Thursday, July 21, 2016

Senate: Accredited For-Profit Education is Fraud

By Professor Doom

     It’s no secret to the public that many accredited for-profit colleges are shady (at very best), plundering the student loan money while providing no education. It’s no secret to the general public, but does our government know?

     Of course they do. The Federal government shut down Corinthian, despite it satisfying all accreditation requirements (and the accreditor insisted until the very end there was nothing wrong with Corinthian). But I’m not talking about one school, they know the whole system is corrupted.
      Hey look, here’s the senate report on the massive corruption of the for-profit higher education system:

     Let’s take a look at snippets from this 2012 report, and the gentle reader should realize our government, which supposedly was formed to protect us from something-or-other, does nothing of the sort. I’m not saying we should have a government to protect us, by the way…but I’m certain we don’t need a government to provide gigantic flows of tax dollars via the student loan scam to well known and quite documented frauds.

Unlike traditional non-profit and public colleges, virtually all of the revenues of for-profit colleges come directly from taxpayers, and significant portions of their expenses are dedicated to marketing and recruiting and to profit.

     While in the “public” higher education system the primary expense is to support a bloated administrative class, the for-profit system spends a great deal of money on marketing. Google’s biggest advertiser is University of Phoenix, for example, which used to spend hundreds of thousands of dollars day on  Google ads. There’s big, big money in higher ed thanks to the student loan scam, but first you have to find the suckers willing to check a box qualifying the loans.
     Federal taxpayers are investing billions of dollars a year, $32 billion in the most recent year, in companies that operate for-profit colleges. Yet, more than half of the students who enrolled in (sic) in those colleges in 2008-9 left without a degree or diploma within a median of 4 months. 

     There’s no accountability in this system. Students are pulled in, sucked dry of loan money as quickly as possible, then spit out deep in debt. Now, I grant the public colleges do much the same, but since they’re paid via tax dollars and the “butts in seats” model, the students get trapped in the system much longer.

     The for-profit system is simply more efficient at looting that loan money, plundering in a few months what takes our public college plundering system years to accomplish. I guess this is a bad thing, though I hope someday the Federal government will take a more careful look at what’s going on in public colleges.

Congress has failed to counterbalance investor demands for increased financial returns with requirements that hold companies accountable to taxpayers for providing quality education, support, and outcomes. Federal law and regulations currently do not align the incentives of for-profit
colleges so that the colleges succeed financially when students succeed.

    The above is certainly true, although once again this applies to a considerable extent to our public system as well. Our colleges and universities have no skin in the game when it comes to these student loans, and are all highly motivated to suck students in, teach them about Game of Thrones and how not to shave…then spit them out. Again, it’s good that our government knows about the for-profits, but maybe they should ask a few questions about the other types of schools as well.

Many for-profit colleges fail to make the necessary investments in student support services that have been shown to help students succeed in school and afterwards, a deficiency that undoubtedly contributes to high withdrawal rates. In 2010, the for-profit colleges examined employed 35,202 recruiters compared with 3,512 career services staff and 12,452 support services staff,
more than two and a half recruiters for each support services employee.

     Again, these statements need to be put in perspective with the public schools. For-profits hire legions of recruiters, to look under every nook and cranny for a sucker to qualify for student loans. The Senate is right to criticize for-profits for their lack of student support services.

     On the other hand, many of our state schools are weighted down with legions of administrators, whose stated purpose is always to help students. And, yet, many of these schools have abysmal graduation rates as well, to the point that students must pay extra to get the graduation services they already paid the administration exorbitantly for. Is not the failure here every bit as extravagant as at the for-profits?

This may help to explain why more than half a million students who enrolled in 2008-9 left with-out a degree or Certificate by mid-2010. Among 2-year Associate degree-seekers, 63 percent of students departed without a degree.

     The above statistics are meaningless, as they are provided in a vacuum. It’s a simple matter for the gentle reader to see with his own eyes that our state schools perform just as badly, and often quite worse at community colleges.

Pell grants flowing to for-profit colleges increased at twice the rate of the program as a whole, increasing from $1.1 billion in the 2000-1 school year to $7.5 billion in the 2009-10 school year.

     Wow, from 1 billion in the year 2000 to 7.5 billion in the year 2009 to over 40 billion today. The gentle reader should keep this in mind when told the reason tuition is going up is because of reduced public funding, as this huge increase is also applicable to our public system as well. We really have poured billions and billions into this, with no improvement to education.

The for-profit education companies examined rarely set tuition below available Federal student aid

      It’s only a single sentence, but the above explains a big part of the problem with the student loan scam: whatever the loan is for, that’s the tuition. Most students going to school also want money for incidentals like food, maybe even a book or two.

     So, the government sees that the loans just barely cover tuition, and raises the loan amount. The for-profit school sees the loan amount has been raised, and thus raises tuition.  This process repeats itself every year, leading to endless tuition increases, and a skyrocketing total student loan debt that passed a trillion dollars years ago, with no end in sight.

      While most of the criticisms of for-profits apply nearly as well to our state/public/non-profit system, this one doesn’t. Most state systems can’t just change their tuition willy-nilly; this is, alas, the only reason our often corrupted public system doesn’t have the same tuition as the for-profit.

Internal documents, interviews with former employees, and Government Accountability Of-fice (GAO) undercover recordings demonstrate that many companies used tactics that misled prospective students with regard to the cost of the program, the availability and obligations of Federal aid, the time to complete the program, the completion rates of other students, the job
placement rate of other students, the transferability of the credit, or the reputation and accreditation of the school.

     Alas, we’re back into criticisms that apply just as well to our public system of higher education. Allow me to just discuss one specific example, from a disreputable (but still public) community college.

      Our students are told by administration about how they can get their degree in 2 years. Our students are told that the Pell Grant (scam) will pay full tuition, provided the student registers for 12 credit hours, “full time,” a  semester, for two semesters a year…24 credit hours a year.

      Two years later, the student has 48 credit hours…and still needs at least another year to graduate.

     What happened? Our programs take 66 credit hours to complete. Administration gives the students terrible advice, dooming them to have no chance whatsoever of graduating in two years, and the students are screwed from their very first semester. Even if the student requires no remedial work (most will), even if the student doesn’t fail a single course (most will), the student has no chance of actually getting a 2 year degree in 2 years if he follows disingenuous administrative advice.

     So, yeah, the for-profits mislead students…I assure the gentle reader there’s quite a bit of deception in our state systems as well. Again, the schools have no skin in the game when it comes to the loans, they just want butts in seats, and don’t care at all if all the students fail.

     I’m only glossing over the highlights here, but absolutely every single thing this one hundred and eighty four page Senate report has to say indicates failure in every way in the for-profit system of higher education. While the report neglects to point out how nearly every failure of for-profits has a parallel in the public system, I’ve done what I can to inform the reader; I do wish there was some way to inform the Senate of this important information.

       That said, there are two takeaways from this report:

1  1)    Our government knows, and has known for years, that our for-profit schools are doing great harm to our citizens, and it's all paid for with tax dollars.

2  2)    The primary reason the for-profit system is such a colossal failure is funding by the student loan scam. With a single stroke of a pen, our government could shut down this loan scam system and  save many of our kids from a lifetime of debt slavery as well as stop putting the taxpayer on the hook for over a trillion dollars now of eventually unpaid student loans.
    In both cases, our government has done nothing about it.

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