During this year's legislative session, the Maryland General Assembly passed a bill to increase oversight of Maryland's for-profit colleges. The bill didn't just create tougher standards for for-profit schools, it also established a guaranty fund meant to reimburse Marylanders who were attending colleges that closed.
But because it didn't go into effect until Oct. 1, its protections may be too late to help Maryland students who attended the now-defunct ITT Technical Institute, which closed in early September.
Last year, Maryland's ITT Tech students included 233 veterans utilizing their GI Bill benefits and about 897 federal loan borrowers. Many were people of color. Indeed, at Maryland's two campuses, nearly 60 percent of borrowers were African American with more than 65 percent qualifying for Pell Grants designed to help students from lower-income families.
Like all students, they enrolled with the hope that a college education would be a gateway to the middle class. What many of them probably did not know was that ITT Tech had its own financial challenges long before it closed. With an institutional loan default rate of 18 percent and only 40 percent of borrowers able to pay down any of the principal on their loans, Maryland ITT Tech students were paying an average of $28,000 annually for their degrees.
ITT Tech's student borrowers who were enrolled within 120 days of its closure and did not complete their degrees can apply for a closed school discharge, but that discharge provided by the Department of Education will only apply to federal loans. The discharge does not apply to Pell Grants, out-of-pocket expenses or GI Bill benefits. Furthermore, it will not give relief to student borrowers with private loans or the institutional loan program that is currently embroiled in lawsuits from the Securities and Exchange Commission and Consumer Financial Protection Bureau.
Worse yet, students who were overcharged for out-of-pocket expenses are finding the reimbursement checks they have been sent are no good.
Consider the email that Veteran's Education Success, an organization dedicated to preventing the abuse of veteran students, received from a veteran who was using the Post-9/11 GI Bill to attend ITT: "They sent me a refund check and on Tuesday last week I deposited it into my account, my bank cleared it on Thursday and made funds available. On Monday night my account went $1,700 in the hole. The check was originally for somewhere around $2,600, and it had been returned from JP Morgan Chase Bank. I am currently going to end up so far behind in bills and rent…"
In short, ITT Tech failed as an institution of higher learning, and those with the duty to oversee its operations also failed. Unless the Maryland Higher Education Commission (MHEC) decides to make the law retroactive, ITT Tech students will be unable to recoup much of the money that was meant to send them to college — another potential failure.
MHEC should make the guaranty fund retroactive and help make ITT students whole. But we need to go even further. The state of Maryland must step up and demand real accountability and measurable outcomes from these schools.
In late September, the Accrediting Council for Independent Colleges and Schools (ACICS) that gave ITT Tech access to federal education dollars, was "de-recognized" by the U.S. Department of Education. For years, the department had been concerned about ACICS's lax standards and shoddy oversight. In fact, ACICS continued to accredit the beleaguered Corinthian Colleges until their closure in 2014. Another six Maryland colleges, enrolling around 2,000 students, are ACICS accredited and now may be in danger of closure.
Accrediting agencies must do more as gatekeepers for federal tax dollars that fund for-profit college education. The federal government must better anticipate troubled educational institutions in order to serve both taxpayers who fund its financial aid as well as the students who rely upon it to receive their educations.
Most college students, including those at the former ITT Tech, believe their chosen institutions have their best interests at heart. Instead, thousands of students nationwide became victims through no fault of their own.
Now is a time to act, not blame or commiserate. It is time for integrity — not profits — to be the watchword for higher learning.
Del. Dana Stein (firstname.lastname@example.org), a Democrat representing District 11 in Baltimore County, introduced the guaranty fund bill in the Maryland House of Delegates. Marceline White (email@example.com) is executive director of the Maryland Consumer Rights Coalition.