WASHINGTON (Reuters) - The head of the U.S. Senate's education committee vowed new legislation to curb deceptive recruiting practices in the for-profit higher education industry.
Committee chairman Tom Harkin called on Wednesday for stronger steps by lawmakers after government investigators uncovered deceptive practices aimed at enticing prospective students.
Although he has not written the proposal yet, Harkin said he anticipates "really tightly designed legislation to correct these practices" by the end of this year and into 2011.
The committee also plans to hold further hearings on the industry, starting in September, he told a hearing on the controversial schools.
The S&P 1500 education services sub industry index was down 0.5 percent on Wednesday afternoon, having fallen 4.5 percent on Tuesday after the Government Accountability Office report was released.
The GAO found staff at for-profit colleges urged potential students to fudge their income on loan forms and gave misleading information about costs.
"GAO's findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight," Harkin, an Iowa Democrat, told the Senate Health, Education, Labor and Pensions Committee hearing.
The independent investigative arm of Congress looked at 15 schools across the United States, including Apollo Group's University of Phoenix in Arizona, Corinthian Colleges Inc's Everest College in Arizona, Washington Post Co unit Kaplan's Kaplan College in California and Education Management Corp's Argosy University in Illinois.
Such schools have come under fire by Democrats and the Obama administration, which has already proposed new rules that could limit their access to federal loans.
Democrats say the schools target students who can least afford to pay, then charge much more than traditional public and private universities, leaving students saddled with debt.
Enrollment in for-profit colleges has grown from about 365,000 students to almost 1.8 million in recent years, according to the GAO report.
"Its' a rip-off of the student, it's a rip-off of the taxpayer, and I think it's despicable," said Senator Barbara Mikulski, a Democrat from Maryland.
But ranking Republican member Mike Enzi, from Wyoming, said focusing on for-profits was not being objective, "we are ignoring the bigger picture of what is happening across all of higher education."
The Career College Association, which represents mostly for-profit colleges, has said the GAO report is troubling and has vowed to improve training and standards.
(Reporting by Emma Ashburn; additional reporting by Jon Lentz; Editing by Susan Heavey, Matthew Lewis and Tim Dobbyn)
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