A New Bill Aims to Protect Students from ‘Worthless Degrees’

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Sens. Jeff Merkley (D-Ore.), Barbara Mikulski (D-Md.), and Tom Harkin (D-Iowa) recently introduced the “Protecting Students from Worthless Degrees Act” to close a loophole that lets unscrupulous institutions prey upon unsuspecting students. Under the loophole, accredited institutions can offer programs that ostensibly prepare students to enter specific jobs or industries even though the programs may not meet any of the industry’s accreditation or licensure requirements. Students who enroll in the worst of these programs often do not realize their credentials are meaningless until after they have completed their studies and cannot find a job. The new bill would require individual programs to meet state licensure and accreditation requirements for the industry for which they prepare students.

For-profit institutions are some of the worst actors taking advantage of the current loophole.  Sen. Harkin’s recent two-year investigation of 30 for-profit higher education companies exposed that, for many, the primary motive is profit, not student achievement. Students who enroll in many for-profits have a small chance of graduating on time, and those who manage to finish often find their credentials worthless.

Taxpayers have a stake in cleaning up the for-profit education industry, too. A whopping $32 billion in taxpayer funds went to these companies in 2009-10, accounting for 82 percent of their total revenue. The “Protecting Students from Worthless Degrees Act” will ensure that students who pay to enroll in an industry-specific program receive a credential they can actually use.

In related news, a new NCES report shows that low-income students at four-year, for-profit colleges pay annual tuition that is nearly three times that of a four-year, public college, and substantially higher than tuition at private, nonprofit institutions. The average net price paid by these students after grants and financial-aid awards are applied is an astounding $22,336, compared with only $8,286 at public, four-year institutions and $15,798 at private nonprofits.

High prices with such disappointing results only make it more outrageous that some for-profits spend 22 percent of their revenue on marketing, 19 percent on profit, and only 17.2 percent on student instruction. Editorials around the country, including these published in The Detroit News and the Tampa Bay Times, are drawing attention to this misplaced priority. And this chart from Moody’s, which appeared recently in Ezra Klein’s Wonkblog in The Washington Post, shows that among for-profit students who default on their loans, the length of time between when they exit their programs and when they default is shortening.

High-cost, low-quality credentials that do not lead students to career opportunities are a waste of everyone’s time and money. The “Protecting Students from Worthless Degrees Act” puts students ahead of short-sighted, big business interests, and is a worthy fix to an easily exploited loophole.

—Nicole Tortoriello