NC Budget and Tax Center

This year’s Super Bowl Sunday shed new light on the for-profit college industry after advocates took to twitter to share the latest disturbing facts about the industry’s practices. The Super Bowl was held in the University of Phoenix Stadium, which is named for the largest for-profit college in the country. The university agreed to pay more than $150 million over 20 years for the naming rights on the new stadium in 2006.

In the past year, greater scrutiny of for-profit colleges, those that are managed by companies accountable to shareholders and, or publicly traded, has led to a series of legal actions and rising concern from policymakers about the role of these institutions in a context in which post-secondary attainment is the path to the middle class.

The problems with for-profit colleges are many. First, they tend to cost students at least three and half times as much as the same education at a community college. Second, their students are more likely to leave a program without a degree but with a significant level of debt. Leading to the next issue that default rates are far higher among students who attended for-profit institutions relative to their share of the total population: for-profit students represent 12 percent of all enrolled and 44 percent of those who default on their student loans.

Now, new data secured by the Center for Investigative Reporting shows that taxpayers are subsidizing the for-profit college industry to the tune of $9.5 billion a year. This is because the majority of for-profit institutions rely on public funds through Pell Grants, Stafford loans and various military tuition assistance programs to fund their operations. In fact, the analysis finds that more than 90 percent of these institutions’ revenue is from public funds. Read More


As Raleigh’s News & Observer reported this morning, a study committee at the General Assembly appears to be in the process of advancing a legislative proposal for the 2015 session that would reverse a controversial Utilities Commission decision from last fall that provided a windfall to big utility companies.

As I explained in the Weekly Briefing last October, the ruling allowed utility companies the option to keep charging consumers for income taxes that the companies no longer paid as a result of recent corporate tax cuts. The ruling was especially controversial in that it came in the form of a direct about-face from a previous 6-1 Commission decision from just months before. In the latter ruling, three new McCrory appointees joined with the Commission chair to overrule the previous decision — a move that sparked bitter dissent from three holdover Perdue appointees.

According to news reports, most companies have not actually been collecting the windfall. Only Dominion North Carolina Power — which serves a swath of northeastern North Carolina — has been pocketing the cash thus far. Nothing, however, would prevent Duke and the other big guys from following suit at some point unless the courts and/or the General Assembly step in.

This brings us back to the Revenue Laws Study Committee which included language in its draft report to the 2015 session reversing the decision yet again — see pages 4-6. This morning’s N&O story — especially the headline (“NC lawmakers to end policy letting utilities overcharge customers”) indicated that the draft report would be adopted today and that the legislature would pass the legislation into law.

A closer look, however, shows that such an optimistic take may well be premature. Read More


As reported earlier this week, a committee of the General Assembly will meet tomorrow to, by all indications, recommend legislation to loosen regulations on mortgage brokers. As also reported in the story, consumer advocates believe that the proposals to lower bonding requirements and do away with  the requirement of audited financial statements for regulated businesses is the direct opposite of what ought to be done. These facts remain beyond dispute.

Since the story ran on Tuesday, however, it’s come to my attention that another central premise — that tomorrow’s meeting was scheduled for the Friday before the Christmas holiday to help keep the matter flying under the radar of public scrutiny — may be in error (or, at least, an overstatement).

According to information forwarded to me last night, it does appear that various legislative deadlines and the limited availability of various members of the Committee on Banking Law Amendments on other dates played a significant role in the scheduling of the meeting for tomorrow. By all reports, the chairman of the Committee, Rep. Jonathan Jordan, has run an open process and allowed all parties and points of view to be heard as the committee has moved forward with its work.

And so, while is is clearly true that a) the proposed legislation is strongly opposed by consumer advocates as an unwise giveaway to a troubled industry, b) the scheduling of tomorrow’s meeting can’t help but minimize the public attention on what ought to be a controversial proposal and c) the best solution would have been for the committee in question to simply abandon its work on the subject (or at the least to have approached the process with greater foresight from the beginning so as to have been able to complete its work at a time in which its actions would have received a great deal more sunlight), it was incorrect to imply that tomorrow’s schedule was arranged for the sole purpose of evading public scrutiny.


Payday loansThe Charlotte Observer hits a home run this morning with this editorial entitled “An industry that hasn’t been missed.” As the authors make clear, North Carolina elected leaders should continue to use all tools at their disposal to resist the efforts of “payday loan” sharks to reintroduce their predatory (and long banned) 400% loans into our state. The conclusion of the editorial sums things up nicely:

“Congress recognized the predatory nature of the industry and in strong bipartisan fashion in 2007 capped interest rates at 36 percent APR on loans made to active military members and their families. It was right for our armed forces, and it’s right for everyone else.

It’s not a partisan issue. Many Republicans and Democrats alike oppose the practice, and some in each party support it. Whether you’re morally offended by a 400 percent interest rate or just see the damage it does to those who can least afford it, there’s a lot not to like.

Congress should ban the practice nationwide. Until that happens, the Consumer Financial Protection Bureau should install rules banning some of the most nefarious practices. And North Carolina legislators should stand firm and tell payday lenders: We don’t want your money.”

Click here to read the entire editorial.

And click here to get the full skinny on this morally bankrupt industry.


Conservative politicians whose campaigns are funded by corporate interests love to talk about the “genius of the market” and “clamping down on burdensome business regulations.” And while there are no doubt many important virtues associated with both of those concepts, here’s what the genius of the market and business deregulation produce much too often in modern America: exploitation and rip-offs.

A new WRAL news story last night explored a classic example: the targeting of military personnel by scamming, high-cost sales outlets like USA Living. As reporter Monica Laliberte explained:

USA Discounters targeted the military with its patriotic vibe by posting advertisements on a Fort Bragg website and sponsoring military events. The company sells everything from furniture and TVs to jewelry and appliances and even car rims. It promises military members are “always approved for credit.”

Trill’s contract included fees of $1,057 for a warranty and $828.84 for debt cancellation, which covers the debt if something happens to him. The finance charge was $2,065.47. All paid, the furniture that was priced at $5,000 would ultimately cost him $10,513.88.

The next time someone feeds you the line about burdensome business regulations (like next week across the Thanksgiving table, for example) tell them about scams like this in which American heroes are targeted every day. And then remind them that this is why we have to have business regulation in America; not just to protect consumers (because if companies will rip off military families, you know they won’t hesitate to do the same to anyone else), but also to level the playing filed for businesses that operate ethically and honestly. After all, as the veteran/victim in the WRAL story noted:

“Is this the world we fought for? I mean, is this really what you fought for?” Trill said. “Everybody’s scamming everybody. Everyone’s trying to dip into your pockets for a little bit extra. It absolutely makes me sick.”