Under Education Secretary Arne Duncan, the Department of Education has sought to tighten regulations on for-profit colleges — institutions like Strayer University or the University of Phoenix. The justification for enhanced regulation is pretty clear: for-profit colleges are sucking up an ever-growing proportion of federal student aid, while also accounting for a disproportionate amount of student loan defaults.
Currently, “eleven percent of all higher-education students are enrolled in for-profits, but they receive 26 percent of federal student loans and account for 43 percent of defaulters.” The schools have also been accused of “recruiting students with inflated promises, fudging financial-aid applications and leaving graduates with crushing debt and bleak job prospects.” The graduation rate for first-time, full-time candidates at for-profit colleges is 22 percent; it’s 55 percent at state colleges and 65 percent at private non-profit universities.
Republicans, however, have sought to defend the industry from scrutiny. A staffer for incoming House Education Committee Chairman John Kline (R-MN) said this week that the GOP has “significant concerns about the [for-profit] regulations as they exist.” Sens. Mike Enzi (R-WY) and John McCain (R-AZ) even walked out on a hearing in September, claiming that Democrats are “determined to ‘beat up’ on for-profit colleges.”
But will the GOP change its tune in light of today’s Bloomberg News’ analysis showing that not only are for-profits failing to get students to graduation, but they’re doing it while taking taxpayer dollars to line their executives’ pockets?:
Strayer Education Inc., a chain of for-profit colleges that receives three-quarters of its revenue from U.S. taxpayers, paid Chairman and Chief Executive Officer Robert Silberman $41.9 million last year. That’s 26 times the compensation of the highest-paid president of a traditional university. Top executives at the 15 U.S. publicly traded for-profit colleges, led by Apollo Group Inc. and Education Management Corp., also received $2 billion during the last seven years from the proceeds of selling company stock…Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece.
“The windfall to executives at for-profit colleges towers over the rest of higher education,” Bloomberg noted.
At the very least, these sort of numbers should give members of Congress pause and push them into taking the Education Department’s proposed regulations seriously. Instead, Republicans are attacking the Department for suggesting the regulations in the first place.