For-profit trade schools have taken a beating in the news this year. Investigative reports have revealed that for-profit colleges troll homeless shelters for prospective students. Military bases and unemployment offices, too. For-profit colleges trade big promises of career possibilities and stable income for students’ government financial aid. It’s a business model built on luring students who depend on government financial aid; some for-profit schools make 90 percent of their revenue from Pell Grants alone, the government aid for students from low-income families.

And now there’s proof of just how they do it. Today the Government Accountability Office will present findings from an investigation it conducted of fifteen for-profit schools at the Senate Committee on Health, Education, Labor and Pensions. The New York Times reports that the GAO found that fifteen out of fifteen for-profit school recruiters intentionally misled students about for-profit schools’ business practices and true cost, and even encouraged investigators posing as students to lie on their financial aid forms so they could qualify for more federal grants.

It’s not an inconceivable practice; in 2009 University of Phoenix, the largest and most well-known for-profit school, took in $933 million in Pell Grants. The New York Times reports for-profit schools made $4 billion in federal grants last year, and $20 billion from Department of Education loans last year. For months Congress has been discussing regulatory solutions, like limiting the amount of money for-profit schools can spend on advertising. Today they will discuss again what to do about for-profit schools.

It’s not just about how these schools get students in the door, it’s what happens to them after they graduate. Graduates often graduate with tens of thousands of dollars of debt, but not necessarily improved job prospectsor even eligibility for the markets they want to break into. Once students leave those schools, they graduate with little more than an embossed piece of paper and tens of thousands of dollars of debt. 

The Department of Education reported this summer that 40 percent of those who attend for-profit schools eventually default on their loans. And big surprise, for-profit schools pull a disproportionate number of students from communities of color. Fifteen percent of America’s black undergrads are enrolled in for-profit schools, a number that’s much higher than their enrollment in public and private universities. Seventy percent of for-profit college students are the first in their families to go to college. And for-profit schools are the fastest-growing sector of the higher education world, outpacing at three times the rate the expansion of their public and private counterparts.

And that’s why for-profit schools make themselves so easy to hate. Regulation of the industry can’t come soon enough. It’s education sector’s subprime mortgage crisis.

Read this online at http://colorlines.com/archives/2010/08/investigation_finds_for-profit_college_fraud.html


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