WASHINGTON (AP) — For-profit colleges put revenues above education, and
charge students high tuition and loan rates that could leave them in debt
for years, a Senate Democratic report said Monday.
While students are aggressively recruited, they drop out in high numbers
without the degree or certificate initially sought, the report said. It
found that 54 percent of students enrolled in 2008-2009 left without a
degree or certificate by mid-2010. When two-year associate degree programs
were studied, 63 percent left without a degree.
The staff report was issued by Sen. Tom Harkin, D-Iowa, chairman of the
Health, Education, Labor and Pensions Committee.
The report said veterans were among those vulnerable to the tactics by
for-profit schools, since these colleges receive the largest share of
military educational benefit programs. Eight of the top 10 recipients of GI
bill money since the Sept. 11, 2001 attacks went to for-profit education
The report said reaching an enrollment quota was found to be the highest
priority for recruiters. Publicly traded companies operating these schools
had an average profit margin of 19.7 percent. They paid an average of $7.3
million in 2009 to top executives, while the five highest paid leaders of
large public universities averaged $1 million and leaders at nonprofit
colleges averaged $3 million.
Steve Gunderson, president and chief executive officer of the Association of
Private Sector Colleges and Universities, dismissed the report as
According to the report, students at for-profit schools faced tuition for
bachelor’s programs that averaged 20 percent more than for similar programs
at flagship public universities. Associated degree programs averaged four
times the cost of similar programs at comparable community colleges, and
certificate programs averaged four-and-a-half times the cost at comparable
“Recruiting materials indicate that at some for-profit colleges, admission
representatives were trained to locate and push on the pain in students’
lives,” the report said.
Once the students were enrolled, 96 percent needed student loans, according
to Department of Education information. Fifty-seven percent of bachelor’s
degree students who graduated from a for-profit college owed $30,000 or
more, compared to 25 percent of those earning degrees in the private,
nonprofit sector and 12 percent from public colleges.
“Because many students who attend for-profit colleges are unable to get
financing through private lending companies, many participate in
institutional loan programs operated by for-profit education companies,” the
In 2009, seven large for-profit education companies offered institutional
loans with interest rates ranging from 11.2 percent to 18 percent. During
the same period, the Stafford federal loan rate was 5.6 percent.
In addition to the high loan rates and debt, students leaving private
colleges hard a difficult time finding jobs. The report cited a national
study by an education center that found 23 percent of students who attended
for-profit schools in 2008-09 were unemployed and seeking work.