Despite High Rates of Student Failure, Companies Rake In Record Profits from Taxpayer Funds
WASHINGTON, D.C. – A new report released today by Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) reveals that more than half of students at many for-profit colleges will drop out within the first two years, most likely with significant loan debt. The companies themselves, however, are raking in record profits largely comprised of taxpayer dollars. The report concludes that under current law, for-profit schools can be extremely profitable while failing a majority of its students.
“The farther we take this investigation, the clearer it becomes that many for-profit colleges view students as no more than cogs in the profit-making machine, with little concern for their education or success,” said Harkin. “As many students face a lifetime of debt with no diploma, these schools are enjoying profit margins that place them among the most successful companies in America – profits derived from taxpayer dollars intended to serve as an investment in American students.”
Harkin released his findings at today’s HELP Committee hearing to examine federal investments in for-profit colleges, the third hearing Harkin has convened this year investigating the for-profits. The report, entitled “The Return on Federal Investment in For-Profit Education: Debt Without a Diploma” reveals that:
Students at for-profit colleges leave without a diploma at an alarming rate:
The vast majority of students at for-profits are left with significant loan debt:
For-profit schools mask high withdrawal rates by aggressively recruiting and enrolling new students:
Despite these dismal student success rates, for-profit institutions are raking in record profits:
These “profits” are largely made up of the taxpayer dollars intended to support student success:
In June, Chairman Harkin released his first report on the for-profit industry, entitled “Emerging Risk?: An Overview of Growth, Spending, Student Debt and Unanswered Questions in For-Profit Higher Education.” After convening two hearings, Harkin issued a document request to 30 for-profit education companies to better understand the range of practices across the for-profit spectrum. The Committee has received cooperation from all 30 companies that received document requests. Today’s report is based on an analysis of information provided by the 8 largest publicly traded and the 8 largest privately held for-profit education companies that offer certificate, associates or bachelors programs.
To read the full report, click here.