94. U.S. Senate Hearings on For-Profit Higher Education

On June 24, 2010, Chairman Tom Harkin opened hearings by the U.S. Senate Committee on Health, Education, Labor and Pensions on for-profit higher education. At the outset, a report was issued, containing the following conclusions:

The Federal government and taxpayers are making a large and rapidly growing investment in financial aid to for-profit schools, with few tools in place to gauge how well that money is being spent. Available data show that very few students enroll in for-profit schools without taking on debt, while a staggering number of students are leaving the schools, presumably many without completing a degree or certificate. To boost enrollment, some for-profit schools recruit large numbers of new students each year. In some cases, schools enroll more students over the course of the year than were enrolled at the beginning of the year. To ensure these enrollment increases, it is necessary for the schools to devote very large shares of Title IV dollars and other Federal financial aid to marketing activities, not education.

These schools are increasingly relying on Federal financial aid dollars for revenue. When all Title IV, Department of Defense and Veteran’s Administration funds are included, many of these schools are receiving nearly all of their funds from Federal sources. While increasing their reliance on Federal dollars as a source of revenue, for-profit schools are at best spending only slightly more than half of revenues actually educating students, and in several cases are shrinking the amount spent on instruction. Yet these same schools are reporting profit margins of 20 percent and higher to investors.

Students at for-profit schools are also taking on higher amounts of debt than their peers at public and nonprofit schools. Nearly half of student loan borrowers who entered repayment in 2007 and defaulted by 2009 attended for-profit schools (44 percent), even though less than 10 percent of students attend these schools.

The publicly available data, in tandem with mounting reports of questionable practices and poor student outcome, yields a mixed portrait of the for-profit higher education sector that calls into question the taxpayers return on their multi-billion-dollar investment, and leaves many unanswered questions with regard to whether a sufficient number of students receive an education that provides them with the knowledge and skills they need to obtain jobs to repay their student debt. (p. 11)

To read the entire report, "Emerging Risk?: An Overview of Growth, Spending, Student Debt and Unanswered Questions in For-Profit Higher Education," copy and paste this link:

http://harkin.senate.gov/documents/pdf/4c23515814dca.pdf