Proprietary Schools:

Millions Spent to Train Students for Oversupplied Occupations

HEHS-97-104: Published: Jun 10, 1997. Publicly Released: Jun 16, 1997.

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Carlotta C. Joyner
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Pursuant to a congressional request, GAO determined the extent to which Higher Education Act title IV funds finance proprietary school training in fields with insufficient job demand, focusing on: (1) title IV money spent to train proprietary school students for occupations with a surplus of trained individuals; (2) ways government-sponsored training programs use labor market information to target training funds toward fields with promising employment outcomes; and (3) the merits of using labor market information to target training funds.

GAO noted that: (1) the federal government spends millions of student financial aid dollars to train students for occupations that already have a surplus of workers; (2) for fiscal year 1995, $273 million in title IV funds subsidized over 112,000 proprietary school students to train in fields with projected labor supply surpluses in the 12 states GAO reviewed; (3) in some cases, proprietary school students received training in occupations with projected labor supply surpluses in several states; (4) for example, 28,000 proprietary school students were trained in electrical/electronic technology in seven states that each had a labor supply surplus; (5) several major federal job training programs restrict training to fields with favorable job demand projections; (6) the Job Training Partnership Act Program, the largest federal employment training program, specifies that participants may train only for occupations of which sufficient job demand exists; (7) in addition, the federal Carl D. Perkins Vocational Education Act requires that state plans describe how training funds will be used for occupations with available or projected job openings; (8) also, until recent welfare legislation passed on responsibility to states under block grants, the federal Job Opportunities and Basic Skills program had similar requirements that compelled welfare agencies to work with private industry councils to ensure that programs provided training for jobs likely to become available in an area; (9) although government officials did not support using labor market data to regulate title IV participation, they and experts GAO interviewed advocated providing prospective students of occupation-specific training programs access to labor supply and demand projections; (10) in agreeing that such information would help these students make more informed training decisions, these interviewees also noted the need to supplement the data with other labor market information, such as training-related placement and wage rates of recent program graduates; (11) using labor market projections provides a rational basis for making training investment decisions, which was a noted advantage; and (12) as a disadvantage, the interviewees cautioned that such data are inherently imprecise.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: This recommendation was not addressed in the Higher Education Amendments sent to conference. The requestor does not anticipate introducing legislation time to implement the recommendation.

    Matter: The Congress should expand the Student Right-to-Know Act to require proprietary schools to report recent graduates' training-related job placement rates. The act currently requires all title IV-eligible schools to report student completion rates but not graduates' employment experiences. Such information would help prospective students understand the usefulness of recent graduates' occupational training programs.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Education included provisions implementing this recommendation in a reauthorization proposal submitted to Congress. Education believes that, without legislative authority, it cannot act further to implement this recommendation.

    Recommendation: The Secretary of Education should identify and take appropriate action to ensure that prospective proprietary school students have access to employment and earnings projections relevant to their chosen training field and local area.

    Agency Affected: Department of Education


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