Lawmakers to decide whether to erase higher education board

April 17, 2015

MADISON The Legislature's budget committee is expected to decide Friday whether to approve language in Republican Gov. Scott Walker's budget that would eliminate a 71-year-old state board that regulates for-profit colleges and investigates student complaints.

The proposed budget would get rid of the Educational Approval Board. A new Department of Financial Institutions and Professional Standards would authorize for-profits only if they need such approval to collect federal aid and state consumer protection officials would field complaints.

Walker's administration says eliminating the board would reduce the financial and regulatory burden on for-profit schools. Critics contend that the move would create a free-for-all that would ultimately hurt students.

"This puts the credibility of all schools at the mercy of the fly-by-night, or profit-first schools," Jerry Kablacka, president of the Diesel Truck Driver Training School in Sun Prairie, said in a March letter to state Senate Majority Leader Scott Fitzgerald, R-Juneau. "Transferring duties that are performed by EAB to a bureaucracy unfamiliar with the business of proprietary schools will do nothing but increase costs to taxpayers and dilutes accountability."

For-profit colleges offer training in areas such as auto repair and nursing and have been popular with nontraditional students. However, the industry has some of the highest student loan default rates and lowest graduation rates in higher education, and some veterans advocates say the schools aggressively recruit veterans in hopes of getting their federal G.I. Bill money. The Obama administration has waged a yearslong fight to improve outcomes and end aggressive recruiting at the colleges.

For-profit colleges contend that they provide opportunities to students who have been left out of higher education.

Created in 1944, the seven-member Educational Approval Board approves and oversees for-profit colleges in Wisconsin as well as out-of-state nonprofit colleges operating here. It currently oversees 252 institutions, according to the Legislative Fiscal Bureau.

The board charges initial approval fees ranging from $2,000 for one non-degree program to $5,100 dollars for one doctoral program. Annual renewal costs $500 plus a second payment of $1.31 per each $1,000 of revenue in 2014-15.

The board also issues permits for college recruiters who work off the school's premises, investigates student complaints, mandates schools have admissions, dismissal, tuition policies and program outlines and maintains a fund built with fees collected from schools to help students following a school's unexpected closure or refusal to issue a refund. Schools pay 50 cents per $1,000 of their adjusted gross annual revenue if the fund drops below $1 million. The account currently stands at $1.4 million; the fund has paid out $383,900 since August as a result of the closure of Anthem College in Brookfield.

The board's director, David Dies, said the budget language has left him perplexed. He said he doesn't understand the Walker administration's argument that the board imposes a financial burden on schools, noting that for every $1,000 of revenue Wisconsin students give the schools the board takes only about $1.70.

"We're entirely program-revenue funded. There's no cost to taxpayers," he said.

The board's regulatory requirements are designed to prevent problems. Once those mandates are gone, state consumer protection officials can expect a deluge of complaints, he added.

"The vast majority of institutions recognize the value of the EAB's oversight," Dies said. "They recognize what happens when you create this vacuum and just throw out the rulebook."

Walker's spokeswoman, Laurel Patrick, said eliminating the board advances the governor's goal of streamlining government.

She insisted the plan would relieve the financial burden on for-profit schools, pointing out the board can charge them up to $5,100 for authorizing a doctoral program now. The two agencies taking over for the board would have the authority to expand regulations as necessary, she added.

The Legislature's Joint Finance Committee started revising Walker's budget language this week ahead of full votes in the Assembly and Senate later this summer. The Republican-controlled panel is set to consider whether to keep the EAB elimination in the spending plan during an executive session Friday.


Associated Press