Report on "For-Profit" Colleges

Chairman Tom Harkin and the Senate Health, Education, Labor, and Pensions Committee released their report on for-profit colleges (the full report can be downloaded here).  Dylan Matthews at the Washington Post provides us with a nice summary of key findings (see here).  Some of these findings (with Matthews comments) are as follows:

• Graduation rates are abysmal:  "The report finds that 62.9 percent of students who enrolled in an associate’s degree program at a for-profit college in the 2008-09 school year left before finishing their degree, and that the median student lasted only four months. A smaller majority — 54.3 percent – left bachelor’s programs before graduating, and 38.5 percent left certificate programs"
• The tuition is very expensive:   "Bachelor’s programs cost an average of 20 percent more, and associate’s programs an average of quadruple public school tuition."
• Most of the revenue collected by for-profit colleges is supplied by the government:   "In the 2009-2010 school year, $7.5 billion in Pell Grants, 50 percent of Defense Department education aid, and 37 percent of GI bill aid went to for-profits, money that, because of the programs’ much higher costs, financed significantly less education than it would have if directly at public or private non-profit institutions."  In fact, the report shows that on average about 86% of the revenue collected by for-profit colleges is composed of Federal dollars.

One other interesting finding of the report is:   "Actual instruction made up a paltry 17.2 percent of expenses."  On this front, many public and not-for-profit private colleges don't fair much better.  The trend in higher education in the U.S. shows an increasing amount of the cost of operating the institution goes for costs other than instruction (and the percent of the total that is instruction is decreasing).