A federal report on for-profit colleges and private universities has lambasted them for misguiding the students.
The report 5,000-pages long, blasts the industry for recruiting too aggressively, for spending more on marketing than teaching, for producing too few graduates, for charging significantly higher tuition than comparable public schools, for tying salaries to recruitment, and for giving prospective students unrealistic impressions of potential post-graduate employment and earnings.
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The schools received $32 billion in tuition aid in 2009- 2010 and aren't a good investment for taxpayer money, according to the study released Monday. In its probe, the Senate Committee on Health, Education, Labor and Pensions, led by Iowa Democrat Tom Harkin, examined 30 companies over two years, reports Bloomberg.
The report takes aim at Apollo's University of Phoenix, Education Management Corp., Washington Post Co.'s Kaplan Higher Education and other for- profit colleges, which as a group spend more on marketing than instruction. Harkin, the U.S. Justice Department and state attorneys general are investigating for-profit colleges, which rely on federal financial-aid money for as much as 90 percent of their revenue.
For-profit college students take on more debt, with 96 percent receiving loans compared with 48 percent at four-year public schools. They also default at a higher rate than their counterparts at nonprofit institutions. Almost half of federal student loan defaults came from students at for-profit schools.
"In the absence of significant reforms," the report said, "the sector will continue to turn out hundreds of thousands of students with debt but no degree, and taxpayers will see little return on their investment."
In a minority report, Senate Republican staff members criticized the report's findings, saying that Democrats repeatedly refused to work in a bipartisan manner and expand the scope of the investigation to include nonprofit and state universities, raising "substantial doubt about the accuracy of the information."