For-Profit Colleges May Lose Access to U.S. Aid Over Violations
For-profit colleges have come under growing scrutiny as Secretary Arne Duncan, seen here, prepares tighter industry regulations. Photographer: Jay Mallin/Bloomberg
Apollo’s University of Phoenix, the biggest U.S. for-profit college with an enrollment of about 470,000, got 88 percent of its revenue from U.S. student grants and loans in 2010. Photographer: Joshua Lott/Bloomberg
For-profit colleges that pay recruiters on the basis of the number of students they sign up may lose access to U.S. government student aid, which provided the colleges with $26.5 billion last year and can account for as much as 90 percent of company revenue.
The Department of Education, seeking to strengthen oversight of the for-profit college sector, is considering boosting fines and disqualifying colleges from participating in federal-aid programs when they give bonuses to admissions officers for enrolling more students, said James Kvaal, deputy undersecretary of education, in a telephone interview. For- profit colleges got about 23 percent of all federal student grants and loans that went to U.S. universities in 2008-2009, according to the U.S.Government Accountability Office, while educating about 12 percent of all students.
The Education Department plans, in July, to make incentive compensation for recruiters illegal, removing 12 types of exemptions, or “safe harbors,” that were put into place in 2002 under President George W. Bush. At that time, the department’s enforcement power was reduced to levying fines, Kvaal said.
