On June 23, 2016, AFR’s Senior Policy Analyst Alexis Goldstein gave opening remarks at the launch of a new report by the American Federation of Teachers (AFT) called “Regulating Too Big to Fail Education: Next Steps for the Department of Education.”
— SLAP – Student Labor (@studentlabor) June 23, 2016
In her remarks, Goldstein outlined the parallels between the for-profit college crisis and the subprime mortgage crisis, outlining how both targeted vulnerable populations —including veterans, minorities, and low-income people—and how both used high-pressure sales tactics to pressure borrowers into high-interest loans with deceptive terms. She also reviewed the strengths and the weaknesses in the Department of Education’s proposed Borrower Defense regulations.
The report was released at a Congressional briefing by the report’s authors, Chris Hicks and AFT member Angus Johnston. At the briefing of Congressional and Department of Education staff, they outlined the Department’s current and proposed oversight of, and regulatory system for, too-big-to-fail for-profit colleges.The collapse of Corinthian Colleges exposed the failures of the existing oversight system, prompting the Department of Education to propose new rules on how it’ll oversee financially troubled colleges and limit liabilities faced by taxpayers. This new report addresses how the Department could develop stronger regulations for for-profit colleges, facilitating early intervention the moment it discovers financial trouble and limiting liabilities faced by students and taxpayers.
The proposals range from tools that the Department currently has at its disposal that have been rarely utilized—such as limiting executive compensation and restricting unnecessary institutional spending, and prohibiting financially troubled schools from expanding new campuses and programs—to new tools that would strengthen financial oversight.