Department Of Defense Appropriations Act, 2016--Motion To Proceed--Continued

Floor Speech

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Mr. SCHATZ. Mr. President, I thank the assistant Democratic leader for his leadership on this issue and for his willingness to educate colleagues and educate the public and to push the DOE to take much needed action in this area.

What is happening with some for-profit colleges is truly a national scandal, and it is a scandal for two reasons: First, students are being hurt, and second, we are wasting tens of billions of dollars. The numbers speak for themselves. Almost 2 million students are enrolled in for-profit colleges, and they have collectively taken on $200 billion in debt to attend, but they often leave with little to show for it. More than half drop out within a few months, and in some programs less than 5 percent of their students ever graduate. For those who leave without a degree, repaying loans is a struggle. Students at for-profit colleges default on student loans at double the rate of students at not-for-profit colleges.

People may be surprised to learn that these substandard programs are financed almost entirely by the Federal Government, and the amount is totally staggering. In total, for-profits receive over $32 billion a year in Federal financial aid--over 20 percent of the total aid--yet they serve only 12 percent of the students.

There are several for-profit companies that each take in more than $1 billion a year in Federal aid and graduate less than 10 percent of their students. Think about that. They take in more than $1 billion in Federal taxpayer money and they graduate less than 10 percent of their students. These companies include the Apollo Group, DeVry, ITT, Kaplan, and Education Management Corporation.

Not only are the educational metrics awful, but many of these for-profit colleges are also under investigation for fraud and deception. Essentially, they have been lying to students and to State and Federal agencies to cover up how bad their record is. Even while prosecutors go after these schools for fraud, they remain accredited and continue to rake in Federal funds. Here are a few examples:

Education Management Corporation, EMC, faces charges of fraud and deception brought by prosecutors in 13 States and the Department of Justice and faces a lawsuit to recover $11 billion in Federal and State funds. Yet EMC is still accredited and still receives $1.25 billion from the U.S. DOE. So the Department of Justice is trying to recover $11 billion at the same time that the Department of Education gives them $1.25 billion.

ITT Educational Services is being investigated and sued by 19 States, the SEC, CFPB, and the DOJ. It is also under scrutiny from U.S. DOE for failure to meet financial responsibility standards. Yet they are still accredited, and last year they received just under $600 million.

Another 152 schools are under investigation by a working group of 37 State attorneys general. They too are still accredited. Collectively, they received $8 billion in Federal financial aid last year.

What do all of these schools have in common? They are accredited. Accreditation is the key to the castle for accessing this spigot of Federal financial aid. It is supposed to signify that a program provides a quality education for its students. Too often, however, the accreditation means nearly nothing.

The GAO released a study on accreditation last year, and its findings are shocking. Over a 4-year period, the GAO found that accreditors sanctioned only 8 percent of the institutions they oversee and revoked accreditation for just 1 percent. Even more troubling, GAO found there was no correlation between accreditor sanctions and educational quality. In other words, schools with bad student outcomes were no more likely to be sanctioned by their accreditor than schools with good student outcomes.

Our accreditation system is broken. According to the Higher Education Act, accreditation agencies are supposed to be ``reliable authorities as to the quality of education or training offered'' by institutions of higher education.

That is the reason for making accreditation a core criterion for receiving Federal funds. How are we following the law when accreditation reviews find that 99 percent--basically, everybody--99 percent of institutions are providing an education of value? How can we say with a straight face that accreditors are acting as reliable authorities on educational quality?

The problem here is money. Incentives are lined up against being critical and against setting high standards. The problem can be traced to the funding and governance of the accrediting agencies. First, accrediting agencies are funded by the same institutions they accredit. Colleges pay an initial fee to become accredited and annual dues after that. They pay for site visits and other services.

Second, accrediting agencies are run and overseen by the institutions they accredit. The member institutions elect their own academics and administrators to serve on the board of the accreditation agency.

It is not hard to see how the incentives are misaligned here. We have created a dysfunctional, if not corrupt, ecosystem in which it is far too easy to become and remain accredited. This system is eerily similar to the one that enabled credit rating agencies to pump out inflated asset ratings, which contributed to the worst financial crisis of our time. Like credit rating agencies, accreditors have a financial interest to churn out accreditations.

The DOE has the authority to improve accreditation. There are a lot of things that Senator Durbin and others, Senator Murphy, and I are working on in terms of changing the Higher Education Act and working in the appropriations context, but U.S. DOE has authority that it is beginning to use but needs to use more of in the accreditation space. It can and must do more to ensure that accreditors are actually looking at academic quality and holding schools to high standards. For the sake of students and taxpayers, the DOE must make this a top priority.

I thank the assistant Democratic leader for his leadership on this issue.

I yield the floor.
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