Published on 2012/08/03

For-Profit Institutions Slammed by Senate Report

Senator Harkin, chairman of the Senate Health, Education, Labor and Pensions Committee, released his group’s report on the for-profit education industry last week, and the results were not rosy.

A major player in the education of non-traditional students, Harkin found the for-profit higher education industry to operate as aggressive recruiting operations more focused on delivering strong quarterly numbers to shareholders than delivering quality learning experiences for students.

Harkin went on to characterize the federal student aid money spent at for-profit institutions—totaling $32-billion in 2009-2010—as “squandered”, pointing to poor graduation rates and graduates unprepared for the workforce.

Nearly all students attending for-profit colleges take out loans to enroll, as opposed to just 13 percent of students enrolling in community colleges. The report made note of the immense cost of for-profit higher education and warned of the cost of investing in the industry.

“While community colleges and two-year for-profit programs have similarly low retention rates, the cost of the for-profit programs makes those programs more risky for students and federal taxpayers.”

The focus on marketing was also a major point of critique for the report, showing in 2009 that four of the five most profitable for-profit education companies spent more on marketing per student than they did on instruction per student. Moreover, the fact that the marketing tends to focus on vulnerable population segments made for additional fodder for the report’s authors.

The Committee’s Republican members and the main trade group representing for-profit higher education labeled the report as an unfair political attack on the industry.

“The report twists the facts to fit a narrative, proving that this is nothing more than continued political attacks on private-sector colleges and universities,” Steve Gunderson, president and chief executive officer of the Association of Private Sector Colleges and Universities, said in a written statement.

He pointed out that adult students are not necessarily being attracted by the marketing of for-profits, but rather are drawn in by the flexibility of program scheduling and the pathways between instruction and employment.

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