A proposal in Gov. Scott Walker’s two-year budget would likely make Wisconsin the only state without oversight of for-profit colleges, at a time when many others are ramping up their level of supervision over colleges that face heavy scrutiny throughout the nation.
“I don’t know of any other state that would not have some kind of vetting of for-profit institutions,” said David Dies, director of Wisconsin’s Educational Approval Board.
Walker’s budget would entirely eliminate the EAB, which has overseen for-profit schools since the passage of the G.I. Bill in 1944 — then as the Governor’s Educational Advisory Committee. It’s been known under its current name since 1968.
Under Walker’s plan, complaints against schools would be handled by the Department of Agriculture, Trade and Consumer Protection. Schools that need state authorization in order to receive federal financial aid would go through the Department of Financial Institutions.
Gone would be the EAB’s oversight function, which Dies said creates a level playing field — both for students and for the institutions themselves.
The agency handles about 50 complaints per year, Dies said. But were the agency not to exist, he estimates that number would “skyrocket” by as many as 10 to 15 times because “there wouldn’t be any rules by which institutions would play.”
“The EAB, by design, is intended to prevent complaints from happening,” Dies said. “And frankly, when there is a complaint, there’s been a failure somewhere along the way. It may be the institution’s fault, it might be the student’s fault. That’s why we get involved.”
In about 60 percent of cases, the school is found to be at fault, Dies said. In the remaining 40 percent, the board finds that the student did not follow the school’s policies.
While Dies expects the number of disputes between students and schools to go up with the elimination of the board, it’s also possible those disputes would not meet the classification of “unfair trade practices” complaints handled by DATCP, he said.
He pointed to the recent closure of Anthem College, in Brookfield, as an example. The EAB was notified at 5:30 p.m. on a Tuesday that the college intended to close that week, and by Friday, the institution had shut down. Close to 200 students were affected by the closure. EAB assisted with transferring, compensating and otherwise helping those students.
“Those students would have no recourse, no advocate, nobody to assist them during that traumatic time if EAB didn’t exist,” Dies said.
The agency oversees, with some exceptions, all for-profit institutions offering degrees to Wisconsin students, plus out-of-state nonprofits offering online programs in Wisconsin. That includes heavily advertised colleges like University of Phoenix, Globe University, DeVry University and Rasmussen College, along with smaller, owner-operated institutions like taxidermy, welding, massage therapy, yoga instructor and truck driving schools.
In total, the EAB oversees just shy of 250 institutions enrolling about 60,000 students. In the 2013-14 reporting period, the schools received a total of more than $350 million in tuition.
The EAB’s budget for the current fiscal year is about $605,000. Its funding comes entirely from fees paid by the schools it oversees.
In other words, spread across the schools, for every $1,000 of revenue a particular school receives, it pays the EAB about $1.70.
Because of that, Dies is skeptical of the rationale given in Walker’s budget for the board’s elimination.
In his budget summary, Walker called for eliminating the EAB to “to decrease the regulatory and fiscal burden on private, for-profit schools.” The EAB employs the full-time equivalent of 6.5 positions, all of which would be cut under the budget proposal.
Dies is also skeptical of whether a significant regulatory burden exists.
The board takes its consumer protection role seriously, Dies said, adding that its job is to protect both the schools and the students. In many cases, smaller institutions have used the board as a resource in developing business models, policies and procedures. The board’s guidance has helped many of those institutions avoid pitfalls down the road, he said.
The agency’s staff is made of school administration consultants rather than auditors and investigators.
Dies acknowledged that the agency doesn’t necessarily have the same relationship with the larger, corporate institutions, whose structures are determined at a higher level.
Some of those schools fought the EAB on a push last year to impose standards for retention, graduation and employment, which was quickly defeated.
For-profit institutions require a specialized oversight separate from that of public and nonprofit schools in part because they enroll a different kind of student, Dies said.
Because they lack the brand recognition that comes with athletics programs and top-tier selectivity, for-profit institutions tend to be aggressive marketers and recruiters. They accept nearly everyone who applies, and about 75 percent of students enrolled are considered non-traditional — most between the ages of 34 and 50. Many have jobs and families and face different challenges than traditional students.
In its oversight role, the EAB doesn’t prescribe to schools what policies they must use, just that they must have policies in place. The requirements handed down by the agency are designed to ensure a level playing field, Dies said.
“If you take all that away, then all of a sudden it’s the wild west, and everybody does what they want,” he said.
Of particular concern to those with an eye on for-profit colleges is the large amounts of debt amassed by students attending the schools.
Students at for-profit schools default on federal loans at a higher rate than students at community colleges and traditional public schools. At 88 percent, they’re also more likely to graduate with student debt than students graduating from public schools (66 percent) or private nonprofit schools (75 percent), according to the Institute for College Access and Success.
They also graduate with more debt than their counterparts at public and private nonprofit schools. In 2012, the average debt for students graduating from for-profit schools was just under $40,000 — compared to just over $32,000 for private nonprofit graduates and about $26,000 for public school graduates.
An EAB report in 2013 found an average dropout rate of 28 percent among 186 schools surveyed that enroll Wisconsin students.
Those numbers have prompted federal lawmakers, the Obama administration and several other states to take a closer look at the practices of the for-profit education industry and, in many cases, tighten regulations.
“The for-profit college industry has engaged in the kinds of tactics and activities that should earn them more, not less, scrutiny,” said Analiese Eicher, program director for the liberal group One Wisconsin Now and a former lobbyist for the United Council of UW Students. “Yet Gov. Walker’s budget goes in exactly the wrong direction for Wisconsin students that are doing the right thing trying to get an education or job training. You have to wonder just who Gov. Walker is working to protect.”
Dies said the board wasn’t consulted on the proposal, and he’s not sure what prompted it. The stated rationale — decreasing the fiscal and regulatory burden on the schools — doesn’t make sense, he said.
The EAB will hold its next board meeting on Feb. 20, where it will consider its response to the budget proposal. ￼
Walker’s budget would entirely eliminate the EAB, which has overseen for-profit schools since the passage of the G.I. Bill in 1944 — then as the Governor’s Educational Advisory Committee.