For-Profit Colleges Adopt Conduct Code

Faced with growing public scrutiny and increased federal oversight, a national group of for-profit colleges said Thursday that its members will now follow a voluntary code of conduct designed to crack down on abuses that have rocked the industry’s image.

The Coalition for Educational Success, a Washington, D.C.-based group that represents career colleges serving 350,000 students at nearly 500 campuses, announced the Standards of Responsible Conduct, but won’t release the complete code until this summer. The industry group said it will cover areas ranging from standard disclosures of tuition costs and job placement rates to more transparent financial aid policies.

Managing director Penny Lee said the standards will provide a "new level of accountability."

"We know concerns have been raised and we take them very seriously," she said. "This is a significant step for the sector."

The announcement comes as another industry group battles the U.S. Department of Education in federal court in a bid to block new regulations of for-profit higher education institutions. The industry has lobbied heavily in Washington against a proposed "gainful employment" rule that could limit schools’ access to federal financial aid if graduates’ debt levels are too high or too few students repay loans.

Also, Lee’s coalition sued the federal General Accounting Office in February over a scathing GAO report that relied on undercover investigators posing as prospective students who found fraud at four schools and deceptive marketing practices at each of the 15 schools scrutinized.
Industry critics reacted with skepticism to the announcement.

"We’re glad that the Coalition for Educational Success now seems to admit it has a problem," said David Halperin, executive director of Campus Progress, an offshoot of the Center for American Progress. "It would have been better if CES had proposed reforming itself before its back was to the wall."

The coalition’s code will be overseen by Republican Thomas Kean, former New Jersey governor and Drew University president, and Democrat Ed Rendell, former Pennsylvania governor. Halperin noted that Kean, who was also chairman of the federal 9/11 Commission, is a partner at an investment firm with a financial stake in privately held education companies.

Neither Kean nor Rendell were available for comment Thursday. In a written statement, they emphasized the role of career colleges in producing workers to better compete in the global economy.

Lee said the conduct code announcement is not an attempt by the group of for-profit colleges to influence the Education Department’s pending rules, which could dramatically affect those schools’ bottom lines. The GAO report found that students at for-profit colleges received more than $4 billion in Pell Grants and more than $20 billion in federal loans in 2009 alone.

"This is separate and apart from what the administration wants to do," she said. "We can’t stop that train."

Conduct codes are not new at for-profit colleges. The Association of Private Sector Colleges and Universities, another leading group whose 1,600 members include industry heavyweights Kaplan Higher Education Corp. and ITT Educational Services Inc., adopted a similar code more than 15 years ago, an association spokesman said.

ASSOCIATED PRESS