WASHINGTON—For-profit colleges are getting attention in Washington, D.C., lately. A senate hearing last week explored the value and risk of for-profit colleges as an investment of federal student financial aid. The Senate committee responsible for education commissioned a study of the growth of for-profit colleges and the debt carried by students who attend them.
Health, Education, Labor, and Pensions (HELP) Committee Chairman Sen. Tom Harkin (D-Iowa) is concerned spending federal dollars to fund students’ education at these institutions may not be a good investment for America’s future.
“The money [federal student financial aid] is an investment by Congress in our nation’s students and also in our country’s future. For that investment to pay off, we must ensure that students are being well educated, and that schools are using federal dollars responsibly,” said Sen. Harkin at the hearing he chaired on the issue June 24.
For-profit colleges such as the University of Phoenix, DeVry University, ITT Technical Institutes, Argosy University, and Corinthian Colleges operate like companies—they operate to make a profit. Some are owned by private individuals and some by public corporations. These publicly traded corporations/schools raise capital by selling shares, making them responsible to produce profit for shareholders.
Nonprofit private colleges and universities rely instead on an endowment of donations from alumni and others to cover costs above and beyond what tuition fees cover. Public colleges and universities rely on state funding.
In a time when many states’ budgets are in trouble, for-profit institutions are able to “bring private capital to bear on funding issues” says Harris Miller, president and CEO of the Career College Association. Mr. Miller spoke with The Epoch Times by phone. He says for-profit career schools help meet the demand traditional nonprofit schools can’t accommodate.
For-profit higher education took off in the 1970s, with schools like the University of Phoenix, founded in 1976, leading the way. For-profit institutions predominantly provide career specific training including programs in accounting, business administration, culinary and hospitality management, emergency medical technology, network administration, and many other fields.
According to the Career College Association, of the students who attend these schools nearly half are children of parents who did not receive higher education.
Forty-three percent of students are minorities and more than 75 percent of career college students work while in school.
Because of the population they serve career colleges receive a large portion of federal student aid money. According to the Health, Education, Labor and Pensions Committee’s study titled “Emerging Risk?: An Overview of Growth, Spending, Student Debt, and Unanswered Questions in For-Profit Higher Education,” for-profit institutions receive more federal aid for the number students they enroll than do nonprofit institutions. The committee’s study reports that for-profit schools enrolled more than 1.8 million students in 2008, or less than 10 percent of all college students. These institutions received 23 percent of all federal student financial aid dollars, approximately $23.9 billion in the 2008-2009 school year.
If the population the career colleges serves tends to be of lower economic means, then based on need, it makes sense for these schools to receive a larger proportion of federal student financial aid.
Education of Value?
Key in determining whether a for-profit career college education is a good use of federal financial aid dollars is whether or not graduates of such programs are able to find jobs in their field, and are able to pay back their loans.
According to his written statement from the June 24 hearing, Sen. Harkin said, “Just in the past week, my office has received hundreds of stories from students who believe they were exploited by a for-profit institution.”
At that same hearing Yasmine Issa testified that attending the Sanford Brown Institute’s ultrasound program failed to prepare her to become an ultrasound sonographer, despite putting her in debt $20,000. After zero success finding a job she learned the Sanford Brown Institute’s ultrasound program was not accredited, although the school was, so she could not take a certification test necessary for finding a job.
Mr. Miller of the Career College Association argues institutions that are not good and do not serve their students will fail. He said that for career colleges to maintain accreditation with the Accrediting Commission of Career Schools and Colleges and thus be eligible for federal student financial aid, they have to maintain a graduate job placement rate of 70 percent. That means 70 percent of graduates need to be able to find work in the field they studied for at the school.
It is in the interest of the schools to prepare their students to find jobs, otherwise the schools will not be able to maintain accreditation, which secures their biggest source of funds: federal student aid.
Miller says students are “voting with their fees,” or their federal aid dollars. He believes word of mouth has an important role in attracting students to the schools. Whenever he visits schools he asks students why they chose this school. He says they tell him, “someone I know and trust said this was the right place for me.”
Paying Back
Another concern the committee study addressed is the high default rate of students who attend for-profit colleges. If students are unable to pay back their loans their education may not be a wise investment for the government.
According to the study, 23 percent of students at for-profit schools defaulted within three years of leaving the certificate and associate’s degree programs. In contrast, only around 15 percent of students attending comparable programs at nonprofit schools defaulted on their school loans.
If students who attend these programs are unable to repay their loans likely it is because they were not able to turn their training into gainful employment. Miller says it is not because students come out of the program unprepared, but that some students do not finish the program.
According to career college schools’ statistics only 6.2 percent of those who default are students who complete the program. Miller says that for many students at these schools, life and work (over 75 percent work) make completing the program challenging. Miller believes it is such people who are unable to pay back their loans.
The Senate Committee on Heath, Education, Labor, and Pension plans to continue hearings on the for-profit college industry. Sen. Harkin believes the industry needs more federal oversight.
Health, Education, Labor, and Pensions (HELP) Committee Chairman Sen. Tom Harkin (D-Iowa) is concerned spending federal dollars to fund students’ education at these institutions may not be a good investment for America’s future.
“The money [federal student financial aid] is an investment by Congress in our nation’s students and also in our country’s future. For that investment to pay off, we must ensure that students are being well educated, and that schools are using federal dollars responsibly,” said Sen. Harkin at the hearing he chaired on the issue June 24.
For-profit colleges such as the University of Phoenix, DeVry University, ITT Technical Institutes, Argosy University, and Corinthian Colleges operate like companies—they operate to make a profit. Some are owned by private individuals and some by public corporations. These publicly traded corporations/schools raise capital by selling shares, making them responsible to produce profit for shareholders.
Nonprofit private colleges and universities rely instead on an endowment of donations from alumni and others to cover costs above and beyond what tuition fees cover. Public colleges and universities rely on state funding.
In a time when many states’ budgets are in trouble, for-profit institutions are able to “bring private capital to bear on funding issues” says Harris Miller, president and CEO of the Career College Association. Mr. Miller spoke with The Epoch Times by phone. He says for-profit career schools help meet the demand traditional nonprofit schools can’t accommodate.
For-profit higher education took off in the 1970s, with schools like the University of Phoenix, founded in 1976, leading the way. For-profit institutions predominantly provide career specific training including programs in accounting, business administration, culinary and hospitality management, emergency medical technology, network administration, and many other fields.
According to the Career College Association, of the students who attend these schools nearly half are children of parents who did not receive higher education.
Forty-three percent of students are minorities and more than 75 percent of career college students work while in school.
Because of the population they serve career colleges receive a large portion of federal student aid money. According to the Health, Education, Labor and Pensions Committee’s study titled “Emerging Risk?: An Overview of Growth, Spending, Student Debt, and Unanswered Questions in For-Profit Higher Education,” for-profit institutions receive more federal aid for the number students they enroll than do nonprofit institutions. The committee’s study reports that for-profit schools enrolled more than 1.8 million students in 2008, or less than 10 percent of all college students. These institutions received 23 percent of all federal student financial aid dollars, approximately $23.9 billion in the 2008-2009 school year.
If the population the career colleges serves tends to be of lower economic means, then based on need, it makes sense for these schools to receive a larger proportion of federal student financial aid.
Education of Value?
Key in determining whether a for-profit career college education is a good use of federal financial aid dollars is whether or not graduates of such programs are able to find jobs in their field, and are able to pay back their loans.
According to his written statement from the June 24 hearing, Sen. Harkin said, “Just in the past week, my office has received hundreds of stories from students who believe they were exploited by a for-profit institution.”
At that same hearing Yasmine Issa testified that attending the Sanford Brown Institute’s ultrasound program failed to prepare her to become an ultrasound sonographer, despite putting her in debt $20,000. After zero success finding a job she learned the Sanford Brown Institute’s ultrasound program was not accredited, although the school was, so she could not take a certification test necessary for finding a job.
Mr. Miller of the Career College Association argues institutions that are not good and do not serve their students will fail. He said that for career colleges to maintain accreditation with the Accrediting Commission of Career Schools and Colleges and thus be eligible for federal student financial aid, they have to maintain a graduate job placement rate of 70 percent. That means 70 percent of graduates need to be able to find work in the field they studied for at the school.
It is in the interest of the schools to prepare their students to find jobs, otherwise the schools will not be able to maintain accreditation, which secures their biggest source of funds: federal student aid.
Miller says students are “voting with their fees,” or their federal aid dollars. He believes word of mouth has an important role in attracting students to the schools. Whenever he visits schools he asks students why they chose this school. He says they tell him, “someone I know and trust said this was the right place for me.”
Paying Back
Another concern the committee study addressed is the high default rate of students who attend for-profit colleges. If students are unable to pay back their loans their education may not be a wise investment for the government.
According to the study, 23 percent of students at for-profit schools defaulted within three years of leaving the certificate and associate’s degree programs. In contrast, only around 15 percent of students attending comparable programs at nonprofit schools defaulted on their school loans.
If students who attend these programs are unable to repay their loans likely it is because they were not able to turn their training into gainful employment. Miller says it is not because students come out of the program unprepared, but that some students do not finish the program.
According to career college schools’ statistics only 6.2 percent of those who default are students who complete the program. Miller says that for many students at these schools, life and work (over 75 percent work) make completing the program challenging. Miller believes it is such people who are unable to pay back their loans.
The Senate Committee on Heath, Education, Labor, and Pension plans to continue hearings on the for-profit college industry. Sen. Harkin believes the industry needs more federal oversight.
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