State Budget Cuts Pushing More Students To Costly For-Profit Colleges

With Republicans taking control of the House of Representatives next month, it seems increasingly unlikely that Senate Democrats will be successful in their push to enact stricter regulations on for-profit colleges. These institutions — like Strayer University and the University of Phoenix — are taking in a growing number of students and an ever increasing amount of federal student aid, while also accounting for a disproportionate amount of student loan defaults.

At the moment, eleven percent of higher-education students are enrolled in for-profits, “but they receive 26 percent of federal student loans and account for 43 percent of defaulters.” For-profit 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.”

And at a time when for-profit colleges may very well escape from enchanced regulation, they’re going to be gaining even more students, as state-level budget cuts are pushing students from their local community colleges into the waiting arms of for-profit schools:

As state budget cuts lock students out of community-college classrooms or force them to stand in class, for-profit colleges are attracting hundreds of thousands of poor and minority students, charging up to 10 times as much for the same degree…Today, one in seven minority students attends a for-profit college, as does one in four poor students who receive federal Pell grants for low-income families, according to the U.S. Department of Education and an industry group. Students in for- profit college programs graduate or stay in school less than those at community colleges, according to a study sponsored by the U.S. Department of Education and released this month.

Washington state, New York state, and California have all cut their community college budgets in response to the recession, while many states, including Virgina and Georgia, have hiked community college tuition.

According to the Pew Research Center, “one-quarter (24%) of 2008 bachelor’s degree graduates at for-profit schools borrowed more than $40,000, compared with 5% of graduates at public institutions and 14% at not-for-profit schools.” But the problem here isn’t only that these schools are leaving students buried in debt. It’s that they’re doing it while sucking up taxpayer money.

As Bloomberg News noted, “as much as 90 percent of revenue at each for-profit college comes from federal student aid.” And executives at these schools are using this taxpayer largesse to line their own pockets. Strayer University’s CEO, for instance, made $41.9 million last year, “26 times the compensation of the highest-paid president of a traditional university.” But House Republicans are going to bat for these higher education profiteers, to the detriment of students and the federal government’s bottom line.