S.1506 / A.2006 Article VII ELFA, Part E


Director, Workforce Development


S.1506 / A.2006 Article VII ELFA, Part E


“For-Profit Accountability Act”



The Business Council of New York State, Inc. strongly supports institutions of higher education that are preparing the workforce for well-paying careers. As such, it opposes the proposed “For-Profit Accountability Act,” S.1506 / A.2006 Article VII ELFA, Part E, which would adversely affect the proprietary college sector in New York, reducing the number of post-secondary education providers in the State, and reducing skill-development opportunities for New Yorkers.  

The metrics outlined in the act are in no way predictors of school quality or student success. The New York State Education Department (SED) has rigorous standards for accreditation, some of the highest in the country, which all the State’s for-, non-profit, and public colleges and universities are governed by. Many of the publicly traded for-profit and online colleges that have made national headlines because of low completion rates and high student loan debt are not accredited in New York by SED, although New York residents can enroll in them. Further, these less-reputable schools certainly do not represent the for-profit sector in New York which, on average, has lower student loan debt for graduates and higher degree completion rates.1  

The “80/20 Rule” outlined in the Act states that proprietary colleges should not receive more than 80% of their annual revenues from “limited revenue sources,” further defined as tuition assistance program (TAP), enhanced tuition award (ETA), all federal student grant and loan programs, and any other local, state or federal government loan, grant, or scholarship. 

While the “80/20 Rule” is only a minor change percentage-wise from the federal rule referred to as the “90/10 Rule,” the definition of “limited revenue sources” far exceeds the federal rule, which only includes Federal Pell Grants and federally backed student loans. The federal rule does not include state or local grants, loans or scholarships, nor does it include the GI Bill. 

The budget language effectively reduces the number of low-to-middle income applicants who can attend these institutions because they traditionally depend on local, state and federal grants, loans, and scholarships for post-secondary education. Reducing education options for veterans and all students who cannot fully fund their higher education and forcing schools to have 20% of their student body privately fund their education would be devastating to these schools. 

Very few students are able to fully fund their higher education expenses without some type of public assistance. And while all of New York’s proprietary colleges are in compliance with the federal rule, under the expanded definition, the “80/20 Rule” would significantly impact the types of students allowed into proprietary colleges. Further, these schools do not receive federal or state aid, as SUNY, CUNY, and non-profit schools do, so they are even more dependent on tuition payments. This reduction in the allowable types and amounts of tuition payments are not only unreasonable but will significantly change who is eligible to attend these schools.  

Schools successfully serving low-to-middle income students and veterans should not be penalized for accepting the public funding students need to attend these institutions. Reducing the education options students have is also a detriment to students who have many personal and familial considerations when making post-secondary education choices. 

Another metric included in this act that does not dictate student success is the requirement that schools spend at least 50% of annual expenditures on student instruction. While this doesn’t seem unreasonable, student instruction (defined as salaries, benefits and professional development for instructors) is only a small part of what students need to succeed in college.

Of course, it is important for institutions to have high-quality faculty, but putting such a heavy reliance on investments in faculty salaries and professional development directly reduces the investment institutions can make in crucial student support services that keep students in school and help them succeed when they graduate. In a time when colleges see the need for food pantries and childcare centers on campus, it is clear that classroom instruction is not the most important predictor of student success. 

Wrap around services, career counseling, co-op and internship placement all require resources outside of classroom instruction and are absolutely vital to helping students stay in school and succeed after graduation. 
Students also benefit greatly from having industry professionals teach their courses. Colleges leverage industry expertise through effective use of adjunct faculty, providing students faculty with first-hand knowledge of subject matter through career experience, in addition to providing a cost savings for colleges. Many adjunct faculty teach in addition to their professional jobs in order to give back to their community and ensure students entering their industry sector are well prepared for their careers. 

To further support the idea that the 50% spending requirement on student instruction is unnecessary, over 65% of all four-year colleges in all sectors of higher education in New York do not meet this measure.2  

From an industry standpoint, there is an unrelenting demand for “middle skilled” employees, those who have some post-secondary education but not a bachelor’s degree. This includes certificate programs and associate degrees. Across the state, many of these SED-accredited proprietary schools are successfully training an in-demand workforce vital to the economy. These schools have strong industry partnerships, and their primary challenge is that they cannot get enough students to fill the needs of local employers. Threatening the vitality and existence of these programs will be detrimental to the workforce and industry’s ability to find skilled employees, especially in the most high-demand STEM careers. Healthcare, advanced manufacturing, and IT all have a high demand for middle skilled employees and rely heavily on certificate and associate degree programs. 

If the State Education Department has concerns about the quality and standards of the programs at proprietary colleges, or any accredited institution, there are ways to address and remedy them within SED. It is hard to imagine what problem the “For-Profit Accountability Act” is addressing that is not already addressed with the State Education Department. There are State and Federal reporting requirements and standards which all these schools adhere to, are in compliance with, and meet or exceed. As was previously noted, many of the publicly traded for-profit colleges that have received national attention and been the subject of headlines are not accredited in New York State. 

There seems to be a general misunderstanding and stigma of the structure of the for-profit sector, based on the name. Many of these institutions in New York State were founded over a hundred years ago and are family-owned businesses in the education sector. As such, they are privately owned and never pursued a non-profit status as many other private institutions have. 

Given that they do not have a non-profit status, they are also tax-payers and contribute to state and local revenues. In a time when the State is concerned about revenue shortfalls and municipalities are on already tight budgets, transitioning a whole sector of institutions across the state from for-profit tax-payers, to non-profit tax-exempt organizations is not financially wise. In addition to being a complex and long process for the institutions, there will be an adverse economic impact on state, local, and school budgets.

New York State has some of the finest institutions of higher education in the country and the world. SUNY, CUNY, for-, and non-profit colleges all serve New York residents in career and civic preparation, and all have a role in New York’s higher education landscape. 

Laws that will effectively eliminate an entire sector of higher education is the last thing the State’s employers need when finding skilled talent is the hardest it has been in decades. As such, The Business Council strongly opposes the “For-Profit Accountability Act,” S.1506 / A.2006 Article VII ELFA, Part E, which would only make it harder for students looking for post-secondary opportunities, and for employers looking to find skilled workers. 








The average student loan debt for the Association of Proprietary Colleges is $22,357, compared to the statewide average of $30,931 [Source: US Department of Education, College Scorecard (https://collegescorecard.ed.gov)]. On-time (2-year) associate degree graduation rates in New York for Proprietary colleges: 26.8%; CUNY: 4.8%; SUNY, 13.1% [Source: New York State Education Department, 2016 Data].

Source: Integrated Postsecondary Education Data System (http://nces.ed.gov/ipeds/)