More Accountability Is Necessary to Protect Taxpayer Investment in For-Profit Colleges, Witnesses Tell Education Committee
WASHINGTON, D.C. – The significant federal funds going to for-profit colleges demands accountability to protect the taxpayer investment, witnesses told the Education and the Workforce Committee this morning.
“It is completely fair to expect institutions profiting from federal taxpayer money to have a standard to meet in terms of what their schools need to provide for their students,” said U.S. Rep. George Miller (D-CA), senior Democrat on the committee. “In this economy, graduating from a career education program should mean a job, not stifling debt. It is irresponsible to not insist on some level of accountability when billions of federal dollars and students’ financial security are at risk.”
Increasing enrollment at for-profit colleges has increased the federal investment in this sector. In 2008-09, $4.3 billion in Pell grants was awarded to students attending for-profit schools. This represents approximately 24 percent of all Pell Grant aid awarded in 2008-09, an increase from 13 percent in 1998-1999. In 2010, Pell grants flowing to students at for-profit institutions increased to $9.2 billion, 25 percent of total Pell grants.
In 2008-09, $19.6 billion in federal student loans, representing approximately 24 percent of all student loans awarded, was awarded to students enrolled at for-profit institutions. In 1999-2000, 11 percent of student loans flowed to the for-profit sector. In 2010, the Department of Education awarded $27.2 billion in federal student loans to students attending for-profit institutions (26 percent of total student loans awarded).
Completion and loan repayment rates are on average lower in the for-profit sector than in other sectors of higher education. These statistics and recent news reports of wrongdoing by some institutions have raised questions about the accountability of the sector.
Dr. Arnold Mitchem, President of Council on Opportunity in Education argued that for-profit institutions have means, more than non-profit institutions, to recruit and target low-income students.
“Unwittingly, we have created an environment in which for-profit institutions have very good reason (and an exceptional level of resources) to heavily recruit low-income students while many publically supported and independent colleges have neither the financial incentives nor the resources to engage in the same state-of-the art, well-targeted, high-pressure marketing. believe that there is a moral imperative and a responsibility to ensure that all students, regardless of background, race or income level, are fairly represented in higher education.”
Students at for-profit institutions are much more likely to borrow to pay for college. According to Education Trust, 97 percent of students attending 2-year for-profit schools took out student loans in 2007-08, compared to 14 percent of students attending public community colleges.
The median debt of Bachelor’s degree recipients at for-profit schools is $31,190, about 4 times the median debt of bachelor degree recipients from public nonprofit institutions and almost twice the median debt of bachelor degree recipients from private nonprofit institutions.
Witnesses also stressed the important role of federal aid in financing a college education. Catherine Barreto, a graduate of Monroe College, a for-profit institution in New York, argued that without federal student aid, she would not have been able to attend college.
Republicans have proposed cuts to federal student aid in their spending bill. Specifically, they have proposed to cut $845 from the maximum Pell Grant award. 9.4 million students are expected to rely on the Pell grant to be able to pay for college in the coming school year. For more information on the Republican proposed cuts, click here.
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