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More regulations proposed for Md. for-profit colleges

"There's just a lot of questions that have to be answered and a lot of dominoes that will fall into place when the Supreme Court decides to act or decides not to act," said Sen. Paul Pinsky, D-Prince George's and incoming chair of the Senate Education, Health and Environmental Affairs Committee.

Sen. Paul Pinsky, D-Prince George’s (File photo)

Maryland lawmakers will look to tighten regulations on for-profit colleges and career schools, hoping to protect students from falling into a student loan debt hole.

Legislation introduced Thursday by Sen. Paul Pinsky, D-Prince George’s, would limit how much of a student’s education could be paid for with loans and require schools to make disclosures about student outcomes.

“They go after people who will need loans, and those are federal loans,” Pinsky said. “And then if the people drop out, don’t complete it, don’t get a job afterwards, they are saddled with a large amount of debt.”

A second bill sponsored by Pinsky would define what is a for-profit college and what is a nonprofit college. Some schools may be trying to get around Maryland regulations by identifying as nonprofits, Pinsky said.

Del. Shelly Hettleman, D-Baltimore County, will sponsor the House versions of both bills. Last year, Hettleman and Pinsky sponsored successful legislation requiring for-profit colleges to disclose to students information about the loans they take out and the school’s graduation statistics before students sign any loan paperwork. 

A spokesman for Career Education Colleges and Universities, which represents for-profit schools, did not not return a request for comment.

Consumer advocates say some for-profit colleges target low-income students, veterans and foster children because of their access to federal funding. That allows them to build a business through federal funds.

But if schools close, like ITT Technical Institute and Corinthian Colleges have in Maryland recently, students can be left holding the bag of high debt without a degree.

There is also concern about the outcomes for students at some of these schools and whether they end up with the jobs and qualifications they were promised before taking out student loans.

“These schools have really poor outcomes for students,” said Jen Diamond, policy associate with the Maryland Consumer Right Coalition. “They lead to really high debt and low return for most of these students that they are enrolling.”

One way the legislation looks to help is by requiring schools to disclose exactly what outcomes their students have. That includes publishing things like how many students are employed after graduation and their average salary. Schools that advertise a program that would help students get a state-regulated license would also have to disclose whether their courses meet the requirement for a Maryland license.

“Am I going to be in tons of debt and make $15,000 a year?” Diamond asked. “Folks should know that before they sign on the dotted line.”

The legislation would also lower a federal standard known as the “90/10 rule.” That rule means that only 90 percent of a school’s overall revenue can be funded through federal loans.

But some loopholes have allowed groups like veterans and foster children to find additional federal funding that does not count against the cap, like G.I. Bill funding.

The legislation would lower the threshold to 85 percent of revenue at for-profit colleges and cover all federal and state funding. Lowering the threshold would require schools to have “more skin in the game,” Pinsky said.

Some for-profit schools are already doing this voluntarily, such as DeVry University.

Most of the regulations proposed in the bills should be welcomed by for-profit universities, Diamond said.

“For both of these bills, if a school is doing all the right things … they should all have no problem with this,” she said. “This is really catching the bad guys, and the good actors should have no problem with either of them.”

But the legislation’s scope could be limited. It would only apply to schools headquartered in Maryland and those schools not in SARA — State Authorized Reciprocity Agreements. Those agreements mean Maryland has to accept schools governed by regulations in other states that are a part of SARA.

California is the only U.S. state not a member of SARA. Some schools in other states have been kicked out of SARA and would also be able to be regulated by Maryland law.

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