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By Benjamin Lesser and Greg B. Smith
The Bureau of Proprietary School Supervision has largely quit investigating unlicensed schools as the volume of new institutions has overwhelmed the limited staff and budget.
In 2009, New York State shut down three trade schools and cited five more for operating without a license. Last year, the total number was zero.
That’s because the state’s Bureau of Proprietary School Supervision can’t keep up with a rising tide of new schools – and has largely abandoned probes into unlicensed schools altogether.
At a recent board meeting in October, one official warned that the agency was “in chaos.”
In the mid-1990s, a staff of 40 covered 300 schools. Today, a staff of 20 covers 500 schools, with 100 to 150 applications pending.
There are five investigators statewide, and to keep costs down they rarely fly to the western half of the state. In the last year, all schools cited for violations were in New York City or Long Island.
A key change has been the decision to jettison probes into unlicensed schools unless they pose an immediate health threat.
“We’ve taken the position that because of the workload we have, we’re not mandated under education law to investigate unlicensed schools,” said Carole Yates, head of the Bureau of Proprietary School Supervision.
“If we are notified of an unlicensed school, we will send … a letter telling them that they might need to be licensed and to contact us. It’s a forceful letter. … Sometimes we get a response.”
Faced with a budget gap, the state has taken $500,000 from the $2 million fund the state uses to reimburse students when schools are shut down – and officials fear this will get even worse.
“It worries me a lot,” Yates said. “This account is for the protection of students, not general fund money.”
Yates admits the agency sometimes can’t look into allegations that deserve investigation “simply because we can’t take any more on. The process slows down. Whether it’s getting a teacher’s license, getting a school license or renewal, a field person going on an inspection – all of it slows down.”
The bureau gets its money from the schools it regulates. That could create a conflict of interest similar to the federal agency that collected royalties from oil rigs while overseeing safety.
If the bureau shuts lots of schools, its revenue stream dries up.
The bureau spends much of its time policing for-profit schools, a job that has become increasingly complex across the country.
For-profits have emerged as the problem child of higher ed, accused repeatedly of claiming students had graduated (but providing no proof), hiring unlicensed teachers or opening schools without a license.
Nationwide enrollment at these schools has soared from 673,000 in 2000 to 1.8 million in 2008, and profits have taken off.
Tax dollars cover much of this. Last year, the government funded $4 billion in grants and backed up more than $20 billion in student loans.
For-profit schools have the worst records when it comes to students’ loan defaults within three years – 11.6% in fiscal 2008, nearly double that of public institutions (6%) and almost triple the rate for private nonprofits (4%).
In New York, loan defaults at 38 for-profits were worse than the 11.6% national average. The worst offender was Plaza College in Queens, where 28% of students defaulted on taxpayer-backed loans within three years in 2008.
For-profit colleges have the worst graduation rates. In 2008, 55% of public college students graduated within six years. At private nonprofit colleges it was 64.4%, while it was 24.5% at for-profit colleges, statistics show.
Whether they graduate or drop out, 53% of for-profit students wind up with more than $30,500 in debt, a recent College Board study found. That compares to just 12% at four-year public schools with that kind of debt.
And stats show lots of trade school students aren’t landing the jobs they were promised.
For example, recruiters at one school in Washington, D.C., told potential students they’d make $150,000 a year as a barber – a figure with no basis in fact.
In August, a congressional investigation discovered a pattern of bait-and-switch by overzealous recruiters at for-profit schools who were paid a per-student commission.
At one Florida school, a recruiter told an undercover agent posing as a student to falsify loan applications to get the money. At another, the recruiter claimed the school was accredited by the same agency that accredits Harvard. It was not.
