Amid numerous efforts to increase college-going and completion rates among minority students, for-profit institutions stand out as a leader. Class flexibility for working and non-traditional students, online courses and corporate partnerships to reimburse employees are all contributing factors to their appeal.
However, along with those attributes are a host of challenges and criticism facing some for-profit institutions including high tuition, misrepresentation in college recruiting and job prospects, claims of targeting low-income students who are more likely to qualify for federal aid, and high dropout rates leaving students with large student loans.
These issues have reached a feverish pitch after Sen. Tom Harkin, D-Iowa, and the Senate Health, Education, Labor and Pensions Committee released the long-awaited report on the for-profit college industry last month.
Results of the two-year investigation by the committee led by Harkin shined a harsh spotlight on the for-profit sector following six congressional hearings, three previous reports and broad document requests. The resulting 249 pages and accompanying in-depth profiles of 30 for-profits largely questions whether federal investment through aid and loans is worthwhile in many of the examined colleges.
The report finds that 62.9 percent of students who enrolled in an associate degree program at a for-profit college in the 2008-09 school year left before earning a degree, and that the median student lasted only four months. A smaller majority — 54.3 percent — left bachelor’s programs before graduating, and 38.5 percent left certificate programs.
Also, the Harkin report found that 22.7 percent of revenue at for-profits goes to marketing and recruitment, and for-profits have an average profit margin of 19.7 percent, and pay an average of $7.3 million a year to their chief executives. According to the report, such expenditures drive up tuition at the expense of educational programming. Actual instruction made up a paltry 17.2 percent of expenses.
The report found that the vast majority of for-profit college revenue comes from the federal government in the form of subsidized loans, Pell Grants, veteran and military benefits and other aid. In the 2009-2010 school year, $7.5 billion in Pell Grants, 50 percent of Defense Department education aid and 37 percent of GI bill aid went to for-profits.
