Senate Releases Harsh Report on For-Profit Colleges
Sen. Tom Harkin (D-Iowa), chair of the House Health, Education, Labor and Pensions Committee, released a harsh report early this week condemning the "predatory" tactics and "regulatory evasion and manipulation" of the for-profit college industry.
In a press conference on at the U.S. Capitol on Monday, Harkin outlined some of the staggering statistics of the report—data that has not been available before, he said.
"In this report, you will find overwhelming documentation of overpriced tuition, predatory recruiting practices, sky-high dropout rates, billions of taxpayer dollars spent on aggressive marketing and advertising, and companies gaming regulations to maximize profits," Harkin said. "These practices are not the exception—they are the norm. They are systemic throughout the industry, with very few exceptions."
Though the $32 billion of taxpayer money that's funneled into the system account for 86 percent of for-profits' revenue, Harkin said the money has been "squandered" on marketing, lobbying, and recruiting while actual education and student services have been under-prioritized.
Harkin pointed to the disparity between for-profits' and public/non-profit's tuition prices as a reason for 22.5 percent of for-profit students defaulting on loans (compared to the 9 percent of students at other institutions.)
The committee's report found that tuition cost for the average for-profit Associate degree cost students an average of roughly $35,000, while it cost just over $8,000 at public and non-profit institutions—which could be why more than 95 percent of students at for-profit institutions take out student loans.
And, though for-profit students only make up about 13 percent of American college students, they account for 47 percent of student loan defaults.
In addition to exorbitant tuition prices, the report shed more light on crippling numbers regarding the programs' retention rates.
Bridgeport Education, Inc., shouldered a staggering 84 percent withdrawal rate in Associate degree programs while Kaplan—owned by the Washington Post—saw 68 percent of its students withdraw from Bachelor's degree programs.
The committee also published the retention rates of the ten Associate and Bachelor's degree programs that were worst at retaining students. They found that nearly 250,000 Associate degree-seeking students and 118,000 Bachelor's degree-seeking students left their programs without earning a degree.
"Many for-profit schools are doing real, lasting harm," Harkin said at the press conference. "In one year, more than half a million [students] enrolled and quit these schools in short order. Almost every single one of these dropouts left school worse off than they began, with no tangible academic benefit and saddled with debt —far less able to continue with higher education in the future."
And while the report's findings are concerning, it's clear that for-profits aren't going away. They continue to "recruit steady streams of students," which Harkin attributed to their immense "marketing machine." The report notes that many programs depend on the emotional exploitation of potential students and predatory targeting of military veterans to fill recruitment quotes.
Laura Brozek, a former Director of Recruitment for ITT Technical Institute who spoke at Monday's press conference, said she left her job after participating in the predatory recruitment techniques encouraged within the program.
Brozek said recruiters were coached to demoralize potential students during recruitment through practices nicknamed "pain funnels." Recruiters would discuss potential students' life shortcomings and encourage them to take out student loans to enroll to improve their lives. The tactics were very successful in the recruiting process, she said, but much less so in retention.
"Many students would become disillusioned during their first year, and then drop out," Brozek said.
Tom Tarantino, of Iraq and Afghanistan Veterans of America, also referenced the disproportionate targeting of veterans per the "90-10 Rule," in which for-profits can enroll another 9 students (and accrue related federal aid) for every veteran they recruit.
Tarantino ripped into the system, comparing the taxpayer-supported for-profits to publicly funded hospitals.
"If we applied the same success rate to the hospitals that we're applying to for-profit schools, we wouldn't be asking for regulation. We'd be putting people in jail," Tarantino said Monday. "People would be on death row if hospitals killed 50 to 60 percent of patients. I'm not saying we shouldn't invest in for-profit education, I think we should. I think we have to make sure that we have at least return on investments."
Despite the committee's harsh findings, Harkin still believes a non-traditional higher education system for the non-traditional student is important and necessary—as long as is "federal education money is spent on education," rather than recruiting or marketing.
"We need to supplement the established system of the traditional campus-based higher education to meet the demands of non-traditional students, but we must also hold colleges accountable," he said. "We must ensure that students and taxpayers are seeing a return."
Melissa Brown is a journalism intern for Campus Progress.