Sen. Harkin Report Blasts For-Profit Colleges
Yesterday, U.S. Sen. Tom Harkin (D-IA), chairman of the Health, Education, Labor, and Pensions Committee, confirmed what Heather has been warning students about for a number of years - For-Profit Colleges are a risky investment for borrowers and account for more than half of all student loan defaults, according to Mr. Harkin's report.
Wrapping up a two-year investigation into for-profit colleges, Sen. Harkin blasted the industry for "...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 went on to say, "These practices are not the exception — they are the norm. They are systemic throughout the industry, with very few individual exceptions.”
Notable findings of the report:
-
Enrollment at for-profit schools has grown dramatically over the past decade. Between 1998 and 2008, the number of students attending for-profit schools has grown from 553,000 to 1.8 million, an increase of more than 225 percent.
-
In order to drive enrollment growth, for-profit schools spend heavily on television advertisements, billboards, phone solicitation, and web marketing. The pressure on recruiters to enroll as many potential students as possible can give rise to recruiting practices that are overzealous or misleading.
-
For-profit schools are far more expensive than comparable programs at community colleges or public universities. The average tuition for a for-profit school is about six times higher than a community college and twice as high as a 4-year public school.
-
For-profit schools provide access to many students who have historically not been well served by traditional institutions of higher education. But data collected by the Senate H.E.L.P. Committee shows that many for-profit schools are not providing the support structure to help these students succeed. The data shows that fifty-four percent of students who enrolled in the 2008-2009 school year withdrew by summer 2010.
-
Close to one in four students who attends a for-profit school defaults on his or her federal student loans within 3 years of leaving school. This high rate of default combined with the fact that nearly all students at for-profit schools must borrow money to pay the cost of tuition, has resulted in a sector that enrolls approximately 10 percent of American higher education students but accounts for nearly 50 percent of all student loan defaults.
- Despite poor student outcomes, for-profit schools are highly profitable companies. Profits at 16 of the largest for-profit schools totaled $2.7 billion in 2009.
Read the entire report here or the executive summary here.
