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False Promises of For-Profit Colleges!

Dear Commons Community,

The fallout from the study released yesterday entitled,  For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success by the U.S.  Senate Health, Education, Labor and Pensions (HELP) Committee, chaired by Sen. Tom Harkin, is all over the media today.  Anyone interested in this sector of higher education will cringe at the findings.  It will also cement in many people’s minds that for-profit colleges are nothing but rip-offs preying on vulnerable student populations.  This is unfortunate since some of these institutions provide a valuable service and are an important outlet for many students to develop career skills.  However, some of the bad apples  are threatening to rot the entire barrel of for-profit higher education. Below is a reprint from today’s New York Times editorial on the study and referring to the “oily subgroup of for-profit schools”.

Tony

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False Promises!

New York Times July 31, 2012

It has long been clear that an oily subgroup of for-profit schools were doing very well for themselves by recruiting students who had no real chance of graduating, pocketing their federal financial aid and leaving the students with valueless credentials — or none at all — and crippling debt.

A dismaying study released this week by Senator Tom Harkin, a Democrat of Iowa, suggests that this predatory behavior — which costs taxpayers tens of billions of dollars a year — may extend well beyond the unscrupulous few to the industry as a whole. The study reveals a disturbing pattern in which companies use misleading tactics to lure poorly informed students into certificate and associate degree programs that average about four times the cost of similar programs in comparable community colleges.

According to the study, taxpayers poured about $32 billion into for-profit colleges in the most recent year — much of it spent on marketing or pocketed as profit. Meanwhile, 96 percent of their students were forced to take out loans, as opposed to about 13 percent in community colleges and 48 percent in four-year public colleges. A majority leave without degrees. And while the for-profit sector accounts for only about 13 percent of enrollment nationally, it accounts for nearly half the loan defaults.

The companies are clearly doing far better than the students. Publicly traded companies that operate for-profit colleges had an average profit margin of 19.7 percent, while paying an average of $7.3 million to their chief executives in 2009, the report says.

This is a politically charged issue, with the Democrats generally favoring tougher regulation and the Republicans favoring the for-profits as a useful alternative to overcrowded community colleges and important sources of vocational education. The good ones may be both. But too many of them look like nothing more than profit centers. Congress, which has largely been looking the other way on this issue, needs to rouse itself.

 

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