Have you read the Senate Committee report on “for-profit” higher education?
Wondering whether unbalanced corporate power and the money corruption of republican democracy not only creates terrible public policy and cynical, broken civics but also huge debt and bloated federal budgets?
Check out the Corporate Schools Final Report Pt 1.
$32 Billion in public tax dollars per year paid to “schools” owned by Wall Street-backed corporations. Those public dollars to private investors comes to more than 80% of the “private” schools’ revenue. And most students drop out with sky-high debts with a few months.
As I discuss in my book, this shameful performance is not considered a failure by the corporations and investors behind the unethical operations.
Most of the exploited students (1.4 million) attend for-profit colleges that are owned and controlled by fourteen corporations. The sixteen largest for-profit schools had profits of $2.7 billion in 2009, with some corporations doubling profits between 2009 and 2010 alone.
Corporate executives who run these operations and are able to sleep at night are richly rewarded. Bridgeport Education, Inc., 65% owned by the Warburg Pincus firm, paid its CEO $20.5 million in 2009, and a total of $36 million to its top five executives.
A few of the key findings from the Senate Committee report:
Federal taxpayers are investing billions of dollars a year, $32 billion in the most recent year, in companies that operate for-profi t colleges. Yet, more than half of the students who enrolled in in those colleges in 2008-9 left without a degree or diploma within a median of 4 months.
While small independent for-profit colleges have a long history, by 2009, at least 76 percent of students attending for-profit colleges were enrolled in a college owned by either a company traded on a major stock exchange or a college owned by a private equity firm.
As a result of high tuition, students must take on significant student loan debt to attend school. When students withdraw, as hundreds of thousands do each year, they are left with high monthly payments but without a commensurate increase in earning power from new training and skills.
In 2010, the for-profit colleges examined employed 35,202 recruiters compared with 3,512 career services staff and 12,452 support services staff, more than two and a half recruiters for each support services employee.
This may help to explain why more than half a million students who enrolled in 2008-9 left without a degree or Certificate by mid-2010. Among 2-year Associate degree-seekers, 63 percent of students departed without a degree.
The vast majority of the students left with student loan debt that may follow them throughout their lives, and can create a financial burden that is extremely difficult, and sometimes impossible, to escape.
Among the companies examined by the committee, the share of revenues received from Department of Education Federal student aid programs increased more than 10 percent, from 68.7 in 2006 to 81.9 percent in 2010.
There’s a lot more: “Boiler room,” deceptive recruitment operations; 40% of the billions of dollars to recruitment and corporate profit and only 17% to instruction; bloated interest rates on loans and up to 80% default rates; extraction of wealth from the poor, veterans and the middle class to transfer to wealthy investors and corporate executives.
The report doesn’t focus on political spending by the for-profit college industry but Public Campaign has some interesting information on that here.
The entire report, with appendices, is here.