The For-Profit College Scam / by kevin murray

It's always about the money and it doesn't help that the government shoots itself in the foot time-and- time again.  Perhaps the government has noble goals by promoting higher education with Pell grants, Stafford loans, Perkins loans, or various other governmental loan programs out there that ostensibly were created to give opportunity for low-income students to attend college.  The problem with these loan and grant programs however, is that they are structured in such a way that the for-profit colleges utilize them again and again as their "go-to" formulato model their business educational program.  For instance, in Tom Harkin's investigation of for-profit colleges in 1992, the report concludes that for-profit colleges received about $32 billion in taxpayer payments thru Pell grants and Stafford loans for 2011.  In fact, the general consensus is that these grants and loans make up around 85-90 percent of for-profit college revenues so that their business model is purposely constructed around these taxpayer-backed monies.


For-profit colleges have minimal interest in actually educating their students, as their incentives are built around recruiting specifically students most likely to need funding by Pell grants and Stafford loans since this money supply is guaranteedor granted by their respective government agencies.  The budgets of for-profit colleges are built around marketing and recruiting, and their incentives are structured specifically around those incentives.  For-profit colleges spend considerably less than traditional colleges for teacher's salaries and the costs for students of attending for-profit colleges are significantly higher than traditional colleges.  The success of for-profit colleges comes down to an insider knowledge of working the system to their advantage and the utilization of massive amounts of monies spent specifically recruiting the student base that they are seeking, which are their primary goals to the virtual exclusion of all else.


If the government was serious about putting an end to the abuse of the for-profit college system which is detrimental to students for the inferiority of the education, the expense of the education, the lack of discretion of students qualifying for the education, and the unnecessary debt burden of students for this education, the government would amend their rules for Pell grants and Stafford loans immediately.  The fuel that feeds for-profit education is the grants and loans that the taxpayers of America are stuck making good on.  For-profit colleges would take a significant blow, they would have to re-invent themselves if these funds were severely restricted or removed from their business model.


The government has the power to give and the government has the power to take away, it need only exercise those powers to correct this injustice to students, to the taxpayers, and to the educational system in general.  If for-profit colleges want to exist or co-exist into the future, they will have to morph from their present state of marketing and recruiting scams with little real emphasis on valid education, to become true institutions of higher learning that help to create prepared minds that are of service not only to themselves but to society at large.