New U.S. House Education Chair Backs For-Profits

WASHINGTON, Dec 10 — The incoming Republican chairman of the U.S. House of Representatives education committee intends to defend for-profit schools from possible Senate legislation and hopes the Education Department will soften a planned rule that could cut federal funding.

Representative John Kline, the Minnesota Republican who takes over the Education and Labor Committee next month, said in an interview that existing rules had not been effectively enforced and the department was punishing the whole sector.

The department wants to bar federal loans to students in programs where fewer than 35 percent of former students are paying back loans or are capable of doing so. A final rule on repayment rates is due out early next year.

Asked if the final version of the rule would be eased, Kline told Reuters, "I certainly hope so."

For-profit schools often offer graduate and undergraduate degrees but also train people wanting to become mechanics and medical technicians, among other trades.

But some of the schools have come under fire for high loan default rates – some topping 30 percent– and graduation rates that are sometimes in the single digits.

Students at for-profit schools represented 26 percent of federal education loan borrowers for 2008-2009 but 43 percent of defaulters, according to the Education Department.

Senator Tom Harkin, a Democrat from Iowa who chairs the equivalent committee in the Senate, reiterated on Thursday that legislation might be needed next year to rein in the schools.

Kline said he would oppose such an effort. "I would push back really hard against a bill that might come out of Chairman Harkin’s committee."

Asked if such a bill could succeed, Kline said: "I don’t think so."

The stock of for-profit education companies rose after Kline’s remarks were published on Friday. The S&P Education Services index .GSPEDUS closed 2.4 percent higher.

REUTERS