For-profit educational institutions offer too easy access to higher education to low-income, minorities, veterans, military, unemployed, etc. -- some of which may not qualify academically or financially at non-profit private or state colleges.
According to a GAO report, “Enrollment in for-profit colleges has grown from about 365,000 students to almost 1.8 million in the last several years and received more than $4 billion in Pell Grants and more than $20 billion in federal loans.”
Senator Tom Harkin’s Committee on Health, Education, Labor and Pensions July 30 report found “that in 2009 when all sources of Federal taxpayer funds, including military and veterans’ benefits, are included, the 15 publicly traded for-profit education companies studied received 86 percent of revenues from taxpayers.”
This industry employs 10 recruiters for every one career placement specialist and spends almost 23 percent of revenue on marketing and recruiting, while actual instruction receives just 17 percent.
And although for-profit schools enroll just 13 percent of all students, they account for nearly 50 percent of all defaults on federal student loans, which doesn’t cost the schools a dime because the loans are guaranteed by the government, so taxpayers pick up the bill – roughly $20 billion a year.
The committee also found that most for-profit colleges charge much higher tuition than comparable programs at community colleges and flagship state public universities:
- Bachelor’s degree programs averaged 20 percent more than the cost at public universities.
- Associate degree programs averaged four times the cost of degree programs at community colleges.
- Certificate programs averaged four and a half times the cost of such programs at a CC.
And the smoking gun in all this crud and corruption is that they rarely set tuition below available federal student aid.
The disproportionately large debt of students at for-profit colleges helps explain why more than one in five default on student loan debt within three years, whereas at public and non-profit colleges, the default rate was one in 11.
And the federal Department of Education estimates that the lifetime default rate on student loan balances at for-profit colleges is 46 percent. Good grief!
Roughly 600,000 students (54 percent) enrolled in 2008-09 left without a degree or certificate by mid-2010 and about 300,000 (63 percent) enrolled in two-year associate degree programs during the same timeframe left without a degree, according to the study.
And online students' withdrawal rate was a staggering 64 percent. Humm?
Hello: Professor? Instructor? Customer service? Anybody? &^%# --- Ctrl-Alt-Del!
The education department sought to impose regulations that could have caused some for-profit schools to lose eligibility, etc. for federal loans in 2015 if they didn’t clean up their acts.
However, the for-profit lobbyists put on a full-court press and a federal judge overturned the regulation.
The unemployment rate for students that now attend for-profit colleges stands at 23 percent and it’s still virtually impossible to discharge any student loan via bankruptcy.
I think the next bubble (i.e. financial disaster) will be the corruption-riddled for-profit education industry plus the associated $1 trillion – and rising - student debt they greatly helped create along with the complicity of private and state universities’ outrageous tuitions, etc.
I suggest people avoid for-profit schools like a plague.
It’s your money.