Bill Requires Transparency From For-Profit Universities

Rep. Matt LoPresti has introduced legislation that would regulate for-profit universities by requiring them to identify themselves as a for-profit business on all promotional materials, ending a deceptive practice that can have serious negative consequences for students.

The measure passed final reading in the House on March 2, 2018, and will cross-over to the Senate for its consideration.

Rep. LoPresti (ʻEwa, ʻEwa Beach, ʻEwa Gentry, Ewa Villages, Hoakalei, Ocean Pointe) introduced House Bill 1320 in the wake of fallout from issues surrounding national institutions such as ITT Tech, Trump University and Heald College (a campus of failed Corinthian Colleges) locally.

“The integrity of the diploma received from an institution is of prime importance to the individual who invests years of their life and tens of thousands of dollars—often in the form of state and federal loans or grants,” said Rep. LoPresti, who is also an associate professor of philosophy and humanities at Hawaiʻi’s largest private, non-profit university.

“As a professor, I know that those who seek to become students want to enroll at institutions that put students’ needs first,” said Rep. LoPresti. “As a legislator, I have unfortunately seen that they have too often found themselves to be merely customers who are being bilked for the bottom line of a publicly traded company whose primary incentive is to minimize spending on actual education so that they can maximize profit from their customers’ tuition.”

Yan Cao of The Century Foundation, a nationally recognized non-partisan think tank, testified at a hearing in support of the measure, “For-profit institutions, particularly when financed by third parties such as government grants and loans, disproportionately lead to decreased student earnings, growing debt balances, unmanageable debt loads, loan default and student deception.”

“Across Hawai‘i, over 2,000 students are enrolled in for-profit colleges. Hawaii students at for-profit colleges are half as likely to graduate and more than twice as likely to default on student loans compared to their counterparts at not-for-profit colleges,” said Cao. “In the past, state policy makers may have assumed that, because for-profit colleges receive up to 90 percent of their funds through the U.S. Department of Education and additional funds for serving military and veteran students, overseeing them is primarily a federal responsibility. But in fact, federal oversight has been demonstrated to be inadequate, and the Trump administration is in the process of rolling back the protections that do exist.”

HB 1320 would require all for-profit, post-secondary educational institutions to clearly disclose in all print, electronic media, and signage that they are for-profit businesses registered in the state to ensure truth-in-advertising. This will inform and protect thousands of students.

The fact that some for-profit post-secondary educational institutions have engaged in serious, wide-spread, and well-documented improprieties across the country and in Hawaii, has caused the federal government to take action to mitigate the impact of their behavior.

According to a U.S. Senate Committee report, 96% of all students in these types of institutions take out loans to pay for their education and have a 22% chance of defaulting on their loans in the first few years of their education.

Due to the previous presidential administration’s tightening of rules on for-profit institutions, more than 28 institutions, including some of the largest and most popular ones, have been charged with false advertising by the Securities and Exchange Commission.

“People seeking a higher education should not have to investigate whether an institution is a business that’s trying to make a profit versus a non-profit or government institution. This should be stated plainly by the business on all of its promotional materials,” said Rep. LoPresti.

“Genuine higher education nurtures relationships between professors and students conducive to opening minds, instilling knowledge and awakening wonder; it has never been about employees serving customers,” said Rep. LoPresti. “It is important that prospective students know which sort of institution they are considering to dedicate years of their life and future earnings towards and this information is so important that it should be in the name of the institution itself.”

To see the full U.S. Senate Majority Committee Staff Report, go online.