Senator Tom Harkin of Iowa, who chairs the Health, Education, Labor and Pensions Committee, held the third in a series of hearings on Thursday to examine federal investment in for-profit colleges and universities.
The Iowa senator also released a new report titled “The Return on the Federal Investment in For-Profit Education: Debt Without a Diploma,” which found that, over a three-year period, approximately 1.9 million students have left 16 for-profit schools analyzed in the report with student loan debt and no marketable skills. The schools’ 2009 profits, however, totaled $2.7 billion. For 14 of the schools analyzed, federal dollars accounted for 85.2 percent to 93.1 percent of 2009 revenues. In the meantime, for-profits are spending what Harkin described as “a small fortune” in advertising to attract students to their institutions.
“The bottom line is this: For students enrolling in for-profit schools, graduation with a degree is a possibility, but debt without a diploma is a probability,” Harkin said in his opening statement. “Going to college should not be like going to a casino, where the odds are stacked against you and the house usually wins.”
Arnold Mitchem, president of the Council for Opportunity in Education, expressed deep concern that low-income students and their families do not have the financial literacy skills necessary to protect themselves from assuming unaffordable debt. This is particularly true, he said, for first-generation students entering the college marketplace.
“A sophisticated business with a high-cost product it wants to sell and a poorly informed consumer is a cocktail for abuse,” Mitchem said. “TRIO educators over and over again point to students choosing high-cost for-profit programs and taking out large loans to do so, when a comparable program is available to the same student at a much lower cost often within reasonable proximity to their home.”
Mitchem also said that, in too many instances, students who enroll in for-profits leave them considerably worse off than when they entered. These institutions make false promises of high paying jobs that don’t exist or require education or experience beyond what the school has offered; enroll students in programs for which they aren’t academically prepared, leading them to drop out; or tell students that the institution’s credits are transferable when they’re not.
Sometimes students are lured into these programs hoping that additional credentials will lead to a significant earnings boost but instead end up in so much debt that they must defer other financial decisions, such as saving for a home or retirement, according to Mitchem.
