to a better life. These rules are an important step to ensuring that higher education remains a pathway to success and not a pipeline to debt and default.
Cover Photo: Berkely Ad Source: @BerkeleyCollege/Twitter
Tags: for profit college, new york city department of consumer affairs, testimony
Testimony: New York City Students Need Protection from False Advertising
On October 17, 2019, TCF policy associate Taela Dudley testified before New York City’s Department of Consumer Affairs, applauding the department for taking steps to protect students through newly proposed rules to prohibit deceptive advertising by for-profit colleges. Among other provisions, the rules would require disclosure of job placement rates and prohibit false or misleading representations. As Dudley explains, New York City’s students need these protections as urgently as ever, and their application will set an important precedent for other local governments to follow.
Thank you for this opportunity to submit comments on the importance of the proposed rules regarding deceptive advertising by for-profit educational institutions that have been put forth by the New York City Department of Consumer Affairs (DCA).
The Century Foundation (TCF) is a progressive, nonpartisan think tank that seeks to foster opportunity and reduce inequality at home and abroad. Our higher education team addresses issues of college affordability, consumer protection, and accountability, and has reviewed numerous local, state, and federal policies that seek to stem abuses by predatory for-profit post-secondary institutions.
DCA’s proposed rules are a critical step toward preventing—and hopefully one day eradicating—consumer harm inflicted on vulnerable students by predatory actors that are heavily concentrated within the for-profit sector of higher education.
As our prior research shows, a small handful of for-profit schools in New York have led more student loan borrowers into default than all of the CUNY and SUNY schools combined. According to research from the Center for an Urban Future, CUNY and SUNY educate ten times more students than do private, for-profit schools; and yet, for-profit schools produce more defaults.
Worse, some for-profit schools in New York are actually generating more defaults than degrees for their students. How can this be? For one thing, for-profit schools as a sector have a bad report card when it comes to helping students succeed. The majority of students who enroll in these schools will default within twelve years; for African-American students, three out of four students will default on their student loan debt. In fact, the worst actors across New York prey on black students: one degree-granting for-profit school purchased Google Ads for any student who searched for a historically black college or university (HBCU); another spent more advertising dollars on BET than it did on advertising in any other media outlet. Both of these schools fail the Obama-era test for “Gainful Employment” because they loaded students up with debt without increasing their earnings. Sadly, seven for-profit schools, which we identify in our report “Grading New York’s Colleges,” place nearly all of their students deep in debt only for those students to earn less than a high school graduate. For the worst programs in New York, graduates earn even less than the average high school drop-out, but still have to face high debt, the risk of default, debt collection lawsuits, frozen bank accounts, and years of wage garnishment.
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It is no surprise that in the last year alone, DCA received 169 complaints against for-profit schools; 113 of these concerned misrepresentation and false advertising.1 The sheer number of complaints alleging misrepresentation highlights the need for oversight that curbs these deceptive practices concentrated in the for-profit sector.
An overwhelming number of the 169 complaints, 112, were against Berkeley College, with 71 concerning misrepresentation. There is a direct correlation between misrepresentation and poor student outcomes. Berkeley’s student outcomes were so poor that New York City sued the school in 2018 for deceptive and predatory lending and “voracious greed.” In a separate, recent lawsuit, former “admissions counselors” of Berkeley College alleged that each employee of Berkeley’s admissions office was evaluated “solely on the number of students they each successfully enrolled,” an illegal practice which underscores DCA’s findings that Berkeley recruiters would say whatever they thought a prospective student wanted to hear in order to convince them to enroll, regardless of the truth. Students should be able to trust their admissions counselors, without having to worry that the counselor is willing to trade their educational success for a bonus, a promotion, or a cushier job placement.
Federal data shows that as of March 2019, 6,000 New Yorkers had testified to being defrauded by the colleges that set up and benefit from their student loan or GI Bill dollars. While for-profit schools enroll around 6 percent of New Yorkers, they generated over 90 percent of student complaints of unlawful deception. The problem is clear from the numbers. And as the Trump administration stalls on providing relief to defrauded borrowers, New York must step up with protections to fill this gap and protect students from predatory for-profit schools.
The New York State Education Department (NYSED) currently provides no relief to students who are ripped off by the largest for-profit chains in New York. DeVry University and Berkeley College, the schools that generated the most student complaints, are both outside the jurisdiction of the state’s modest tuition reimbursement program.
Through a public records request, The Century Foundation has obtained all of the records for student complaints and reimbursement requests that have been processed by NYSED within the last three years. While we are still analyzing the thousands of pages of complaints that NYSED has processed, one thing is abundantly clear: New York is not providing students with enough help when they are defrauded by predatory for-profit schools. NYSED has only distributed $200,000 in relief for all of the students who filed for relief in the past three years. That amount of money barely covers the sticker price for a four-year degree for a single student at New York’s most expensive for-profit schools. That’s because for low-income students, for-profit schools are more expensive than Ivy League degrees, and students get much less in return.
New York must do more to protect students from being tricked and trapped into a life-long debt sentence when they are only seeking a path to a better life. These rules are an important step to ensuring that higher education remains a pathway to success and not a pipeline to debt and default.
Cover Photo: Berkely Ad Source: @BerkeleyCollege/Twitter
Notes
Tags: for profit college, new york city department of consumer affairs, testimony