The for-profit college scam

by David Safier

For-profit colleges are scamming their students and the federal government. They charge too much, teach too little and saddle their students with loan payments out of proportion with the salaries graduates earn in the jobs the colleges pretend to prepare them for. When the ex-students can't pay, the feds pick up the bill.

The figures in an article in today's Star tell the tale.

• For-profit colleges average $2,659 per student on instruction. The average full time student pays $30,900 annually.
• Non-profit private colleges average $15,289 per student on instruction. The average full time student pays $26,600 annually.
• Public universities average $9,418 per student on instruction. The average full time student pays $15,600 annually.

Numbers like these are always approximate and somewhat misleading, but the differences are glaring even if the numbers aren't entirely accurate. The numbers show for-profit colleges spending less than 10% of student costs on instruction leaving 90% for overhead and profits, while non-profit private colleges spend a little over half and public universities spend about 60% on instruction.

The for-profits "get as much as 90 percent of their revenue from federal student grants and loans." That means the federal government is footing the bill. If students default on their loans, the feds are stuck with the bill, while the college's owners suck up the profits.

The for-profit college lobby and its congressional friends are fighting against legislation that would bring a much-needed increase in regulations and oversight, naturally.