For-profit colleges have become a big, big problem.
Sen. Tom Harkin, D-Iowa, completed a two-year investigation of the industry last July and found a system rife with greed. For-profit colleges have been operating under a 90/10 rule for some time now as far as the amount of revenue they can get from the federal government. The 90/10 rule states that a college can receive no more than 90 percent of its revenue from federal grants and loans.
No more than 90 percent.
This is to make sure taxpayers aren’t paying for a college that’s not attracting students on its own. The theory is if it’s a good education at a competitive price, it should be able to make at least 10 percent of its own revenue.
At least 10 percent.
Harkin’s report was filled to the brim with colleges that, for the most part, got more than 80 percent of their revenue from the federal government. More averages in his report include the colleges’ spending breakdowns — the 30 colleges he studied averaged 22.4 percent of revenue spent on advertising, 19.4 percent on profits and just 17.4 percent on instruction. The colleges’ chief executives made an average of $7.3 million.
A solution has been proposed in the form of the College Student Rebate Act, which would force the colleges to spend at least 80 percent of their revenue on “educational and related expeanses,” but this begs the question — if these colleges are using federal money in ways it isn’t intended to be used, why do they keep getting federal money?
According to the Huffington Post, the average cost of associate and bachelor’s degrees from a for-profit college is $35,000 and $63,000, respectively, but the average cost of those degrees from public community colleges and universities are just $8,300 and $52,000.
Furthermore, many of the colleges’ degrees aren’t enough to get licensure in their areas of study. Some colleges are accredited but have programs that are not. Some aren’t accredited in the first place. The usual end result is a degree that no one in the industry respects.
Harkin’s report also found more active forms of deception. Because veterans’ benefits count toward the 10 percent the college makes on its own, colleges have been aggressively pursuing veterans because, functionally, veterans are free money for them. There are also programs that assist their alumni to prevent them from defaulting on student loans for the first few years until the government stops tracking them.
If it’s more efficient to put that money into public schools in the first place and the schools are more widely recognized and kept to a better standard, tax dollars shouldn’t be spent on for-profit colleges at all. The solution isn’t further regulation. The solution is to cut for-profits loose, let them fail and send more money to community colleges and universities.
