The Tragic Collapse of State Oversight of For-Profit Career Schools in California With Assembly Defeat of SB 8233 min read

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Nearly half million students at the mercy of predatory trade school practices

The failure of SB 823 (Perata) in the Assembly on Monday June 30 means the tragic collapse of all consumer protections and state oversight of for-profit career schools in California, leaving the nearly half million students of these schools at the mercy of the predatory trade school marketplace.

You’ve seen the ads on television and in the newspapers targeting recent immigrants, low-wage workers, and single parents struggling to provide a better life for their families with high-pressure sales tactics. These schools prey on hopes and dreams and make grand promises of “high paying careers” and “guaranteed job placement”, but regrettably often leave students without the promised skills, without jobs, and instead with enormous student loan debts—$15,000 or more for short-term programs, with credits that are not transferable and diplomas that likely will not be accepted toward higher degrees.

Students lured into these programs are told of “job placement rates of 80%,” when it may be a third of that; they have had their signatures forged on legal disclosure documents; they have been given the answers to admission tests by school personnel in order to get them in the door and collect their student financial aid dollars.

School recruiters fuel their dreams to “become a chef at a prestigious restaurant” or to have a lucrative career in the “medical field.” But graduates may later find themselves able only to get hired at minimum wage jobs, no better off than they were before incurring the heavy student loan debts. Unable to repay their loans, these students face ruined credit, inability to get federal financial aid to attend any other school, and garnished wages and tax refunds. Their dashed dreams quickly become their nightmares.

SB 823 is a hard fought compromise that accomplishes some key aims. This bill re-instates a fund to compensate students whose schools close unexpectedly. It requires schools to make basic disclosures critical to any student investing in a program to prepare for a particular occupation– completion, job placement and, if applicable, the licensing examination pass rates for each program. This data is essential for students deciding whether, and to which institution, to pay tens of thousands of dollars for a training program. The uniform definitions in the bill will ensure that prospective students can make apples-to-apples comparisons among schools, thereby making the proprietary school marketplace function more effectively.

Ultimately, this bill failed because schools successfully argued that this much scaled back bill will somehow put them out of business. However, for 20 years these schools were required by prior California law to do much more than is in SB 823—and they flourished. From my perspective, if these schools cannot honestly make the required disclosures, they should not be in business.

This legislation will come back as a majority vote bill at a later date, to take effect no later than January 1, 2009. This means a six-month gap in the law. It is unfortunate that the schools have exercised such muscle. It is more tragic that their bottom line interests were placed above the interests of their students.

Elizabeth Imholz is the Director of Special Projects for Consumers Union and is an advocate for them in Sacramento on policy issues related to insurance, health care, trade school regulation, and general consumer protection. She previously headed the West Coast office of CU and has worked as an attorney representing consumers.

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