The problem with for profit education

by David Safier

The problem with for profit education is . . . it's for profit. Anyone who's looking to make a buck off of running schools has a constant conflict of interest between the students' best interest and the bottom line.

Case in point. The University of Phoenix has to pay $48.5 million to the U.S. Department of Ed, along with $19 million to a few whistle blowers. The reason? 

. . . the nation's largest for-profit university defrauded the department by obtaining billions of federal student loan and Pell Grant funds based on false statements of compliance with the Higher Education Act. The act prohibits universities that receive these funds from making incentive payments to recruiters based "directly or indirectly" on the number of students they sign up.

The more people UofP signs up, the more money it makes. Don't worry whether they have the background or qualifications to succeed, and certainly don't worry about whether they can pay tuition. Con them into taking a toxic mixture of loans and grants.

With approximately 80 percent of its students on federal financial aid, [UofP] is the single-largest recipient of federal student aid, with more than $3 billion from government loan programs last year.

If students succeed, great. If they drop out before they finish the semester, that's fine too, because the tuition is already paid. Taxpayers cover the grants, and the students will be paying off those loans for as long as it takes. If they don't pay them off, we pay for those too.

So UofP paid recruiters by the student, giving them the incentive to lie, cheat and steal to get those students enrolled, regardless of their chances of success.

How big is UofP?

Phoenix has more than 250 campuses in 40 states, the District of Columbia, Puerto Rico and two Canadian provinces, with 443,000 students.

More students, more profit. Lose students at your peril. That's just good business.