Democratic senators sharply questioned Thursday whether for-profit colleges reaping huge amounts of federal aid dollars are delivering on promises to students and taxpayers.
The fast-growing for-profit college industry has faced increased scrutiny in recent months and is fighting greater government regulation, which it says will cut off access to education at the worst possible time.
The first in a series of congressional hearings on for-profit colleges raised more questions than it provided answers about possible steps Congress or the Education Department might take.
One common refrain from senators and witnesses was how the for-profit college landscape includes both "good actors" and "bad actors" – and that they're uncertain how to weed out the bad ones.
Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, said Congress must pay more attention to for-profit colleges to make sure federal money is being spent wisely and that the for-profit schools "are serving students, not just the shareholders."
Harkin cited students who said they were misled and "false hopes pedaled on a billboard or a pop-up ad or an enticing phone call."
While for-profit schools enroll less than 10 percent of all higher-education students, they receive 23 percent of all federal student financial aid dollars, federal statistics show.
"We need to have good information," said Sen. Al Franken, D-Minn. "We need to have data, we need to know who the good actors are and who the bad actors are ... and act against the bad actors."
Sen. Michael Enzi of Wyoming, the committee's ranking Republican, urged caution in addressing problems so as not to unintentionally harm students in legitimate programs. Enzi said he also hoped for a similar analysis of two-year and four-year nonprofit colleges.
The hearings come at a sensitive time for for-profit colleges, which have been praised for offering options to students who otherwise would be shut out of college and criticized for questionable recruiting tactics, high loan default rates, and low graduation and job placement rates. Earlier this week, several Democratic members of Congress asked the Government Accountability Office to investigate the quality and finances of for-profit colleges.
Last week, the Education Department said it plans to close loopholes in rules that already bar colleges from paying recruiters for students. The department delayed issuing more controversial rules, opposed by for-profit colleges, that would cut off federal aid to vocational programs if most of their students don't earn enough to repay their loans.
The one for-profit college representative on the witness list was Sharon Thomas Parrott, a senior vice president at Chicago-based DeVry Inc. Under questioning from Democrats, Parrott said the amount the school spends on instruction versus marketing and other items compares favorably to nonprofit colleges.
"At the end of the day, our country needs to produce an educated work force that can thrive in a rapidly changing global economy," she said, describing for-profits as a key player in realizing the Obama administration's education goals.