Lower financial scores would help for-profit businesses

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According to a report released Tuesday by the progressive Center for American Progress, a proposal soon to be decided by the Department of Education, to forgo financial health measures for institutions for three years, would mainly help struggling for-profit colleges. , according to a report released Tuesday by the Progressive Center for American Progress.

This is a controversial waiver request that the National Association of Independent Colleges and Universities and the American Council on Education made in March. The groups have expressed concerns that the financial impact of the coronavirus pandemic would hurt the financial responsibility of establishments. Those who fall below a certain threshold would be prohibited from offering distance education.

Although the associations represent nonprofit institutions, the report found that “the main immediate beneficiaries of the easing of supervision would be struggling private for-profit colleges; the move would give a free pass to colleges that faced challenges long before the onset of the pandemic. “

Center for Post-Secondary Education Vice-President Ben Miller’s report acknowledged that “the process of financial control of the Department of Education is no means perfect. But “to give up these tools now would be irresponsible,” he said. “Suspending financial supervision of private colleges could increase the risk of unplanned closings, leaving students to transfer to another institution on their own and taxpayers bear the full cost of canceling loans,” the report said. Miller also argued that due to a delay in reporting, institutions do not face an immediate threat.

Miller instead approved the provisions of the HEROES Act, the coronavirus relief program approved by the Democratic-controlled House last month, which aims to offer some relief to struggling colleges and provide additional protections for their students. .

Currently, when institutions’ financial responsibility scores fall below a certain threshold, they are required to take action such as obtaining a line of credit in order to continue to receive federal assistance. to students.

Since institutions at risk of failure find it difficult to obtain credit, the HEROES Act would instead waive the requirement for private non-profit institutions. Those whose composite scores fail, or whose cash flow is insufficient to fund six months of operations, would have to come up with a plan for how they would handle closures and where students would transfer. Colleges with less than three months of cash flow would have to obtain binding commitments from other colleges to accept their students.



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