(MintPress) — For-profit marketing material depicts the smiling faces of students investing in their education and preparing to embark on careers that are both lucrative and fulfilling. Yet a recent report presented on the Senate floor detailing the cost and success of for-profit college institutions is calling into questions the merit of such programs, and the burden to the American public.
Senator Tom Harkin (D-Iowa) revealed the study Monday, drawing attention to the high cost and low achievement rate attached to for-profit colleges — a system that is partially funded through federal financial aid and student assistance.
The two-year study presented by Harkin shows a multitude of warning signs related to the for-profit system, giving credence to claims made in the past that the overly expensive schooling system often fails to deliver on promises, leaving students unemployed and swimming in a debt they’re unable to make up.
It’s an argument politicians are waging, claiming the federal aid system is supplementing a program that is not focused on the primary objective of educating students — and instead is concerned with turning a profit for investors, at the risk of putting Americans deeper in debt and compromising the financial aid system.
Tuition (times 6)
Harkin’s report shows what many have alluded to for years: For-profit colleges are exponentially more expensive than their public, community counterparts. The average price of for-profit schools as six times that of two-year community colleges.
It’s a number that has continued to grow throughout the last decade. In 2011, Corinthian, a for-profit college, raised tuition roughly 12 percent. While the hike added roughly $8,000 to the average student’s bill, the report shows the college did not raise the budget for faculty or new facilities.
A graph depicted in the report shows a comparison among Colorado, Florida and Indiana for-profit and public institutions. The visual results show a widespread different between the two types of colleges. An associate degree expected to generate roughly $40,000 a year requires those attending for-profit colleges to spend between $35,000 and $46,000 — a community college, on the other hand, offers similar programs for just $6,000 to $9,000.
“This high cost means that most students must borrow money to pay their tuition,” the report states.
And that they do, with 95 percent of students at for-profit colleges taking out loans to make up for costs — that’s compared to 12 percent within the community college system.
Who pays for big profits?
Looking at the entire college education system, for-profit institutions account for 10 percent of all enrolled, yet the student loan debt among that population accounts for 50 percent of all student loan defaults, according to the report.
Those who take out federal loans to make such large payments have a low success rate of making payments, with 1 in 4 students defaulting on loans within three years of leaving school.
Considering the financial aid system is a federal program, the cost related to defaults are passed along in a few ways — either rates are increased or taxpayers end up footing the bill.
Is it worth it?
The dropout rates among students enrolled at for-profit colleges is notoriously high. The most recent report breaks down the withdrawal rate among America’s most profitable colleges.
Fifty-four percent of students in the for-profit system who enrolled for the 2008-2009 school year quit by the summer of 2010 — 2 million students dropped out in the past three years alone.
Ashford University, owned by Bridgepoint, had a withdrawal rate of 84 percent among students enrolling in 2008-2009. The numbers for the University of Phoenix weren’t much better, with 66 percent of students throwing in the towel. Rasmussen College ranked eighth on the list, with 63 percent.
Students included in this category did not receive degrees, yet are included in statistics for default, calling into question the method by which they were recruited into programs.
As the report details, the amount of money spent on marketing and recruiting in the for-profit college sector is high, in comparison to community and four-year colleges.
The average community college institution spends two-and-a-half more per student on costs relating to education, including instruction. The amount spent on student education in for-profit colleges is largely overshadowed by recruiting costs.
In 2010, Bridgepoint Education, Inc. employed 1,703 recruiters — and one person charged with aiding in career placement. That was at a time when the college saw enrollment of 77,892. According to the report, the company plans on increasing the number of recruiters and sales staff.
Opposition in the political realm
The question now is whether the federal government has any say in placing restrictions on the for-profit colleges. Some Senate Republicans argued against the study, claiming it was partisan in nature and that the report, which included hundreds of pages in research, should be expanded.
“By failing to examine similar problems at public and nonprofit institutions, which serve 90 percent of all post-secondary students, committee members have been given no perspective to judge which problems are limited to the for-profit sector and which exist throughout all institutions of higher educations,” the Republican staff wrote, according to the Huffington Post.
It’s a sentiment shared by the Private Sectors Colleges and Universities, a lobby organization representing for-profit colleges.
“Instead of joining the conversation about ways to expand access to postsecondary education, Sen. Harkin is attacking schools that are currently providing instruction to 3.8 million students,” Steve Gunderson, president and chief executive officer of the association said in a press release.
Yet Harkin said he’s not the one to gain from for-profit colleges — the shareholders are. He’s calling for regulations that would reward for-profit colleges that can prove student achievement is increasing.