Fate of state agency puts some students in lurch
Contra Costa Times 1/8/07
State leaders said it may be too late to prevent closing the Bureau of Private Postsecondary and Vocational Education, which oversees 2,400 for-profit schools in California but has had funding and staffing problems.
The bureau was founded in 1989, and Gov. Arnold Schwarzenegger last year vetoed a bill that would have extended its lifespan by 18 months.
Federal education officials have told California lawmakers that students at some for-profit schools will not be eligible for financial aid if the bureau closes. Federal law requires aid recipients to attend a school subject to state oversight.
A lapse in oversight also could prevent some students from becoming certified in fields such as marriage and family counseling, paralegal work and court reporting. California law requires licensees in many industries to have degrees from colleges certified by the bureau or an accreditor.
"Students are kind of getting stuck in the middle with this," said Steve Boilard, who heads the higher-education division of the state's nonpartisan Legislative Analyst's Office. "That's unfortunate. They should not suffer because the various parties have not been able to come up with a fix."
A Schwarzenegger spokeswoman said the governor's office is trying to work out a deal with federal regulators to prevent the financial-aid lapse, but she declined to provide details. A spokeswoman for the U.S. Department of Education also declined to comment.
The bureau's impending demise has introduced new anxiety to what already was a much-debated issue among state and federal lawmakers. Legislators have long sought the best way to regulate schools that have been criticized, prosecuted and fined for underhanded recruiting techniques and untruthful advertising.
Tax laws require traditional schools such as UC Berkeley and Stanford University to maintain nonprofit status by directing revenue back into campus programs. For-profit schools such as the University of Phoenix are owned by corporations and generate billions of dollars for shareholders.
In some cases, students lured by the promise of 98 percent job-placement rates pay tens of thousands per year for an education, but find themselves with heavy debt and useless degrees upon graduation.
Oregon resident Andrea Blaesing said she dropped out of the Brooks Institute of Photography in Santa Barbara last year, halfway through her three-year program, after learning that most alumni could not find jobs. She left with $68,000 in debt and few schools willing to accept the credits she earned at Brooks.
With an 18 percent interest rate steadily raising that total, a family member bailed her out by paying back the loan, she said.
"With the amount of money I owed, I would never have gotten out of debt," Blaesing said. "It would have ruined my whole entire life."
California's regulatory bureau was designed to grant and rescind operating licenses for the private schools and to refund tuition money to students of schools that close.
Critics said the agency has been ineffective in both roles, particularly since the Department of Consumer Affairs took it over in 1998. They charge that the bureau is two years behind in repaying the tuitions of students at closed schools, for instance.
"They're worthless and they haven't done anything," said Elena Ackel, a Los Angeles attorney who serves on the bureau's advisory committee. "They've gotten an F-minus. Everyone admits it is a total disaster."
For-profit college lobbyists for years have fought increased regulation. Some said lawmakers have unfairly targeted corporations.
The Legislature should not expand the California bureau's mission to include academic programs or investigate legal claims, said Scott Govenar, a Sacramento lobbyist who represents the University of Phoenix and other for-profit schools.
"At its heart, the bureau is just a licensure body," he said. "It should (remain in) the Department of Consumer Affairs."
A spokesman for the Department of Consumer Affairs said the agency's problems resulted from how the Legislature designed it. Tuition-recovery reserves were limited to $6 million, he said, and demand quickly exceeded that amount when the technology bubble burst, causing many small schools to close.
The spokesman, Russ Heimerich, said he's confident policymakers will find a way to protect students before July 1.
"We're optimistic," he said. "I don't think anybody's going to lose their financial aid."
But legislators and consultants said it might be too late to prevent the lapse. Some said they were considering overlooking a state law that prevents lawmakers from fast-tracking bills to extend such deadlines.
"People have to come together to make it work," said recently elected Assemblyman Anthony Portantino, D-La Canada Flintridge, chairman of the chamber's Higher Education Committee. "We've heard many times that things can't be done, but ways have been found."