Corinthian Colleges: For-Profit Schools Preying on the Vulnerable While Soaking Up Tax Dollars
To really grasp the significance of what is happening to Corinthian Colleges, I urge you to read Suzanne Mettler’s new book, Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream. The book is a broader exploration of the laws that shape policy for colleges and universities, but one of the topics it explores is the explosive growth of for-profit colleges after 2006, when Congress removed the rule that to qualify their students for federal loans, colleges must provide at least 50 percent of a student’s education in person. In other words, buried in 2006 federal budget, Congress expanded federally backed student loans for colleges that provide 100 percent of a student’s education on-line.
Mettler describes soaring enrollments: “In the next five years after the demise of the 50 percent rule, enrollments nearly doubled in the for-profit sector, and revenues soared… The Apollo’s University of Phoenix and Kaplan, owned by the Washington Post, doubled their revenues—and the default rates of their students climbed at the same pace.” (p. 107) The other thing that grew with soaring profits was the investment by the for-profit colleges in Congressional lobbying. “During the 2007-2008 election season, for example, the Apollo Group played a prominent role. Not only did it lead the for-profit colleges in campaign contributions, but by donating over $11 million, it ranked twenty-eighth among all organizations and businesses nationwide. It spent approximately twice as much as Goldman Sachs, JP Jorgan Chase, Bank of America, Time Warner, and Walmart, among others, and three times as much as the US Chamber of Commerce.” (p. 110)
Congress has responded to this massive investment in lobbying. A good part of the profits for such institutions comes directly from tax dollars in the form of federal student loans, and the default rates have skyrocketed along with the for-profit colleges’ profits. Hence the story in recent weeks about Corinthian Colleges, which, according to Kevin Carey in the NY Times, Corinthian Colleges: For-Profit Schools Preying on the Vulnerable While Soaking Up Tax Dollars | janresseger: