Policy Documents

Regulating For-Profit Colleges in Ohio

October 31, 2011

The Ohio legislature is considering H.B. 39, a bill to regulate the operation and accreditation of proprietary colleges and postsecondary institutions in the state of Ohio, introduced on January 20, 2011 by state Rep. Clayton R. Luckie (D-Dayton).

Proprietary colleges and universities – henceforth referred to as for-profit colleges – are postsecondary institutions operated by owners or investors for profit. They are distinct from most colleges and universities, which are operated by governments or nonprofit institutions for charitable purposes. For-profit colleges rely primarily on tuition to fund their educational services, whereas others rely on a combination of tuition and taxpayer support, tax-deductible contributions, or endowments.

This Heartland Policy Brief describes the growth of for-profit colleges in the U.S., the reason why states are moving to regulate them now, and who attends these colleges. The issue of students defaulting on their loans, often raised as a justification for new regulations on for-profit colleges, is then discussed. Seven provisions of H.B. 39 are summarized and analyzed. In each case, the author questions the need for the new rules and warns of the negative consequences they could have on students. A brief summary of findings ends the paper.