Dive Brief:
- The U.S. House of Representatives passed an amendment last week to its version of the National Defense Authorization Act for the 2020 fiscal year that would require the U.S. Department of Defense to audit financially shaky for-profit colleges that enroll members of the military.
- It also requires the department to keep a public, online list of how much each college receives from the agency’s Tuition Assistance (TA) program. It was supported by most House Democrats and 20 House Republicans.
- Although the legislation lacks clear teeth, observers say the information it gathers will be critical to the continued oversight of for-profit colleges.
Dive Insight:
The amendment would require the DOD to audit any college that fails to meet the financial responsibility standards laid out in the Higher Education Act (HEA) — though it doesn’t specify any punitive measures against colleges that fail to meet them.
Proponents of the bill have lauded it as an important step to increase oversight of for-profit schools, which have been accused of targeting veterans and active duty service members. Nearly half (46%) of TA benefits went to for-profit colleges in the fiscal year 2015, according to a report from Veteran Education Success, a group that advocates for military-affiliated students.
Tanya Ang, vice president at VES, told Education Dive in an interview that the “extra step of security” the audits provide are a positive development.
Bipartisan support is also a plus in her view. “That’s one of the most positive things,” she said, “that they collectively understand the need to protect taxpayer dollars and the service members who end up getting used by predatory for-profits.”
Although for-profit colleges cannot receive more than 90% of their revenue from federal aid, the DOD’s and GI Bill’s education benefits don’t count against them. If they did, hundreds of for-profit colleges would likely be found out of compliance with the cap, according to a 2016 analysis from the Education Department.
If the amendment goes through, it would be “an important step in information sharing and making sure different agencies are coordinated” in their oversight of for-profit colleges, said Clare McCann, an education policy analyst with nonpartisan think tank New America, in an interview with Education Dive. “The audits being published would be vital information to any agency that provides federal dollars to colleges,” she added.
It’s also a sign that other federal agencies may be looking to place a check on the Ed Department, said Ben Miller, vice president for postsecondary education at the Center for American Progress, in an interview with Education Dive. “It’s a really important acknowledgment that the rest of the federal government cannot rely on the Ed Department’s judgments on institutional quality,” he said.
However, the amendment may be hampered by flaws in how the HEA assesses an institution’s financial responsibility, experts said.
The problem with the test used, analysts told Education Dive, is that it doesn’t provide an analysis of real-time developments that can impact a college’s finances. “There’s a long delay,” Miller said. “It’s six to nine months later, and places can have significant declines in finances in a short period of time.”
While the composite score may work for a traditional university, where enrollment doesn’t fluctuate dramatically, it may not work for for-profit schools.
“For adult-serving institutions, where demand can move very dramatically, you need to catch an institution before it’s too late,” said Trace Urdan, managing director with investment banking and consulting firm Tyton Partners, in an interview with Education Dive. The amendment would have more teeth if DOD was required to conduct an audit at an earlier stage, he added.
Although the House passed the amendment, the provision isn’t included in the Senate’s version of the defense bill. The amendment will now be worked out by a conference committee, Politico reported.