Get Smart – It’s time to tighten the screws on for-profit schools

Too many for-profit schools have no good reason to exist and lots of reasons not to.

Corinthian Colleges, a for-profit chain of schools with about 72,000 students, took in $1.4 billion in federal student loans and grants last year, almost 90 percent of its total revenue. The money kept afloat the 107 campuses of Corinthian’s schools across the country, operated under the names Heald, Everest and WyoTech.

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But now the entire system is collapsing under the weight of lawsuits and government action alleging fraud, excessive student debt, low completion rates, lies about student success in finding employment in their fields, and other malfeasance.

For-profit schools in the United States have become a largely government program, sucking up federal loans and grants, costing taxpayers billions and failing to deliver for students. The government should be coming down hard on a network that delivers so little value for all the federal money pouring into it.

But Congress, particularly heavily lobbied Republicans swamped in campaign contributions from the for-profit colleges industry, refuses to rein in the abuse.

Minnesota Republican Rep. John Klein tops the list of members receiving contributions from the for-profit schools industry, taking in $117,650 in the 2014 cycle. Klein just happens to be Chairman of the House Committee on Education and the Workforce.

Republican Rep. John Klein is a big beneficiary of contributions from the for-profit schools industry

Republican Rep. John Klein is a big beneficiary of contributions from the for-profit schools industry

This isn’t to say the Democrats are all on the side of the angels. Cory Booker, a New Jersey Democrat, pulled in $11,100 from for-profit schools and Senator Patty Murray, a Washington Democrat, collected $21,70 in the 2014 cycle, according to the Center for Responsive Politics.

A typical concern raised by Democrats is that cracking down on the for-profit schools will hurt minorities, a cynical explanation given that minorities tend to be the ones hit the worst by for-profit schools’ abuse.

Prominent companies heavily invested in for-profit colleges include ITT Technical Institute, DeVry, Kaplan, Apollo Group / University of Phoenix, Career Education Corp. (CEC), Education Management Corp. (EDMC), and Globe University.

Just in the first three months of 2014, for-profit education companies spent at least $1.9 million on lobbying expenses, according to an Inside Higher Ed analysis. Apollo Education Group, the Association for Private Sector Colleges and Universities, Bridgepoint Education, Herzing University and Corinthian Colleges (which operates under the school names Everest, Heald, and Wyotech) were among the biggest spenders.

The Association of Private Sector Colleges and Universities, the trade group representing for-profit schools, argues on its Higher Education For All website, that “all students should be afforded the opportunity to pursue a postsecondary education regardless of their location, socioeconomic status or career choice… Government should not be in the business of restricting individual’s opportunities…”

Agreed, but that doesn’t mean the government, and taxpayers, should be subsidizing a failing system.

According to the Institute for College Access and Success, more than 600,000 federal student loan borrowers who entered repayment in 2010 defaulted on their loans by 2012. The largest share of these students – 46 percent –attended for-profit colleges, even though they enrolled just 13 percent of students nationally.

Apollo Group says it’s “Playing a vital role in educating the world”, but in 2013, the Washington Post reported that the University of Phoenix had an overall graduation rate — meaning first-time undergraduates who get a degree in six years — of about 16 percent, and the graduation rate for students in online programs was just one-fourth of that.

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Particularly hard hit are veterans. According to the Center for Investigative Reporting, over the past five years, the University of Phoenix campus in San Diego reaped $95 million in post 9/11 GI Bill money, more than the entire University of California system. Meanwhile, the overall graduation rate at the San Diego campus is less than 15 percent and more than 25 percent of students default on their loans within three years of leaving school.

The for-profit college industry has been battling for years to block regulations that could shut off federal dollars flowing to programs that too often leave graduates and drop-outs with excessive debt and no good-paying job.

On Feb. 26, 2014, when Consumer Financial Protection Bureau Director, Richard Cordray, filed a lawsuit against for-profit chain ITT Educational Services for misleading students, he cited the failure of for-profit schools to serve their students well.

According to the National Center for Education Statistics, he said, for bachelor’s degree students starting a four-year program in 2004, just 28 percent of students attending for-profit institutions graduated within six years. This was half the rate for students at four-year public institutions.

“This is truly an American tragedy,” said Cordray, in announcing the suit against ITT. “Students may think they are climbing a ladder to success when instead they are getting knocked down, crushed by student debt that does not help them gain a better job or a better life.”

It’s time for Congress to act.

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