N.Y. Approves Tougher Rules for For-Profits

State regents raise standards for commercial institutions, but seek alternative to 'tax' on the colleges to fund enforcement.
May 24, 2006

The New York State Board of Regents voted Tuesday to support a set of recommendations from the State Education Department that will force all 42 for-profit institutions in the state to adhere to stricter standards.

The regents also endorsed the idea of developing legislation that would allow the department to recoup some of the financial costs of investigating improprieties at all higher education institutions in the state. Department officials said that one idea they had proposed along those lines -- imposing a fee on for-profit institutions equal to 0.1 percent of the annual state and federal financial aid they receive -- had raised concerns among some for-profit institutions, and that they are open to other scenarios. No formal legislation has yet been introduced in the Assembly or in the Senate to deal with the issue of the department’s need for more funds to pay for investigating fraud.

Johanna Duncan-Poitier, deputy commissioner of the department, said after the vote that the department has been rather lax on for-profit regulation, having only recently established a moratorium on the establishment of new commercial colleges after the emergence of a scandal involving the Interboro Institute last year. In drafting the recommendations, Duncan-Poitier said her intentions were to mitigate both the time and costs incurred when investigating possible abuses in the for-profit sector. She recommended, and the regents approved, that the state:

  • Require a five-year transition period before newly established institutions are given final authority to award degrees.
  • Require that the sale of degree-granting proprietary institutions be approved by the department prior to purchase and that the new owners demonstrate capacity to meet the board’s existing educational and fiscal standards to operate the institution before ownership is established.
  • Require for-profit institutions to clearly define and differentiate remedial and developmental coursework from credit-bearing college coursework to ensure that students are appropriately prepared to succeed and to graduate.
  • Require institutions to strengthen admissions policies, in an effort to ensure that college students, especially those without a high school diploma or GED, have accurate information on the college, job placement, and/or transfer opportunities necessary to make educated enrollment decisions.

Advocates for for-profit institutions in the state did not object to the new regulations. “Good institutions will welcome these rules, and most are already following them,” said Stephen J. Jerome, chair of the Association of Proprietary Colleges and president of Monroe College. He also indicated that he was confident that legislators will come up with a fair way to help the department deal with financial costs.

These proposals will now be written into official regulations, a process that does not require legislative action. Then, the regents will have the opportunity to change any language, said Duncan-Poitier. “These are not intended to punish these institutions in any way,” she added. “We’re focused on problematic institutions.”

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