The Department of Education estimates that 96 percent of students at for-profit colleges take out loans, a much higher percentage than students at community colleges, four-year public universities, and nonprofit private colleges. Students at for-profit colleges account for 13 percent of the nation’s college enrollment, but 47 percent of all federal student loan defaults.
The report concluded that significant reforms are needed to ensure that for-profit colleges succeed financially only when students also succeed and that taxpayer dollars are used for educational purposes.
In early July, attempts by the Education Department to penalize for-profit colleges whose graduates ended up with huge debts and low job prospects were struck down by a federal judge.
For-profit colleges can still lose federal student aid if more than 90 percent of their revenue comes from federal sources or their students have high loan default rates in the three years after graduation.
Democratic members of the committee called for legislation to better regulate for-profit colleges, including adding new rules to the Higher Education Act, which is scheduled to be reauthorized next year.
“If nothing else, this report has put the nation on notice that there is a problem here,” said Sen. Richard Blumenthal, D-Conn.
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