Cracks in the For-Profit College Shell Game

Finally, some government regulation that works

Pity the poor Washington Post Co., which on Friday released an earning report showing a heady drop in profits, due in part to the tanking of its Kaplan for-profit education unit. Astonishingly, new federal regulations meant to keep Kaplan University and its ilk from vigorously recruiting poor and disadvantaged students and enrolling them in order to garner federally subsidized student loans while failing to prepare them for meaningful careers are actually working. Forced by the regulations to be more selective in recruiting, Kaplan’s for-profit colleges have seen enrollments plunge by 30 percent for the third quarter; revenues were down 27 percent. Operating income went from $106 million for the same time period a year ago to a measly $18 million—an outcome that should make all of us except Kaplan investors stand up and shout hooray.

For-profit colleges had a really sweet deal going for a while there. Conscienceless recruiting methods had them preying on society’s most vulnerable victims. The statistics are startling: Nearly half of all for-profit student loans are in default, compared to 28 percent at public and nonprofit schools. For-profit colleges cost twice as much as public institutions, though they spend only a third of what the public schools do on educating their students. And a whopping 92 percent of enrollees take out loans, compared to 27 percent of students at public universities and 60 percent at private nonprofit schools. Blacks and Latinos make up nearly half of all students at the for-profit schools. And only one in five for-profit students graduates in six years, compared to more than half of those at public schools.

Believe it or not, for-profits argue that they’re serving minorities and the poor by making college educations available to those who otherwise wouldn’t get them. I guess that’s why ex-Pennsylvania governor and Philly mayor Ed Rendell is a shill for a leading for-profit-college lobbying group, the Coalition for Educational Success, that claims for-profit schools are being “demonized” and says that “millions of students still seek us out.” Well, yeah, if you define “seeking out” as falling prey to deluges of advertising, bounties paid to recruiters, and practices of which one former recruiter said, “You’d probe to find a weakness. You basically take all that failure and all those bad decisions, and you spin it around and put it right back in their face as guilt, to go to this shitty university and run up all of this debt.”

What happened with for-profit colleges is exactly what cynics opposed to school vouchers and for-profit lower-education schools fear will result if Governor Corbett’s voucher plan is passed: The most vulnerable among us—the poor, the uneducated, the exploitable—will be taken advantage of by schemers who have no consciences or ethics. That for once, Congress managed to step in and pass regulations that made the for-profits’ profits tumble is heartening. But we should be smart enough to learn from the experience and not let history repeat itself. Look at who stood with Corbett last month as he announced his voucher scheme: a dozen legislators, all Republican, none from Philadelphia, which is home to 91 of the state’s 144 poorest-performing schools. Those kids down at Dilworth Plaza are right: It’s all about the 99 percent.