It’s time to rethink the system that funnels federal funds into businesses set up as for-profit colleges and universities.

A scathing report presented to a U.S. Senate committee on Monday reveals a setup that does more to enrich investors and executives than it does to improve students’s lives — and does it almost entirely on the taxpayer’s dime.

According to the study, schools spend an inordinate amount of money on marketing and recruiting, hooking customers up with federal student aid programs including Pell Grants and subsidized Stafford loans.

When the students drop out, which they do at a high rate, the schools still cash their checks, clearing the decks for a new crop of students. The failed students are left with the debt, which the rest of us inherit if they default.

One of the worst performers, according to the study, was Education Management Corp. which has been the subject of lawsuits and investigations.

More than 62 percent of the students enrolled in Education Management programs in the 2008-09 school year had withdrawn without completing it by mid-2009. The company’s board of directors is headed by former Maine Gov. John McKernan.


For-profit colleges are a big business. In 2009-10 school year, for-profit programs received $32 billion from the federal government, or 25 percent of the total Department of Education student aid program. The portion of the Pell Grant program going to for-profit colleges increased from $1.1 billion in 2000-2001 to $7.5 billion in 2009-2010.

The increasing support for these for-profit institutions comes a the same time that states are pulling back on what they give to public colleges and universities, which usually charge less for their programs and do more to support students.

Investment in public higher ed, like the university and community college systems, would be a better use of pubic funds than these businesses.

The federal government should at least require more accountability from the for-profit institutions if we are going to continue to fund them at this level. The government should limit how much public money can be spent on marketing by a for-profit business, and access to the fund should be linked to student performance.

The current system does not serve the taxpayers or the students and should be changed.

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