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For-profit schools questioned by Congress

Marketplace Staff Jun 24, 2010

For-profit schools questioned by Congress

Marketplace Staff Jun 24, 2010


Kai Ryssdal: For-profit colleges got a grilling from lawmakers today on Capitol Hill. Those kinds of schools get more than 90 percent of their revenue from the government, which is to say you and me, in the form of tuition paid by federal student loans and grants. Students are piling up huge debts for for-profit degrees that sometimes don’t pay off, and there’s worry in Congress that tax payers aren’t getting their money’s worth.

Janet Babin reports from North Carolina Public Radio.

Janet Babin: Enrollment in for-profit universities jumped a staggering 225 percent over the past 10 years. And virtually all of those students rely on federal grants and loans to help pay their tuition. That costs the government billion of dollars a year. But almost half of those students can’t pay their loans back.

Sen. Tom Harkin says the schools get their money, but taxpayers get the tuition bill, and the students are saddled with debt.

Sen. Tom Harkin: That debt is not dischargeable in bankruptcy, it will follow them until the day they die. But the for-profit schools get the benefits.

For-profit colleges argue that in an unsteady economy, they’ve become a rock for students that many traditional universities turn away.

Harris Miller is with the Career College Association, a group that represents for-profit colleges.

HARRIS MILLER: Our students are graduating in high numbers, particularly if you compare them to other schools that accept at-risk students.

That’s not the experience Yazmeen Esa had. She trained to be an ultrasound stenographer at the Sanford-Brown Institute in White Plains, N.Y.

Yazmeen Esa: Five months after finishing the program, I had no prospects for employment, but still had a family to take care of, rent, bills and now the outstanding student loans.

With the job market still very tight, more people like Yazmeen will be looking to boost their career skills. Many of them will end up at for-profit colleges.

The Senate plans a second hearing on the issue next month.

I’m Janet Babin for Marketplace.

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