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Debate Over For-Profit Colleges Turns Partisan

The debate over the flow of federal dollars to for-profit colleges took on a partisan tone today as lawmakers exchanged barbs at a hearing of the Senate Committee on Health, Education, Labor & Pensions.

At the third in a series of hearings on federal investments in for-profit education, some of the witnesses and senators criticized the parts of the sector for using high-pressure recruiting tactics, providing misleading job-placement statistics, and leaving students with mountains of debt.

"While I agree, at their best, non-profit colleges may indeed offer an alternative model for higher education, this committee's ongoing investigation has brought to light, disturbing practices that appear to be systemic to the industry," said Sen. Tom Harkin, D-Iowa, the committee's chairman. "And it raises serious questions about the enormous taxpayer investment in these schools."

Sen. Mike Enzi of Wyoming, the committee's ranking Republican, was more critical of the hearings. He said the interests of the nation's students were not being served by the hearings and called for the committee to work on a solution to what he called the real problems facing students pursuing higher education. "Students are taking on too much debt, loan defaults are too high, and it is too difficult to find jobs or even complete a program of study. Tuition continues to rise in all sectors of higher education faster than the rate of inflation, putting the dream of a college education out of reach for many of our most financially vulnerable students," Enzi said. "It is naïve to think that these problems are limited to just the for-profit sector."

Sen. John McCain, R-Ariz., said that there appeared to be opposition to anything with a profit motive and that proprietary college provide flexible courses at night and online that were responsive to the job market. "I regret that this debate has exemplified the sharp division between our two parties and philosophies," he said, adding that there might be a different agenda in the Senate in January, after the mid-term elections. McCain said the chairman of the committee had pointed out the abuses in the system "ad nauseam."

Harkin said he never anticipated the hearings would devolve into partisan politics. He asked if McCain was implying that a Republican takeover would mean the issue would die. "I hope that's not the case," Harkin said. "I think something needs to be done."

Harkin released a report at the hearing today that analyzed 16 for-profit schools and highlighted the debt load of their students and the profits of the companies. Highlights included:

  • More than 95 percent of students at the two-year for-profit schools and 93 percent at the four-year for-profit schools took out student loans in 2007, while only 16.6 percent of students attending community colleges and 44.3 percent at public four-year institutions did so.
  • At the for-profit schools, 57 percent of students who entered between July 2008 and June 2009 have withdrawn. Over a three year period, an estimated 1.9 million students have left the 16 for-profit schools.
  • Profit margins at the schools ranged from 16 percent to 37 percent, with the majority of revenue coming from the federal government.

Students too often leave for-profit colleges with debt, but not a diploma, Harkin said. "It's turned higher education into a high-stakes gamble for students," he said. "Going to college is like going to a casino where the deck is stacked against you."

Another hearing is slated for December. Harkin said he anticipates coming up with proposed legislative changes next year.

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