Is Money & Influence Driving The Student Loan Crisis?

Friday, March 01, 2013

There is obviously a need to reform our higher education funding, prices and student loan system. What is lacking is political will. The for-profit colleges are making big money and spending some of their money on keeping the status quo by lobbying Washington.

What do we mean by for-profit schools? We are talking about schools like University of Phoenix who spent over one million dollars lobbying DC in 2011. Kaplan spent nearly one and half million for the same reasons. 

Following investigations from the Senate and the Government Accountability Office, the for-profit colleges are accused of deceptive and predatory practices in recruiting students. President Obama has attempted to bring new regulations to crack down on these deceptive practices. The for-profits fought back, spending millions to lobby Washington.

Why lobby to keep things the same? They are making billions off of high tuition, underwritten by the US government in the form of guaranteed student loans. The for-profits have collected 32 billion dollars in federal dollars, including programs such as Pell Grants. Many students have failed to graduate, despite racking up large amounts of debt.

Students at the for-profit tend to borrow more and are twice as likely to default on those loans. This is not surprising, what with an associates degree costing upwards of $60,000 dollars. These schools are also deceptive in promising jobs, which is what you assume you are paying for. The Department of Education has found that graduates of the for-profits have a tough time finding employment.

What are they spending their money on? Studies show that 42% percent of revenue goes to marketing, recruitment and profits. Only %18 of those dollars go directly to instruction.

Are you getting a better education from the for-profit colleges? It doesn’t look like it.

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