For-profit colleges rip off students and waste funding that could be spent on public institutions. It’s time to end that.
We pump around $33 billion a year into for-profit schools. By taking advantage of the nation’s flawed financial aid system, for-profit colleges can tap into federal funding the same way any public or nonprofit institution does. In fact, many for-profit colleges receive 90 percent of their funding from taxpayers.
Since for-profit schools receive taxpayer money, it is reasonable to expect a return on our investment. But as students and lawmakers are discovering, they are simply not worth the trouble.
For-profit schools gamble with students’ futures. Despite enrolling just 12 percent of college students, for-profit institutions are responsible for nearly 70 percent of all student loan defaults. This is blatant exploitation. Particularly notorious offenders like the University of Phoenix have graduation rates as low as four percent. These companies still rake in financial aid the same as any other school.
This reckless waste is exacerbating the higher education crisis. Despite outrageous tuition and skyrocketing student loan debt across the board, student loan default is actually slowly falling. Predatory businesses, like many for-profit colleges and student loan corporations, prevent the student loan default rate from dropping to an even healthier number. Put bluntly, these companies profit by setting students up to fail.
Even students that make it through these inferior programs are in for a rough time in the job market. For-profit degrees are worth less than traditional degrees from public and non-profit institutions. A number of studies have concluded that employers don’t place a high value on degrees from for-profit colleges. Online degrees from those institutions are particularly useless.
Despite lacking merit, for-profit colleges continue to rake in the dough. This is owed in part to the army of lobbyists for-profit colleges can afford by defrauding the public. But it is also owed to the ideological stubbornness of our legislatures.
Many lawmakers support for-profit colleges simply because they are private businesses. When politicians refuse to regulate the private sector under any circumstances, it is little wonder that they let industries like for-profit education get away with racketeering.
While there is growing talk of going after for-profit colleges, little has been done at the legislative level to protect students and taxpayers.
The Obama administration instituted the so-called “90/10” rule, a federal law that states for-profit colleges may receive no more than 90 percent of their funding from federal student aid programs.
That this was not already the case is outrageous. Much more must be done.
To be sure, some for-profit schools are entirely reputable. However, there is not a reliable method in place to make sure that only deserving schools receive federal financial aid. As voters, we need to put pressure on our representatives to address this.
Thankfully, the public is beginning to catch onto the for-profit scam. Students increasingly recognize that many schools exist solely to rob them.
But for-profit schools have evolved.
Always a step ahead of regulators, many for-profit schools have become nonprofit schools.
This way, scrutinized for-profit colleges can avoid both taxation and the growing stigma of for-profit schools. It’s only a ploy, though — it will take these institutions many years to truly reform themselves. These new nonprofit schools also have had a nasty tendency to shill out millions to former owners on the sly.
Public universities remain a better investment of students’ time and government funds. On average, they have lower tuition, lower student loan debt and lower student loan default than their private for-profit competitors.
Despite this, many state governments have cut funding for public universities. Michigan now spends more on prisons than higher education. The federal government has had to pick up the slack. It is now expected that the federal government is responsible for ensuring that young people receive an education. If we accept that funding higher education is the job of the federal government, then we must insist that our taxpayer dollars are not wasted out of stubbornness.
The class of 2015 will graduate with the most student loan debt ever — and they won’t hold that title long. If we are going to reverse this trend, we must fully recognize education as a public good worth investing in and regulating.
It’s time to stop gambling on for-profits. We’ve lost enough time and money already.
