Economy

The Graduation Rate of For-Profit Colleges is Shocking....

September 20th 2014

By:
Lindsay Haskell

For-profit colleges (think University of Phoenix or ITT Tech) are coming under intense scrutiny by the federal government and the public alike - and for good reason. Many exploit students, especially those from low income backgrounds, for tuition money with no guaranteed return-on-investment in terms of acquired skills or job opportunities.  

While a key appeal of for-profit colleges is that they accommodate flexible schedules, this perk does not begin to make up for their failings.

And despite these bleak prospects, many students are paying more tuition than they would at other universities. The average tuition at a for-profit college is six times higher than a community college and twice as high as a public four-year school. To fund this education, 96% of for-profit students take out loans, which then haunt them after college.

The business models of for-profit schools is also quite dubious. Roughly 86% of their revenue comes from federal aid. And where is their other profits coming from? Why, GI Bills of course. In 2012 alone, one of the largest for-profit college companies, Corinthian Colleges, received $186 million in post-9/11 GI Bill funds. So by targeting lower income families and veterans, for-profit colleges gets the federal government to guarantee the tab with loans, GI bills, and grant programs (the Pell Grant alone constituted $7.9 billion for these institutions in 2010), that come out to roughly $33 billion a year. It's no wonder, then, that the 15 largest for-profit colleges chose to spend $3.7 billion (23% of their budget) on advertising and marketing in 2009 alone, compared to non-profit schools which only put 1% of their budget towards advertising. 

John Oliver recently discussed this phenomenon on his HBO Program, Last Week Tonight

 

 

All this makes you wonder how these dismal practices can continue. Well, it turns a good portion of the money for-profit colleges don't invest in marketing is used for lobbying instead. Recently, President Barack Obama came forward with a "gainful employment" rule, which aimed to shut down predatory for-profit college programs by setting standards (ie: better graduation rates) for receiving federal aid. Under his proposal, college programs that leave their graduates with few job opportunities or employable skills would be cut off from taxpayer-backed money. In response, the companies that run for-profit colleges pulled out their checkbooks. The Apollo Group, which runs the biggest for-profit college, University of Phoenix, spent $490,000 in the first quarter of 2014 lobbying in Washington. The chairman of the House Committee on Education and the Workforce, Rep. John Kline, for instance, was called out for quickly killing legislation that would prevent for-profit colleges from preying on veterans and exploiting the federal aid system, all the while having the University of Phoenix as his biggest donor.

All this demonstrates the corrosive influence of money in politics. If you agree it's time to get money out of politics, click here to take action