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Senator Tom Harkin, D-IA, and his Senate Health, Education, Labor and Pensions (HELP) Committee staff released a blockbuster report in late July that concludes a massive investigation into the 30 largest for-profit college companies. The report served another blow to the already-troubled for-profit college industry. It rippled across the mainstream media. It was also nuanced in its critique, lauding some schools while criticizing others. It indicates new approaches to regulate and legislate an ethical way forward for the industry that could affect the broader higher education industry in the United States. Here’s a compilation of media stories on the report.

NPR interviewed Sen. Harkin:

Harkin’s office reports:

• Enrollment at for-profit schools has grown dramatically over the past decade. Between 1998 and 2008, the number of students attending for-profit schools has grown from 553,000 to 1.8 million, an increase of more than 225 percent.

• In order to drive enrollment growth, for-profit schools spend heavily on television advertisements, billboards, phone solicitation, and web marketing. The pressure on recruiters to enroll as many potential students as possible can give rise to recruiting practices that are overzealous or misleading.

• For-profit schools are far more expensive than comparable programs at community colleges or public universities. The average tuition for a for-profit school is about six times higher than a community college and twice as high as a 4-year public school.

• For-profit schools provide access to many students who have historically not been well served by traditional institutions of higher education. But data collected by the Senate H.E.L.P. Committee shows that many for-profit schools are not providing the support structure to help these students succeed. The data shows that fifty-four percent of students who enrolled in the 2008-2009 school year withdrew by summer 2010.

• Close to one in four students who attends a for-profit school defaults on his or her federal student loans within 3 years of leaving school. This high rate of default combined with the fact that nearly all students at for-profit schools must borrow money to pay the cost of tuition, has resulted in a sector that enrolls approximately 10 percent of American higher education students but accounts for nearly 50 percent of all student loan defaults.

• Despite poor student outcomes, for-profit schools are highly profitable companies. Profits at 16 of the largest for-profit schools totaled $2.7 billion in 2009.

Via Sen. Harkin Office

David Halperin writes on RepublicReport:

I’ve been saying for a couple of years that, no matter how cynical one’s view of Washington is, it cannot encompass the perpetuation of the terrible impunity of America’s for-profit colleges. For over a decade, these corporations have taken billions from taxpayers — now about $33 billion a year — for a toxic mix of high-priced, low-quality programs that leave many students — veterans, students of color, low-income students, immigrants, and others — deep in debt, their hopes crushed, their lives ruined.

For-profit colleges now account for about 10 percent of U.S. students but 25 percent for federal financial aid and nearly half of all student loan defaults. Many schools get 85-90 percent or more of their revenues from federal taxpayers, and they spend most of it on items like marketing, recruiting, and big executive salaries, rather than education and job placement. Not all for-profit colleges are that bad, but many, including most of the big ones, are.

There is stalemate in Washington on holding this industry accountable, because the big money that it spends on lobbying, lawyering, and campaign contributions has bought the allegiance of many congressional Republicans and  Democrats and has thwarted federal regulations. Thus determined reform efforts by the Obama Administration, and principled leaders like Senators Harkin, Dick Durbin (D-IL), and Kay Hagan (D-NC), and Representatives Elijah Cummings (D-MD), Maxine Waters (D-CA), and Keith Ellison (D-MN), have largely been blocked.

But after an extended period of scrutiny by federal officials, nonprofits, and diligent news reporters, the truth is coming out and having an impact. Federal investigators are probing for-profit institutions including giants the University of Phoenix and EDMC and smaller operations like Florida’s FastTrain College, where, on the day of an FBI raid, one student told a reporter that she had been charged for room and board — at a school that does not offer student housing.

More than 30 state attorneys general are accelerating a joint investigation of fraud by for-profits including Corinthian, Kaplan, and Bridgepoint. Long lethargic accrediting bodies are at last reconsidering the free pass they have given these schools. Investors are realizing that the reckless joy ride may be over soon. Most importantly, students are getting the message that they need to look elsewhere for educational opportunities. Veterans are especially incensed, and more and more of them are speaking up about the deceptive and coercive recruiting tactics many for-profits use to exploit lucrative GI bill dollars. Check out the hard-hitting video from the Iraq Afghanistan Veterans of America, above.

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The for-profit colleges have adopted a talking point — see here and here — asserting that those who question their industry are driven by “their political or ideological agenda.”  But the agenda that Harkin and his allies are pursuing is purely common sense: Taxpayer money should not fuel waste, fraud, and abuse.  There can be a constructive role for for-profit institutions in educating Americans, but the current race to bottom — where profits depend on abusing and exploiting students — must end. With federal dollars already scarce, policy must instead reward schools that compete by helping students train for careers and obtain good jobs. This straightforward approach could be considered contentious only in a warped world where slick industry lobbyists and campaign money distort the debate.

Tamar Lewin at The New York Times reports:

For-profit higher education has long been a politically divisive issue, with Democrats generally arguing that greater regulation is needed to prevent huge publicly traded colleges from plundering the Treasury for student financial aid while leaving students with crippling debt and credentials that are worthless in the job market. Many Republicans see such colleges as a healthy free-market alternative to overcrowded community colleges, offering useful vocational training and education to working adults who will not attend more traditional institutions.

The Republicans on the Senate committee criticized the Democrats’ investigation for including testimony from Steve Eisman, the hedge fund manager who was one of the first to compare for-profit colleges to the subprime mortgage industry; for making public the internal company documents that the committee gathered; for refusing to broaden the investigation to include abuses by nonprofit colleges; and for being what they said was a hostile partisan effort.

Over the last 15 years, enrollment and profits have skyrocketed in the industry. Until the 1990s, the sector was made up of small independent schools offering training in fields like air-conditioning repair and cosmetology. But from 1998 to 2008, enrollment more than tripled, to about 2.4 million students. Three-quarters are at colleges owned by huge publicly traded companies — and, more recently, private equity firms — offering a wide variety of programs.

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Colleges with very high loan default rates in the two years after graduation (now changing to three years) lose their eligibility for federal student aid. As a result, the report found, many of the for-profit colleges try to move students having trouble with repayment into deferral or forbearance until they are past the years the government monitors.

Via The New York Times

Ryan Randazzo at The Arizona Republic writes about the report’s mention of Arizona institutions such as University of Phoenix:

The report noted that Apollo is taking steps to improve, but said its withdrawal rate is higher than the industry average, as is the percentage of revenue spent on marketing and taken as profits. Students’ default rate on federal loans is high and rising, the report said.

Apollo Group officials said the company has spent millions of dollars to provide better learning opportunities for University of Phoenix students. Harkin, in fact, held out Apollo Group as a positive example of change in the industry. “There are also for-profit colleges that have had very serious shortcomings in the past but are beginning to make very serious changes,” he said before mentioning Apollo by name.

In 2010, the University of Phoenix began requiring new students to take a three-week orientation course, allowing those who withdraw to not incur debt to the school. “Over the last four or five years, Apollo has really thought through the student-learning life cycle,” said Mark Brenner, senior vice president of external affairs for the company.

He said that in addition to acclimating students to the curriculum, the colleges have worked to reduce student debt. ”We help students before they enroll to fully understand the obligations through their course of study, and keep loans as low as possible for them,” he said. The report quoted a 2007 training manual for Apollo recruiters, instructing them to develop a sense of urgency in potential students “so they resist the urge to wait and get excited to begin NOW.” Brenner said the industry is regulated in how it compensates recruiters and does not pay them based solely on how many students they enroll. ”It is not a high-pressure sales environment,” he said. “We are trying to help students make the right decisions.”

Via The Arizona Republic

James Hyerczyk writes on the Nasdaq community pages about the report’s impact on For-Profit College stocks:

Even before Sen. Tom Harkin (D-Iowa) concluded last month a two-year investigation of the for-profit higher education industry, the stock market appeared to already know the results. The five stocks I analyzed for this article all showed massive declines since the first of the year with some even beginning their latest plunge late last year. As an investor, one has to decide if this investigation means the end for several of these companies or better times ahead now that the problems have been identified and improvements can be made.

Via Nasdaq Community 

Peter Fenn writes on US News & World Report:

Sen. Tom Harkin, Democrat of Iowa, released a report recently on for-profit colleges that should make your hair stand on end. So many bad apples, so little time to remove them.

… I have written a number of blog posts on the for-profits, and each new revelation makes me angrier. No one disputes that efforts at nontraditional learning, online courses, helping those who are older and are raising families succeed, are laudable and should be pursued with all due speed. But the current crop of for-profits are, by and large, failing to serve these students and ripping off taxpayers.

The Washington Post’s Dylan Matthews summarized it as follows: Most students don’t graduate, the schools are really expensive, and you’re paying for it. He should have added that many in this “business” are getting fabulously wealthy soaking in taxpayer dollars. The average CEO of the publicly traded for-profits made $7.3 million in 2009…$7.3 million! If they were delivering a serious and worthwhile product and their compensation was tied to student success, that would be one thing, but far from it.

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And how do these for-profits spend their money—on education? An educational institution, one would think, should be investing in education, right? Sorry, 23 percent goes for marketing and recruitment, 20 percent is considered profit, and actual instruction for students comes to a paltry 17 percent. Don’t forget the lobbying expenses that have increased rapidly as these for-profits have come under legitimate criticism.

Via US News

Paul Fain at InsideHigherEd writes about where the for-profit colleges go from here: