The embattled for-profit college sector took another hit Tuesday with the release of a new report that cites the industry for preying on low-income and minority students in a way that will ultimately lead to a financial catastrophe like the subprime mortgage collapse of 2008.
The report—produced by The Education Trust, a D.C.-based organization that works to address the nation’s achievement gap—essentially serves as a wake-up call for Congress and the federal government to advance with efforts to more heavily regulate the for-profit college sector. Many fear that GOP lawmakers, fresh off a victorious takeover of the U.S. House, may stifle or roll back such efforts.
“The developing showdown between for-profit colleges and the government is another example of how the aspirations of the underserved and the unfulfilled promise of the American Dream combine with lax regulation to make the rich, richer and the poor, poorer,” says the report, titled Subprime Opportunity: The Unfulfilled Promise of For-Profit Colleges and Universities.
“The problem is not the ‘for-profit’ nature of for-profit colleges,” the report states. “Rather, the problem is that their (financial) returns are a function of sustained failure, rather than student success.”
The report delineates—on a campus-by-campus level—the low completion rates and heavy debt loads that plague students in the for-profit college sector.
Specifically, the report notes that, while for-profits enroll 12 percent of the nation’s college students, they enroll 20 percent of the nation’s Black students and 24 percent of Pell Grant recipients, with the latter group bringing in $4.3 billion in Pell Grants to the for-profit institutions in the 2008-2009 school year. The schools also reaped $20 billion in federal student loans that year, the report states.
But despite the money brought in by serving low-income students, the report states, the institutions evidently are not serving the students well.
