For-profit colleges are scamming American students

According to an investigation by Democratic Congressman Elijah Cumming – the ranking member on the House Committee on Oversight and Government Reform – for-profit colleges are paying executives massive salaries – not based on student achievement – but instead based solely on profitability. Looking at 13 different for-profit schools – the investigation found, “the single most significant measure for determining executive compensation at these schools is corporate profitability…rather than student achievement.”

For-profit colleges rely heavily on government funding, with many schools receiving as much as 90% of their revenue from federal student loan assistance programs. Yet, they’re not producing good results. A quarter of all students who attend for-profit schools default after three years, while the default rate at public institutions is a mere 10%. Yet the for-profit school executives still get fat paychecks – like Strayer CEO Robert Silberman who made $41 million in 2009 alone.

Educating the future American workforce used to be a part of the commons, because the economic security of the nation depends on well-educated workers. But now, the money-changers are in control – leaving students in debt, unprepared, and jobless.


TimFromLA 10 years 43 weeks ago

I attended a for-profit college and luckily, I have a good career. There is one for-profit college I know of and they were denied V.A. funding. Get this, the finance person is telling the vets to apply for private loans.

Mark Saulys's picture
Mark Saulys 10 years 43 weeks ago

Education, like healthcare, is a basic right that, when upheld, allows us to live freely in a free society. Government, in a democratic society, is a good thing and allows us all to be free and an important, proper function of government is the provision and maintainance of the people's healthcare and education.

If the democratic society is also a capitalist society the taxes paid by business to the provision and maintainance of those rights ought be seen as just compensation to those who work for them, a.k.a. "the rest of us". Historically, business objected to welfare benefits because they competed with wages and forced it to pay a more living wage than the slave and poverty wages it would've like to have paid. Walmart gave lessons to its employees on how to get on food stamps.

What business doesn't pay in wages it pays in taxes. If business refuses to do either you have happen what is happening now, i.e. the destruction of the middle class and the pauperization of the working people.

occupy christianity's picture
occupy christianity 10 years 43 weeks ago

Hello Thom,

I do wish you, Representative Cumming, and Senator Harkin would show a little more nuance when talking about for-profit colleges and that they're "scamming America". Given the sheer number of institutions, do you think that some are serving their students well and contributing to the knowledge of many who have little other access to higher education?

Sure, there are poor institutions in this category. There are poor "not for profit" (I use this term very loosely...look at the attention many give their endowment funds and the salaries of their administrators) institutions. Let's look at all institutions of higher education. Compare for-profits to "not for profits". Hold them to the same standards, by all means! Those institutions (whichever category they fall into) that are not serving their students properly should have their feet put to the fire.

I encourage you to look at Walden University (disclaimer...I am on their faculty). Examine their commitment to positive social change. Look at the statistics on their student loan default ratio. Ask their students if they feel they are receiving a quality education. I know there are others who fit this bill as well.

Hoping that a more rational, facts-based discussion of this topic will emerge someday...

dowdotica's picture
dowdotica 10 years 43 weeks ago

as if i'm not already to vomit. one kid in a community college that keeps cutting classes for the kids yet still keeps giving raises and building new buildings?, another off to the number one public university in the country in a couple of weeks to the tune of, oh man am i going to be a broke joke for a while!! its sad as my logic back in the day when the kids were in private school was if we're swingin' this then college should be a push! huh, who'd a thunk some capitalist pigs would extort the American Public by jacking up tuition in upwards of 700% in less then 12 years. Our nation is morally and fundimentally broke when in less then 25 years education takes the back seat to just about anything else. ie: $14 billion proposed to build a stupid water tube to move water from north to south, crap put some truckers to work and drive the H2o? billions propsed on the bullet train to nowhere? (tragically i really want a bullet train but not 'til we fix all the other junk thats broke first). $210 million to turn a car pool lane into a solo toll lane? heck thats only in califony! imagine the sheer amount of funding thats being manipulated right this minute all in an effort to make the rich even richer and line the pockets of politicians and buarocrats while stickin' it to us all!!!! broke,broke,broke, morally!!! And i can't help but wonder 20-30 years from now if we don't fix it, how strong AMerica will really be when the majority of the population is illiterate....think about that one!

dowdotica's picture
dowdotica 10 years 43 weeks ago

$41 million in one year! how many 80k educations could that be? sounds like robbery to me...

DrRichard 10 years 43 weeks ago

Taught in one for 19 years. It wasn't my first choice, but I didn't get tenure and this was what I could find. I believe we did some good for students who knew exactly what they wanted and found it in the well focused vocationally-oriented programs that we had available. From what I saw a number of them, who did not want to go to traditional colleges, ended up with decent careers that actually pulled them up from their families' poverty.

The problem was that profits trumped education. Until the complaints reached the level of an actual "60 Minutes" expose, to meet their number the recruiters would take anyone and promise anything. Then we teachers got blamed for failing illiterates, new immigrants who couldn't speak English, people with really serious developmental disabilities, and folks whose math skills stopped around multiplication. Related to this was, until it also was exposed with lawsuits, is that the students were told they were going "to college" and usually didn't understand that their credits wouldn't tranfer to a "real" school. Always the bottom line ruled academic decisions. Certainly economics is an increasing concern at legitimate private or state colleges, but here making the next quarter's numbers began to dominate everything.

Thus over time as the corporation, an 80-school chain, began to reach its limits as it followed the typical capitalist path of trying for endless growth. Several times a year at our school we'd have the "new program that's going to save everything", and which would then be killed if it didn't show immediate results. (In fact, several of the excellent long-term programs the school had been built on were also destroyed.) Full-time teachers like me, stopped being hired and adjuncts, no matter how good, simply aren't as motivated or will be as stable hires. Middle managers began to do several jobs and became totally stressed out. Terms went from 12 weeks to 11 to 10, then 5 with a doubling of weekly classes. Vacation periods were largely eliminated. (All this sounds like American business today, doesn't it?) The students, adults with lives, couldn't stand the new schedule or the constant faculty turnover and started to leave. Enrollment dropped from 2200 to 450, which led to still more stress on everyone. When I was told my workload was increasing 30% but my pay wouldn't "since you'd had it too easy," I walked. (As a friend who quit at the same time, then promptly died, said, "We had a good 10 year marriage, then 8 years of abuse. It's time to leave.")

Just to get an idea on salaries, while the health insurance awas good, after all that time at the school, plus having 2 masters' and a Ph.D. I was making under $50k. Adjuncts get at best $2k per classes. On the other hand, when the corporate president was caught allegedly faking placement figures he was forced out and supposedly got $5M in compensation. The stock, which was at 3 almost 20 years ago, peaked out at 70 and is now under 5.

So do these schools have a purpose? I'd say yes, especially with some community colleges so crowded that students have trouble taking required classes. Do they need much better regulation? Most assuredly. Better accreditation and some path for students to get into regular schools would be great, but nobody is talking about that. For-profit education can work, but generally not the way it's been allowed to run amok.

George Reiter's picture
George Reiter 10 years 43 weeks ago

The Republicans play upon the necessary foundations to living in America where they can capitalize upon the necessities that you cannot escape from. Health care, education, and jobs are basic. The Republicans can manipulate all of the foregoing. If you get sick you can go bankrupt and loose everything. If you want an education, you are strapped for life with a loan with a no bankruptcy clause. If you try to find a job after graduating from college, learn Chinese because that’s where the jobs went. It's call "I gotchya".

fjkapustka2's picture
fjkapustka2 10 years 43 weeks ago

It is time for education to take a step forward to public K-14 education. Having public K-14 education for at least core curriculums (English, Math, Science, Drafting/Architectural Drafting/CAD, Art, Education, Agriculture, Biology, etc.) and the more basic trades (Carpentry, Auto Repair, Plumbing, Electrician, and Agricultural shop classes) will keep jobs locally while unburdening student of the cost of moving away to school. It will also allow smaller communities to offer junior college level courses early, again saving people money when going off to school. It is a very simple problem to the online universities. These juco schools could offer collaboration with online universities for testing. With any school, accreditation is very important. The juco level education could also partner with in state 4 year universities with online programs. Having classrooms with live cameras and local staff to serve as teaching assistants would kill off predatory non-accredited education institutions.

Many universities bum students onto graduate students for all but the main lectures. Many schools of lunacy such as Chiropractic, which has no known medical value as well as know to cause harm while not even requiring an anatomy class or any college level coursework to complete, are thriving with on-site brain washing. Schools of voodoo such as Accupuncture and Chiropractic as well as other unproven harmful and dangerous professions have always abounded all over the world.

A move to year round education of either 3 full semester or 4 full quarters would also cheapen education by cutting rent costs for students. Northwestern still has, I believe, a 3 years pre-med and 3 years of medical school program verses a 4 and 4 format at most universities. With the ability to take 2 years of college coursework before graduating college, imagine going 4 years and becoming a medical doctor or getting a masters degree.

douglas m 10 years 43 weeks ago

No, for profit colleges should be outlawed.
Why should an institution that has a goal of undermining the American Education system be Legal???
Vulturism,new word.
Isnt this the enemy within,again!

reilich 10 years 43 weeks ago

It seems to me that universities have always been for-profit regardless what they claim. This story is therefore not so much news as more of the same. Increase in hustling behavior across US cultures of every type, across the world for that matter is more proof that capitalism is a bad idea. Humans need to embrace sharing and, if necessary socialism. Pardon me if that is stretching this subject, or off-topic. It isn't, really. So I will briefly continue. The problem, traditionally with socialism has been mismanagement and corruption. If humans could figure a way to manage an egalitarian government/society and rid our species of economic polarity, then we could finally be proud of calling ourselves evolved. How convenient that human governments and finance are always rife with corruption, socialistic and capitalistic, making the fundamentally corrupt capitalism an apparent only choice since it appears more individualistically free, but is actually the most corrupted economy at its core ethic of greed and profit. Yes, I am bombarded with education hustlers every day on the web. I am also bombarded with hustlers at the supermarket and everywhere else. Every day. I am sick and tired of it. I wonder if others are, too.

reilich 10 years 43 weeks ago

@ DrRichard -- Just wondering. What percentage of "skilled, professional" jobs require more than multiplication level math knowledge? If it is a small percentage, why are people required to "learn" (e.g. pass tests for) higher levels of math when they don't actually need this knowledge in their jobs? Most of the people I know, told me that they studied for tests to get grades, not to learn anything. They needed to pass classes to receive diplomas and college degrees. They also said that they hardly remember any of this knowledge. I wouldn't know. I'm a high school drop-out. But it seems to me that there is a basic flaw in the organization of education to begin with. That flaw, competition based education, seems to be related to this subject of hustlers gaming in the education biz.

The problem is that humans have not evolved beyond the hostile planet we call Earth. We are still competing for survival. Turning education into a ruthless, capitalist game is more of the same. Nothing has changed. Some people obviously enjoy competition in business and education. Others don't. It's a basic difference in types of people and the dichotomy is at the root of all discussions concerning capitalist behavior. This fact should be clarified whenever anyone beings up subjects concerning economic competitiveness. That is, that some people don't like it. Yet, most usually forget this. Go on and talk about the scourge of hustlers supposedly turning education into a competitive greed fest. When the truth is that education has always been a greed fest, and not only on the administrative end. It appears that education is served right for greedy hustlers to show up and put a mirror on education culture that is competitively greedy at its core and throughout.

DrRichard 10 years 43 weeks ago

That's a reasonable question Reilich, and I'll try to answer it. I taught basic algebra, some geometry, and what else I could sneak in like how a map works or why compound interest is important when taking out a loan. For some programs algebra was critical--electronics and photography come to mind. At the real college where I now teach occasional courses the medical technicians and nurses absolutely must understand how to set up basic problems involving unknowns if they are going to run their equipment, or make properly dosed medicines. Beyond that, I explained to each class that having some knowledge of how numbers really work (or what statistics do and don't tell you, a subjec that I also taught) means that a salesperson or politican can't as easily fool you by throwing around phony or manipulated data. This was important for our broadcasting students who otherwise couldn't judge the validity of much of the material they were given to repeat. Having these technical skills really increase the feeling of power and control over one's environment; even knowing something as simple as how to a calculate tax or understand a commission will make one a more informed citizen and consumer. So it's a mindset issue as much as a working one.

Kend's picture
Kend 10 years 43 weeks ago

The problem with our education system is we end up with too many art students and not enough welders and plumbers.

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