Home > Uncategorized > For Profit Colleges Are The Real Villain

For Profit Colleges Are The Real Villain

February 27, 2015

Scott Walker has recently made waves in Wisconsin by surreptitiously attempting to change the mission of the University of Wisconsin, and by threatening to remove $300 million of federal aid to the University of Wisconsin, citing the “laziness of professors” as a problem in need of a solution. On the one hand, he’s right to say there’s a crisis in higher education. But on the other hand, he has the wrong villain.

Instead of focusing on state schools like U of W, we should be investigating the toxic for-profit college industry. For-profit colleges have mushroomed in the last decade and tend to represent themselves as a solution to a very real problem; namely, that it’s become increasingly difficult to get a good job out of high school.

People who have been told to get a degree to pull themselves out of poverty are often faced with two options: enrolling at a nearby community college, or at a for-profit. But, partly because public funds are being diverted to for-profits, more affordable community colleges are not able to fill demand, leaving potential students with the more expensive alternative.

The results have proven to be terrible for the students. They leave with devastating debt, low graduation rates, and often no real education, often worse off than when they started.

This hasn’t gone completely unnoticed. The for-profit industry has been getting into repeated messy problems lately for fraudulent practices, including lying about graduation rates and post-graduation jobs. In the past year alone we’ve seen Corinthian, ITT, and GIBills.com get busted for fraudulent marketing practices.

This won’t be a surprise to those who know how these for-profits operate. They represent a revenue-maximizing industry which game the federal student aid programs for the poor and for veterans. Corinthian obtained $1.4 billion in federal grant and loan dollars in 2010 alone, more than the 10 University of California campuses combined for that same year. We could and should be getting more for our money.

Moreover, the industry specifically targets vulnerable, poor, minority single mothers online with misleading ads promising an easy degree and a new life. Once they have a phone number, they have trained recruiters repeatedly call and “poke the pain” of their targets.

Even when the fraudulent practices are discovered, as is the case with Corinthian, which the Consumer Financial Protection Bureau has accused of running a “predatory lending scheme,” the students haven’t gotten their money back, and neither have the taxpayers.

Obama has been making noises about a new college ranking system. Instead he should create a flat-out fraud detection system, built explicitly to be harder to game than the current watered-down regulatory framework, and particularly considering these companies are professional gamers.

Even better, the government should cut for-profits off of public assistance, and divert subsidies to struggling community colleges and institutions like the University of Wisconsin, which are better positioned to serve the common good. When education becomes a profit center, things go awry: admissions counselors become salespeople, students become consumers to be wrung for every last dime, and administrators become executives who cash out while students and taxpayers are left with the tab.

Corinthian and the other for-profits are only the worst along the spectrum of bad, and almost no college is immune to these kinds of tricks. We need to do a better job of quality control and educational goals. Beyond real punishment for the worst offenders, and refunding bilked student’s money, we should immediately increase funding for state schools, and try to once again create a country of opportunity.

Categories: Uncategorized
  1. davidwlocke
    February 27, 2015 at 6:28 am

    Sorry, but state universities have pension funds that the GOP/right will get around to stealing. Education is not a good thing in their view, so destroying education at all levels has been one of their major policy thrusts. Just get over this get an education to get a job thing. It was never the real reason people went to school. And, now that it is the reason, people should just not bother. There will be no jobs. But, yes, it is no surprise that Mr. Walker is doing what he does. He is just following the script. They wouldn’t get the money to run if they stood for anything, not the GOP/right. They have destroyed much. There is much left to destroy.

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  2. Katie
    February 27, 2015 at 8:34 am

    Sounds like for-profit community colleges are to state-run CC as charter schools are to public? But it’s not only the Corinthians of the world: you’ve also mentioned the ridiculous tuitions at “highly respected” 4-yr universities ~ if students can get loans, tuitions can go up and nobody loses (ha). Is there a way to make colleges partially accountable to the loans they expect students to take on without it becoming a new advantage for privileged students?

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  3. February 27, 2015 at 8:35 am

    Why don’t existing laws regarding fraud serve in this case?

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  4. Eric
    February 27, 2015 at 9:57 am

    I’ve been trying to get momentum for petitioning both the US Department of Commerce and EDUCAUSE, which together manage the .edu top-level domain, to change the rules for registration under .edu. Right now, an institution must simply have state accreditation, which is extremely vague. For-profit institutions are not a public service, and .edu registrations should be limited to non-profit educational institutions — not commercial enterprises. There is already a top level domain for the latter and it’s .com

    Anyway, I have no idea how to get the ball rolling on this but let me know if you’re interested and maybe we can make some noise. It’s a small but meaningful first step.

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  5. JohnGalt47
    February 27, 2015 at 12:22 pm

    I agree that community colleges are a better option than for-profit schools. However, they are not turning away students for lack of resources, at least not in Georgia. Also their graduation rates are much worse than the normal campuses. I was driving through a part of the state that I don’t usually see and noticed a college name I had never heard of. Looked it up when I got back home. It was community college in a notoriously poor part of the state. Had a 4-year completion rate of 4%. Those students weren’t getting their money’s worth either.

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  6. captain obvious
    February 27, 2015 at 7:24 pm

    MB: “When education becomes a profit center, things go awry: admissions counselors become salespeople, students become consumers to be wrung for every last dime, and administrators become executives who cash out while students and taxpayers are left with the tab.”

    In that respect the difference from “nonprofit” US universities is one of degree more than kind. Except that the nonprofits also wring the alumni and private donors.

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    • February 27, 2015 at 7:51 pm

      I agree that it’s a spectrum and that nonprofits are not innocent.

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  7. February 28, 2015 at 6:29 am

    Reblogged this on Network Schools – Wayne Gersen and commented:
    Cathy O’Neill gets it completely right in this post, which includes the stunning report that for-profit Corinthian “…obtained $1.4 billion in federal grant and loan dollars in 2010 alone, more than the 10 University of California campuses combined for that same year” and this great quote: “When education becomes a profit center, things go awry: admissions counselors become salespeople, students become consumers to be wrung for every last dime, and administrators become executives who cash out while students and taxpayers are left with the tab.” And we want to “reform” monopoly public schools by replacing them with deregulated for profit charter schools?

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  8. March 1, 2015 at 10:37 pm

    Can someone please explain the difference between for-profit and not-for-profit private universities? Just looking at the 7-figure salaries at the top of not-for-profits and the enormous endowments leads one to question what exactly is not-for-profit at not-for-profit institutions.

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