The for-profit college industry is known to most Americans
by its commercials and billboards promising potential students new skills, job
training and exciting career paths. The reality is far more sinister, as
Senator Tom Harkin’s new report,
released last week, reveals.
“In this report, you will find overwhelming documentation of
exorbitant tuition, aggressive recruiting practices, abysmal student outcomes,
taxpayer dollars spent on marketing and pocketed as profit, and regulatory
evasion and manipulation,” Mr. Harkin, an Iowa Democrat who is chairman of the
Senate Health, Education, Labor and Pensions Committee, said in a statement…
“These practices are not the exception — they are the norm. They are systemic
throughout the industry, with very few individual exceptions.”
According to Harkin’s findings,
for-profit colleges take in about $33 billion each year from taxpayers (in the
form of student loans), making up 85 to 90 percent of their revenues, yet they
spend the large majority of that money on marketing, recruiting and executive
salaries – CEOs took home an average of $7.3 million a year. Not surprisingly,
this business model fails their students: 54 percent of the students who
enrolled in the 30 biggest for-profit schools examined by Harkin in 2008-09
left institutions without a degree.
Looking to maximize profits, these schools target those most
likely to receive lots of federal student loans: low-income students,
immigrants, students of color and other nontraditional types of students.
Perhaps most predatorily, they have sought to enroll veterans of the recent
wars in Afghanistan and Iraq. Student loans from the G.I. Bill count as private
money, not federal loans, helping for-profits stay below an imposed 90
percent threshold for revenue from the federal government while
maximizing profits. It got so bad that earlier this year President Obama penned
an executive order to protect U.S. troops from recruiters, saying that these
schools are “trying to swindle and
hoodwink you.”
Last week, Harkin held a press
conference with some colleagues sharing his findings. One of the
speakers was a former for-profit college recruiter who described the techniques
she used to convince potential students to apply:
“The pain funnel was used to ‘demoralize potential
applicants by discussing their life’s shortcomings in order to have them
enroll, where their life would improve.’ Such techniques are both ‘predatory’
and ‘very successful,’ she said. Students would enroll with the ‘expectation
that if they spend enough money, whether through savings or students loans,
their problems would be solved,’ Brozek said. ‘For a large percentage of
students who enrolled, this was simply not the case.’”
Another was a former Army captain who denounced
the treatment of veterans saying that if hospitals behaved like these
schools, their executives would be in jail.
The examples of abuses are shocking. Take this recent
story from a report by The Village Voice’s Chris Parker, in which
a recruiter from Ashford University encouraged 14-year-old Bobby Ruffin Jr. to
enroll for classes without telling his parents and to let the school lie for
him on his financial aid forms. Parker writes, “Bobby took online classes for
almost a year. …”
“Of course, it’s illegal for kids Bobby’s age to receive
financial aid…. But when [Bobby] wouldn’t endorse Ashford [University]’s lying
on his financial-aid forms, administrators miraculously discovered that he was
under 18. Since this left him ineligible for federal aid, Ashford was forced to
return his loan money to the feds. The school wouldn’t be eating those costs.
Bobby would. Ashford, which declined interview requests for this story, sent
him a bill for $13,000.”
Examples like
this abound.
How are for-profit schools getting away with this behavior?
The same way most companies get what they want in this country: with millions
of dollars in lobbying
federal lawmakers, pricey
lawyers and strategic campaign
contributions.
This is an industry that is by and large exploitative to its
students and useless to the public good. But business seems to be going just
fine – for-profit universities have an average profit margin of 19.7 percent.
They just won’t tell you that those profits are coming from our taxes – and at
the expense of some of the most vulnerable among us.
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