Florida House kills bill aimed at low-performing for-profit colleges

Published Jun. 17, 2015

A proposal to suspend the licenses of for-profit colleges whose students have high numbers of loan defaults died despite bipartisan support in the Senate.

Florida lawmakers have rejected a proposal that would have cracked down on the worst-performing for-profit colleges by suspending their licenses to operate and kicking them out of state financial aid programs.

The proposal, which had bipartisan support in the Senate, could never get anywhere in the Florida House. The Republican leadership in the House ignored the bill during the regular legislative session — failing to give it a single committee hearing.

During the current special session focused on budget issues, Senate leaders again brought up the proposal. House leadership shot it down.

A recent Miami Herald series, Higher-Ed Hustle, documented problems with lax oversight of Florida's for-profit colleges, which enroll nearly one in five of the state's college students. Florida's oversight agency is controlled by for-profit college executives, and state lawmakers have passed at least 15 laws to help the industry while receiving more than $1.2 million in political contributions.

Rep. Erik Fresen, chairman of the House education appropriations subcommittee, said the for-profit measure was rejected on Monday because it didn't belong in negotiations over the state budget. In a text message exchange with the Herald, Fresen said the Senate has repeatedly tried to change state policies during the special session by sticking them in the budget bill.

"We consistently opposed them all," wrote Fresen, a Miami Republican.

The proposed accountability rules would have cut off state financial aid funds to schools with federal student loan default rates above 30 percent for three consecutive years, or above 40 percent for a single year. Schools with these high default rates would have also had their state licenses suspended — effectively putting them out of business. A Senate analysis of the proposal predicted it would impact "a very small number" of for-profit schools.

Asked if he would have supported the new rules on a simple up-or-down vote, Fresen said he "never even saw it. No clue."

Florida spends more than $13 million each year on state financial aid programs for students at for-profit colleges. Miami Rep José Javier Rodríguez, a Democrat who sponsored the measure in the House, said Republican House leaders dismissed loan default rates as a "federal issue."

Rodríguez argued that Florida has a right to make sure its state financial aid grants are spent wisely, and that loan default rates are useful information in that process.

"When students take on debt in the hope of improving their financial situation and then aren't able to pay it off, something is wrong," Rodríguez said. "When you have a default rate as high as 30 or 40 percent of your graduates, something is very wrong."

Rodríguez said it was appropriate to bring up his proposal again during budget talks.

"We're talking about state spending," he said.

In 2012, California adopted much-stricter performance standards for its Cal Grant program. The state disqualified any schools with student loan default rates above 15.5 percent.

For-profit colleges were hit hard by California's tighter rules — about 80 percent of them no longer qualified for Cal Grants.

America's total student loan debt has tripled in the past decade, and now stands at about $1.2 trillion. Although for-profit colleges are not the only reason for this rising debt, the schools are a significant factor. For-profit schools account for about 44 percent of all U.S. student loan defaults.

Sen. Jeremy Ring, a Parkland Democrat who sponsored the for-profit accountability bill in the Senate, said student debt is a "financial crisis" and those who ignore it are akin to "climate change deniers."

"Eventually, it's going to collapse," Ring said. "And it's not going to be a just a brush fire, it's going to be a towering inferno."

Ring said he plans to re-file his bill in the next legislative session. He already has the support of Republican Don Gaetz, a former Senate president who also served as superintendent of schools for Okaloosa County.

"As a North Florida conservative Republican, I'll be his first co-sponsor," Gaetz said.

Times/Herald staff writer Mary Ellen Klas contributed to this report.