Solutions to Student Debt Must Include For-Profit Schools

February 5, 2014 | Blog, News

With permission, I am posting the testimony of David C. Dies, executive secretary of the Educational Approval Board, delivered today in Wisconsin’s Legislature.  Testimony was regarding Senate Bill 376, which I discussed on yesterday’s blog.

Good morning.  Madam Chair and members of the committee, my name is David Dies and I am the executive secretary for the state’s Educational Approval Board.  I appreciate the opportunity to be here today to testify on Senate Bill 376 for informational purposes.

The EAB is an independent state agency responsible for protecting Wisconsin students by regulating for-profit and certain non-profit postsecondary schools, colleges and universities.  Currently, the EAB oversees more than 200 active institutions that annually enroll more than 60,000 – primarily adult – students in roughly 3,200 or so degree and non-degree programs.  Of these institutions, roughly 120 offer an associate’s degree or higher.  Its oversight, however, does not include the UW and technical college system institutions; nor does it include non-profit institutions incorporated in the state prior to 1992, such as Marquette University, Lakeland College, Cardinal Stritch University, and other institutions that are members of the Wisconsin Association of Independent Colleges and Universities.

The EAB is keenly aware of the costs associated with pursing a postsecondary education.  And, as an agency responsible for protecting student consumers, the EAB applauds the goals of the bill’s authors to better educate individuals about the costs associated with taking on debt to finance ones’ educational pursuits.  Based on my understanding, however, the bill does not apply to the institutions that are overseen by the EAB.

Under section 35 of the bill pertaining to lending transparency, an “institution of higher education” is defined as “an institution or college campus within the University of Wisconsin System, a technical college within the technical college system, a tribally controlled college, or a private, nonprofit institution of higher education located in this state that provides an educational program for which the institution awards a bachelor’s degree or higher or provides a program that is acceptable toward such a degree.”  At the same time, section 36 of the bill pertaining to loan counseling uses a slightly different definition that references institutions offering an associate’s degree or higher.

While the use of a different definition for each of these provisions might be by design, the fact that degree-granting institutions approved by the EAB are excluded is concerning.  I would encourage this committee to consider expanding the bill’s applicability to include degree-granting institutions that are subject to EAB oversight for two reasons.  First, students attending EAB-approved institutions are arguably among the most financially at-risk and vulnerable.  Second, the majority of institutions subject to EAB approval are for-profit institutions and receive no state subsidies, which means their students are responsible for the entire cost of their education and end up borrowing more on average than do students attending the others types of institutions.

Under current law, tax filers who pay tuition and fees to attend institutions of higher education, including institutions approved by the EAB, can deduct these amounts up to a specified limit based on the average tuition at 4-year UW System institutions.  Section 39 of the bill amends this provision by expanding the definition of “tuition expenses” to include higher education loan payments.  However, this provision is tied to a definition in Chapter 18 of the statutes pertaining to higher education bonding, which limits the loan deductibility provision to students who attended regionally accredited, nonprofit, postsecondary educational institutions.

The vast majority of students who enroll in EAB-approved schools are non-traditional, working adults – many of them facing economic and financial challenges.  I hope this committee will consider making changes to this bill so that the protections intended are available to all students, regardless of the institution they choose to attend.

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