Chiu’s bill on colleges gutted
Plan amended, forprofits drop their opposition
SACRAMENTO — A push to tighten regulations on forprofit colleges in California suffered a blow Monday when a state Senate committee gutted the key bill in a legislative package.
Democratic lawmakers, led by San Francisco Assemblyman David Chiu, had proposed financial protections for students similar to an Obamaera federal regulation that the Trump administration just scrapped. The socalled gainful employment rule blocked financial aid for careertraining programs that turn out graduates who do not make enough money to pay off their loans.
Chiu’s AB1340 targeted those same schools by proposing to limit their ability to enroll California residents. But on Monday, Chiu put forward amendments to address objections raised by the Senate Business, Professions and Economic Development Committee, requiring that the state instead collect and report student debt and earnings data for graduates of vocational programs.
Another measure, which sought to counter a federal law that allows forprofit colleges to get up to 90% of their tuition from federal and state financial aid, was pulled altogether. Because military education benefits are not included in that limit, many schools aggressively recruit veterans and are almost entirely subsidized by taxpayers.
The bill that was pulled, AB1343 by Assemblywoman Susan Talamantes Eggman, DStockton, would have lowered the financial aid cap. It will not be eligible for consideration again until next year.
“We hit a buzz saw here and we’re going to have to work on getting the committee the background information they need,” said Bob Shireman of the Century Foundation who helped write the gainful employment rule adopted by the Obama administration in 2014 and has been lobbying for the California legislative package.
Sen. Steve Glazer, the Orinda
Democrat who chairs the Senate committee, said he sought changes to Chiu’s bill because the state does not have the authority to collect all the information it would need to enforce its own gainful employment regulation. He said supporters should celebrate the progress that the committee made by advancing most of the package.
“We share the same goal,” Glazer said. “It’s really, how do you do it?”
Consumer advocates have long sought to crack down on forprofit colleges, which account for the majority of student loan defaults nationwide. Several have been accused of fraudulent marketing and recruiting tactics. But the industry and its allies argue that policies such as the gainful employment rule limit students’ options by unfairly singling out one segment of higher education and punishing schools that have done nothing wrong.
In eliminating the federal regulation, U.S. Education Secretary Betsy DeVos argued that transparency is a better means of holding schools accountable. She promised to expand a federal database of student debt and earnings.
Forprofit colleges dropped their opposition to Chiu’s bill Monday because of the amendments.
Chiu said he hoped the data collection would provide a foundation for tougher state enforcement in the future. He added that the bill would still give California a tool for accountability if the federal regulators further reduce their oversight.
“The federal government could turn off the spigot at any moment,” he said. “We have no faith in the same administration that scrapped this critical rule that they will do the right thing for students.”
The Senate committee advanced four other measures dealing with forprofit colleges, including AB1344 by Assemblywoman Rebecca Bauer-Kahan, DOrinda, which would require online college programs based outside California to meet state consumer protections if they want to enroll California students. All will be heard next in the Senate Education Committee.
Lawmakers expressed the greatest concern over AB1345 by Assemblyman Kevin McCarty, DSacramento, which would ban colleges from setting recruiting bonuses or quotas for employees. Representatives of forprofit schools said it was written so broadly that it would make it impossible to fire anyone who works on student admissions and enrollment.
“Their job is to talk to students and get students interested in the university or the institution,” Matt Back, a lobbyist for the California Association of Private Postsecondary Schools, told the committee. “If we can’t condition employment based on those activities, we could never terminate an employee for not doing their routine activities.”
The bill narrowly passed after McCarty said he was negotiating with forprofit colleges about the language.