Why are Taxpayers Subsidizing For-Profit Colleges while Public Colleges Slash Budgets?

Monday, May 28, 2012
While state governments continue to cut funding for community colleges, the federal government has helped for-profit universities grow and prosper.
In recent years, federally guaranteed student loans to students attending private “proprietary colleges”—those operating to make a profit—has greatly expanded in numbers. According to Floyd Norris of The New York Times,“In the 2010-11 academic year, the government guaranteed nearly $24 billion in loans to students at proprietary schools and provided almost $9 billion more in grants. All that money went to the schools.”
Such government aid has helped for-profit educational company ITT Educational Services grow exponentially. ITT now operates 148 schools in 48 states, with 71,000 students enrolled.
Because credits from for-profit schools tend to be non-transferable, the for-profits like ITT afford their students fewer degree opportunities beyond their own programs. This means if students don’t get the specific jobs they trained for, they wind up both unemployed and saddled with large student loan debts. Although for-profit colleges enroll only 10% of the nation’s undergraduates, they account for almost half of student loan defaults.
Meanwhile, the budgets of community colleges, whose credits are transferable, have been shrinking as a result of state deficits. This has meant fewer or more crowded classes at two-year schools, which don’t charge nearly as much tuition as the for-profit institutions. Leaner times at community colleges also have made it harder for their students to transfer to four-year colleges, either public or private.
-Noel Brinkerhoff, David Wallechinsky
To Learn More:
Colleges for Profit Are Growing, With Federal Help (by Floyd Norris, New York Times)
Student Loan Default Rate Highest in 14 Years (Noel Brinkerhoff and David Wallechinsky, AllGov)

Private For-Profit Colleges Score Big with G.I. Bill (by Noel Brinkerhoff, AllGov) 


Earl Lauderback 11 years ago
it amazes me that as a former educational manager of itt educational services, when we reported fraud and deception regarding itt and their students, specifically the tampa campus, headed by dennis w. alspaugh, director, nobody paid attention in 1999/2000. we contacted the us department of education and many other governmental agencies,making them aware of how itt educational executives were getting rich on the backs of students/parents and student loans. the former president of itt rene champagne and his vp cronies have retired as rich men based upon us government student loans that we all pay for. earl lauderbacl, m. ed.

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