For-Profit Colleges, John Boehner and the Educational-Industrial Complex

Dear Commons Community,

I have posted on the for-profit colleges on this blog several times in the past year or so.  See for instance:

The Huffington Post has an article today on how legislation introduced by Representative John Boehner (R-Ohio) and passed in 2006 opened the path for doubling enrollments in for-profit online college education courses.  The article states that:

“With a mere eight lines buried in an 82,000-word budget bill passed in 2006, Congress eliminated legislation that had for more than a decade limited how many students colleges could enroll in online courses — rules aimed at protecting students against dubious programs. Those eight lines have proven a potent fertilizer for a for-profit college industry that has since grown to enormous proportions, collecting most of its profits via federal student aid dollars.

In the five years since Congress deregulated online education, enrollments at for-profit colleges have nearly doubled. Six major corporations owning for-profit institutions have enjoyed initial public offerings on Wall Street, with each promoting the rapid growth of online classes to investors and netting millions in compensation for executives. Revenues have doubled at the University of Phoenix and Kaplan University, two of the largest players — so has the rate at which its students have defaulted on their federal loans.”

Professor Kevin Kinser, a colleague of mine from SUNY Albany, is quoted as:

“Most of the large publicly traded [for-profit] institutions would not be able to exist the way they do today if that rule had not been taken away…You have an entirely new revenue source that’s been open to these institutions. … The cost goes down, the revenue goes up, and that’s a pretty attractive investment vehicle.”

The article goes on to identify the workings of the for-profit college lobby and names names:

“The deregulation was the result of a fierce lobbying effort waged by the for profit-college industry, coupled with strategic campaign donations distributed to Boehner, Rep. Mike Enzi (R-Wyoming)  and Rep. Howard “Buck” McKeon (R-Calif.), the men who controlled the Education committees..

For the three election cycles between 2002 and 2006, those three lawmakers and their political action committees alone took in nearly one-fifth of the money donated to federal candidates and committees by the for-profit college industry.

The industry has also benefited from Washington’s traditional revolving door: President Bush’s assistant secretary for post-secondary education, Sally Stroup, had served previously as a lobbyist for the Apollo Group, which owns the University of Phoenix. During her tenure overseeing higher education policy from 2002 through 2006, she authored a series of reports outlining an imperative to lift the online learning restrictions – a major impetus for Congress to ultimately scrap the 50 Percent Rule.”

The bottom line on all of this is that for-profit colleges have basically become a multi-billion dollar industry controlled by a handful of private companies whose profits stem largely from federal financial aid programs.  Many of these for-profit schools have the largest dropout and hence default rates in higher education leaving their former students in debt without having improved their chances for better jobs.

The educational-industrial complex in our country is alive, well and continues to thrive for the benefit of stockholders and politicians.


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