Building an Economy that Works for Everyone

Too many for-profit colleges fail to deliver for students

DeVry University

From the Tacoma News Tribune

A new Senate education committee report on the nation’s for-profit colleges paints a disturbing picture of billions in taxpayer dollars being spent on student aid, with precious little to show for it.

Tuition at these colleges tends to be pricey, with associate degrees costing at least four times as much as comparable community college programs. Yet many of the credits students earn are not transferable to other institutions and often don’t qualify them for the professional licensing they need – despite what the TV commercials claim.

More than a quarter of federal student aid now goes to for-profit schools – and that doesn’t even include military GI Bill benefits. These schools are aggressively pitching their sales messages to veterans – sometimes even as they are recuperating from war injuries. Only after the vets have spent their benefits do they discover that they have little to show for it.

A typical case is Moses Maddox, a Marine veteran who enrolled at the University of Phoenix – the largest for-profit college. He worked as a salesman for Phoenix, persuading other veterans to enroll and use their GI Bill Benefits. After applying to a state university, he learned that it would not accept his Phoenix credits.

Attorneys general for 21 states have asked Congress to close loopholes in federal law that they say allows for-profit colleges to use predatory, high-pressure tactics to target veterans.

The Senate report found that more than 85 percent of revenues for the 15 publicly traded for-profit colleges came from federal student aid and U.S. military educational benefit programs. But little of that money is finding its way into the classroom. The companies spent 42 percent of their revenue on marketing, recruiting and profits and only 17 percent on instruction. They paid their chief executives an average of $7.3 million per year.

The schools particularly target vulnerable populations eager to improve their status, such as low-income minorities and those who may not have good enough grades to get accepted for admission elsewhere.

Once the schools have recruited the students and gotten their money, they do little in the way of student support, career services and guidance. More than half of the students drop out after about four months – their educations dollars down the drain and into the coffers of the big companies that own the schools.

Almost all students who enroll in for-profit colleges take out students loans, compared with 13 percent for community college students and 48 percent for those attending four-year public colleges. And for-profit enrollees account for almost half of all student loan defaults, even though they make up only 13 percent of the nation’s college enrollment.

Committee chairman Sen. Tom Harkin, D-Iowa, had harsh words for the for-profit college industry, noting its “exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation. These practices are not the exception – they are the norm. They are systemic throughout the industry, with very few individual exceptions.”

Clearly, more must be done to safeguard taxpayer dollars to ensure that they are being spent actually preparing students for careers rather than just enriching companies that own for-profit schools. Education dollars are too scarce to waste them like this.

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