For-profit colleges’ oversight criticized; performance also gets a bad grade

While admitting that Congress is unlikely to do much about it in the near future, Sen. Tom Harkin on Monday released a lengthy, scathing report on the perceived evils and excesses of the for-profit college industry.

The sector is a frequent target of Mr. Harkin, Iowa Democrat and chairman of the Senate Committee on Health, Education, Labor and Pensions. He, along with many other Democrats, argue that for-profit schools -- an increasingly popular choice among older students and military veterans -- eat up a disproportionate amount of federal financial aid but have graduation and job placement rates far below those of public and private non-profit institutions.

"This report details how Congress has failed to monitor the results of this sector, or safeguard the numerous investments the taxpayers are making," Mr. Harkin said at a Capitol Hill news conference Monday afternoon. "This cannot be allowed to continue ... a wide range of Americans, including taxpayers and prospective students, are waking up to the troublesome realities of this industry."

Mr. Harkin and others have proposed a variety of fixes, including measures to prohibit for-profit schools -- such as the University of Phoenix and Strayer University -- from using federal dollars for marketing, recruiting and advertising.

About $32 billion, roughly 25 percent of the federal Department of Education's student aid budget, went to for-profits in the 2009-2010 academic year, the report says. Of the 30 for-profit companies examined in the study, 22.4 percent of all revenue -- about $4.1 billion -- went to marketing and other efforts to attract new students, according to Mr. Harkin's report.

Another 19 percent was kept as profit, while only 17.7 percent, or $3.2 billion, went to student instruction, the survey shows.

"The information is in front of us. Now we must do something about it," said Rep, Elijah E. Cummings, Maryland Democrat and his party's ranking member on the House Oversight and Government Reform Committee, who joined Mr. Harkin at Monday's event.

But when asked whether Congress could address those issues this year, Mr. Harkin sounded a pessimistic note, acknowledging that the Republican-controlled House is unlikely to go along with any additional federal regulations.

"This year, I don't think we're going to get much done," he said.

Meanwhile, the for-profit sector lashed out at Mr. Harkin and his colleagues in a written statement, arguing that their outspoken criticism is pure politics.

"The report twists the facts to fit a narrative, proving that this is nothing more than continued political attacks on private sector colleges and universities," said Steve Gunderson, a former Republican congressman from Wisconsin and president and CEO of the Association of Private Sector Colleges and Universities, which represents the industry.

"Instead of joining the conversation about ways to expand access to postsecondary education, Sen. Harkin is attacking schools that are currently providing instruction to 3.8 million students," Mr. Gunderson said.

As an example of that fact-twisting, Mr. Gunderson pointed out that, unlike public colleges, for-profits receive no direct subsidies from taxpayers. Not examining those subsidies, which usually come in the form of state aid, distorts the true nature of taxpayer support for higher education, he said.

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