Tag Archives: private colleges

A Reform Worth Considering

I have long believed that America’s patchwork, complicated method of financing higher education makes no sense. I watch working students taking one more class than they can really manage in order to meet aid eligibility requirements; I see the university employing dozens of people to shuffle the paperwork; I see parents struggling to complete complex forms–and of course, we’ve all seen the reports of unmanageable student loan debt. The need to repay that debt constrains the choices of graduates who might go into lower-paying but more satisfying jobs, makes periods of unemployment more terrifying, and probably restrains the sort of consumer spending that would boost economic growth.

An article in the recent issue of the Atlantic suggests scrapping the whole system and replacing it with a far simpler, more transparent approach. I hope a couple of paragraphs from that article will tempt you to click through and read the whole thing.

With what the federal government spent on its various and sundry student aid initiatives last year, it could have covered the tuition bill of every student at every public college in the country. Doing so might have required cutting off financial aid at Yale, Amherst, the University of Phoenix, and every other private university. But at this point, that might be a trade worth considering.


The under-funding of public university systems and Washington’s attempts to compensate have also helped nourish a giant barnacle on the side of higher-ed: the for-profit college industry. As scarce classroom space at community and open-admission state colleges has filled up, students turned towards alternatives like Kaplan University and University of Phoenix, which charge tens of thousands of dollars for degrees with dubious job market value. They get away with it because of federal aid. I call it the 10, 25, 50 problem: They educate ten percent of students, who take out about a quarter of all student loans and are responsible for about half of all defaults. In the meantime, they suck up about $8.8 billion, or around 25 percent, of all Pell Grant money.

Not-So-Private Enterprise

This morning’s New York Times has a story about Mitt Romney’s campaign-trail praise for a “private” enterprise that–just coincidentally–happens to be owned by one of his largest contributors. It’s a story that could undoubtedly be written about several of the other candidates in an era when money makes the political world go around, and it wouldn’t merit much more than a sigh and a shrug if it weren’t for two things: the enterprise in question and the increasingly dishonest characterization of what constitutes “private enterprise.”

The business that Romney praises as a “cost-effective” alternative to soaring tuition rates is a for-profit college in Florida named Full Sail University. As the Times points out,

“Mr. Romney did not mention the cost of tuition at Full Sail, which runs more than 80,000, for example, for a 21-month program in ‘video game art.'”

Nor did he mention the institution’s 14% graduation rate.

In fact, there has been a growing recognition that many, if not most, for-profit colleges are royal rip-offs, promising students credentials that prove worthless in the marketplace and vastly overcharging for poor-quality instruction. In response, President Obama has proposed new regulations that would make it much more difficult for students attending such institutions to receive federal aid.

And that leads to the problem of mis-characterization. The reason so many of these for-profit colleges are lobbying so frantically against the Obama proposals is that they are “private” enterprises in name only. They depend almost entirely upon the financial aid available to students courtesy of the American taxpayer.

I’m told that for-profit colleges got their biggest boost in the aftermath of the Second World War, when the availability of the GI Bill promised quick profits to educational entrepreneurs who could best market their programs. Today, most of them would disappear without the ability to tap public funds.

We have a long history in this country of politicians extolling the virtues of those who fund their campaigns, and we have an equally long history of people railing against “socialism” and “bailouts” and “welfare” while happily sucking at the public you-know-what. (Remember Ross Perot, that apostle of private-sector “can do” attitudes who made his fortune contracting with the government?)

As the Times article points out, the for-profit college industry has “been the target of withering criticism in the last few years in the wake of federal investigations into fraudulent marketing practices, poor academic records and huge loans assumed by students ill-prepared for the expensive programs.”

Bottom line: these enterprises are not examples of private entrepreneurship. And what they are offering bears little resemblance to an education.