For-Profit “Colleges” Go to Hill
I have been a vocal critique of many for-profit colleges who use deceptive marketing tactics to sell worthless degrees to some of the most vulnerable segment of the population. Many unsuspecting students at these colleges and universities often end up with no degree (or a worthless degree) and a boat load of debt that cripples them for the rest of their lives.
The life-blood of these colleges is the federal student loan programs. Imagine this: ten percent of the total student population in US study are enrolled in these outfits. Yet, 25% of total student loans go to these colleges.
Today, congress held another dog-and-pony show and questioned the colleges and critiques of these colleges about the abuses. Of course, none of this is news to me. But, for some it apparently is.. [Via NY Times Blog]
According to the report, the publicly traded education companies have a combined enrollment of 1.4 million students in the United States. The largest, the University of Phoenix, has 458,000 students — more than the undergraduate enrollment of the entire Big 10 conference.
And at least seven of the publicly traded for-profit colleges enroll most of their students exclusively in online programs.
Federal student aid comes mostly in the form of Pell grants, of up to $5,350 a year, and Stafford loans, which students must repay after they leave college. Although the aid is meant for the benefit of individual students, the disbursements actually go directly to their colleges. In 2008-9, for-profit colleges got $4.3 billion in Pell grants and $19.6 billion in Stafford loans.
And although for-profit colleges enroll less than 10 percent of the nation’s higher-education students, they get almost a quarter of the federal student aid.
I call this dog-and-pony show because, the lobbyists already seem to have the lawmakers in their pockets. But eventually the stocks of these colleges are expected to reach fair valuation, which to me is close to zero.