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Sunday, March 14, 2010

For-profit education

You may have seen the recent article in the NY Times about for-profit trade schools. The companies take advantage of the huge streams of available federal student aid for education (both grants and loans) -- according to the article, they often derive upwards of 80% of their revenue from federal student aid. At the University of Phoenix chain, 86% of revenue came from the federal government last year. The schools aggressively recruit students, saying that they will position themselves for high-paying jobs upon graduation, but many graduate poorly equipped to land a position with the sort of pay needed to pay back their big student loan debts. Default rates are high.

Of all the morally-suspect lines of business one could be in, this racket seems particularly evil. You're sucking up valuable federal student aid funding for something that doesn't provide real education. Even worse, you're convincing young people who are trying to better themselves to do something that won't really help meet their goals, and at the same time saddling them with huge amounts of debt that will destroy their ability to get back on their feet afterward. (It's very difficult to have student loan debt forgiven, even in bankruptcy.) I'm sure there are some decent for-profit schools, but the basic business model of many of these operators is just repulsive.

1 comment:

XTERRA 29er said...

As one who works in public higher education I find this trend particularly troubling. I've looked into a couple of positions at these institutions and their admissions office requires no management or higher education experience, but sales experience. It is all about sales and profit margins not education. Why students choose this option, given its outcomes, is particularly troubling.