Editorial: Are you paying the tuition?

Published 8:45 am Thursday, July 8, 2010

U.S. Senator Tom Harkin of Iowa is on to something.

“For-profit schools are an important part of the mix of post-secondary institutions,” Harkin said at a Senate hearing on June 24, according to the website Politics Daily. However, “this data begs for oversight of this industry, which will begin … today.”

He produced a report that noted how federal tax dollars in the form of financial aid and low-interest loans are fueling the growth of for-profit colleges that often lack proper accreditation in many key fields students seek. And the students of for-profit colleges are much more likely to default on their students loans. And they are much more likely to drop out.

Email newsletter signup

According to Harkin’s website, here are some other highlights of the report:

“For-profit schools enrolled more than 1.8 million students in 2008, less than 10 percent of all higher education students, but receive 23 percent of all federal student financial aid dollars, approximately $23.9 billion in the 2008-2009 school year.”

“Enrollment in for-profit schools has grown 225 percent between 1998 and 2008. The largest for-profit school reports current enrollment of 458,600, more than the undergraduate enrollment of the entire Big Ten conference.”

“For fiscal year 2009, one school reported an operating profit of $489 million on revenues of $1.3 billion, a 37 percent margin. By comparison, this margin was more than triple that of Raytheon, and double that of Apple.”

“According to Department of Education data, $4.3 billion in Pell grants and $19.6 billion in federal loans flowed to for-profit schools in 2008-2009. Public and private nonprofit schools saw their Pell funding decrease, while for-profit institutions saw their share increase — taking in 23.6 percent of all Pell dollars in currently allocations, as compared to 13.1 percent in 2000.”

The report also noted how some for-profit colleges spend nearly as much on recruitment as they do on education.

Indeed, some for-profit models work, but the industry needs cleaning. We commend Harkin and call for more stringent use of tax dollars in this field.