U.S. Senator Tom Harkin has released the conclusions of a two-year investigation into the for-profit college industry. During the course of the investigation, the Senate Health, Education Labor and Pensions Committee, which Harkin chairs, looked at 30 companies that operate institutions of higher education all over the country and found that, despite receiving over $30 billion on federal funding just over the last year, the for-profit sector often failed at helping students obtain their college degrees and instead saddled them with additional debt.
“In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation,” Mr. Harkin, an Iowa Democrat who is chairman of the Senate Health, Education, Labor and Pensions Committee, said in a statement on Sunday. “These practices are not the exception — they are the norm. They are systemic throughout the industry, with very few individual exceptions.”
Some of the statistics quoted in the report were alarming. According to data collected by the committee, more than half of students who enroll in for-profit colleges leave without graduating, sometimes within months of enrolling. On average, the thirty companies studied spent merely 18% of their operating budget on instruction, with nearly 23% going towards marketing and a bit over 19% banked as profit. Among the documentation released by the committee along with its findings was the testimony of hedge fund manager Steve Eisman, who compared the for-profit colleges to the subprime mortgage industry.
For-profit colleges have gained in popularity over the past 15 years with enrollment nearly tripling to 2.4 million students nationwide. The colleges are mainly funded by federal financial aid dollars, which means that many of the schools place their focus on increasing enrollment numbers. According to the report, the 30 companies studied had over 30,000 recruiters on staff, each with the mandate to meet recruiting quota, compared to fewer than 4,000 career counselors.
Historically, Democratic politicians have been hostile to the for-profit college industry, calling for greater regulation of the sector and for restricting access to federal aid funds. The investigation and its conclusions have already been criticized by Republican lawmakers and representatives of the for-profit education industry as fatally flawed and a piece of political theater.
Steve Gunderson, president and chief executive officer of the Association of Private Sector Colleges and Universities, dismissed the report as inaccurate.
“Unfortunately, Sen. Harkin’s report continues in the tradition of ideology overriding reality,” said Gunderson, a former Republican congressman from Wisconsin. “The report twists the facts to fit a narrative, proving that this is nothing more than continued political attacks on private sector colleges and universities.”