For-Profit College Investigation
Is the New GI Bill Working?: Questionable For-Profit Colleges Increasingly Dominate the Program
Four Years in, For-Profit Education Companies Dominate the Post 9/11-GI Bill Program
HELP Committee Chairman Tom Harkin released a report on just how much in Post-9/11 GI Bill funds is going to the for-profit education sector. This report revealed that during this period examined, enrollment of veterans in for-profit colleges increased sharply, in tandem with a steep decline in veterans' enrollment in public institutions.
Key Findings of Senator Harkin's Report Include:
- For-profit colleges received $1.7 billion in Post-9/11 GI Bill benefits during the 2012-13 academic year - almost as much as the total cost of the program just four years earlier.
- Eight of the top 10 recipients of Post-9/11 GI Bill benefits are large, publicly-traded companies that operate for-profit colleges. These eight companies have received $2.9 billion in taxpayer dollars to enroll veterans in their for-profit colleges over the past four years, including 23 percent of all Post-9/11 GI Bill benefits ($975 million) in 2012-13.
- Amongst the top recipients of Post-9/11 GI Bill benefits is Corinthian Colleges, Inc. Corinthian received $186 million in Post-9/11 GI bill funds, yet recently announced it was in such severe financial distress that it would close or sell all campuses. In all, seven of the eight companies are currently under investigation by state attorneys general or federal agencies for deceptive and misleading recruiting or other possible violations of Federal law.
- While the total number of veterans attending all colleges on the Post-9/11 GI Bill grew rapidly between 2009-10 and 2012-13, both the number of veterans attending for-profit colleges and the amount of benefits these colleges received increased more than in other sectors of higher education.
- The percentage of veterans attending a public college has declined precipitously, from 62 percent in 2009 to just 50 percent in 2013. During the same period, the percentage of veterans enrolling in for-profit colleges increased from 23 to 30 percent of total enrollees.
- Although overall student enrollment has decreased at each of the eight top for-profit GI Bill beneficiaries, their enrollment of veterans has dramatically increased during the same period.
- This is true even though taxpayers are paying twice as much on average to send a veteran to a for-profit college for a year compared to the cost at a public college or university ($7,972 versus $3,914).
- The Federal government does not currently track how veterans are performing at different types of colleges. However, overall student outcomes provided by the companies to the HELP Committee for students enrolling between 2008 and 2009 give ample reason for concern. At the for-profit colleges currently receiving the most benefits, up to 66 percent of students withdrew without a degree or diploma.
- Between 39 and 57 percent of the programs offered by four of the companies receiving the most Post-9/11 GI Bill benefits would fail to meet the proposed gainful employment rule, suggesting that the students who attend these institutions do not earn enough to pay back the debt they take on.
- Some large companies that operate for-profit colleges appear to be increasingly dependent on continued receipt of Post-9/11 GI Bill funds to comply with the Federal 90/10 requirement, designed to ensure that the companies and their colleges are not overly dependent on Federal education resources.
For-Profit College Investigation
HELP Committee Chairman Tom Harkin launched a 2-year Committee investigation into the for-profit college industry, culminating with an extensive final report. You can download the full table of contents, executive summary, or Part I (the main body of the report). You can also download profiles of individual companies by clicking on the links below.
Senator Harkin's HELP Committee investigation found:
- Between 2008 and 2009, over a million students started attending schools owned by the companies examined by the Committee. By mid-2010, fully half (54 percent) of those students had left school without a degree or certificate. For Associates-degree students, 63 percent left without a degree.
- Most for-profit colleges charge much higher tuition than comparable programs at community colleges and flagship State public universities. The investigation found Associate degree and certificate programs averaged four times the cost of degree programs at comparable community colleges. Bachelor's degree programs averaged 20 percent more than the cost of analogous programs at flagship public universities despite the credits being largely non-transferrable.
- Because 96 percent of students starting a for-profit college take federal student loans to attend a for-profit college (compared to 13 percent at community colleges), nearly all students who leave have student loan debt, even when they don't have a degree or diploma or increased earning power.
- Students who attended a for-profit college accounted for 47 percent of all Federal student loan defaults in 2008 and 2009. More than 1 in 5 students enrolling in a for-profit college-22 percent-default within 3 years of entering repayment on their student loans.
- Despite dismal outcomes and high defaults, for-profit colleges enroll between 10 and 13 percent of students but receive 25 percent of all federal financial aid dollars. In 2009-10, this amounted to 25 percent of the total Department of Education student aid program funds.
- The final report estimates that the 15 publicly traded companies operating "for-profit" colleges received 86 percent of their revenues from federal taxpayer dollars.
- For-profit colleges spend these taxpayer dollars primarily on non-education related expenses: In fiscal year 2009, the companies examined by the committee spent:
- $4.2 billion or 22.7 percent of all revenue on marketing, advertising, recruiting, and admissions staffing.
- $3.6 billion or 19.4 percent of all revenue on pre-tax profit.
- $3.2 billion or 17.2 percent of all revenue on instruction.
- In 2009 the CEOs of the publicly traded, for-profit education companies took home, on average, $7.3 million. In contrast, the five highest paid leaders of large public universities averaged compensation of $1 million, while the five highest paid leaders at non-profit colleges and universities averaged $3 million.
- The investigation also documented that many companies recruiting tactics misled prospective students with regard to the cost of the program, the graduation rates of other students, the job placement of other students, and the transferability of the credit.