at this point in time, the US Senate HELP committee and the US Department of Education are considering various actions to try and better manage the enormous amount of funding that goes to student loans and grants. we would like to suggest better transparency for ALL institutions that collect these funds – including privately-held for-profit education institutions.
according to an article from Andy Kroll on Mother Jones, for-profit education institutions represent almost 25% of our education loans and grants while only educating only 10% of our students. this alone is not the reason for the scrutiny as a number of these institutions legitimately argue that they have lower admission standards to extend educational opportunities to those less fortunate and, thus, need more aid.
the problem is that we have no mechanism or leverage to ensure that they are actually educating this group. as Daniel Golden has demonstrated in a number of articles, including this one about recruiting the homeless, this argument leaves a huge loophole for profit seekers to simply admit anyone to collect our tax dollars and fill the pockets of its investors.
but it gets worse. lets consider shades of gray. according to an article in the LA Times by Julia Love, the average publicly traded for-profit school grew profits to “$229 million in 2009, up from $150 million the year before.” however, while the publicly traded for-profit schools admittedly access public funds on a larger scale, the profits that are created are at least available through the purchase of shares in the organization. and while this is not getting back to the lower class that it leveraged to collect the funds, it is available to anyone with a 401k or any investment tool in his or her portfolio.
in privately held firms like american career college and west coast university in LA, things are completely different. these firms take from over 5,000 or 6,000 students per year and share the proceeds with 50 people with a vast majority going to one individual. while this alone is no crime – it is capitalism – someone has to ensure that we are getting the benefits we are contracting. the fact that these books are closed and not available for public review leaves the system ripe for manipulation and malfeasance. surrounding this are rumors of land development, family excursions, extra houses, and boats purchased by the education organization – how does that help educate the students of the greater Los Angeles area?
you say “the accrediting bodies are there for this”? they are in bed with the schools they govern. just like the recently uncovered challenges found with MMS in the oil industry, the same organization that collects the fees of the schools are the same organizations that regulate them. there is no way they are going to cut off their nose to spite their face. they need the revenue to pay for their existence. a simple example of this was a request for placement rates by our group to ABHES, the accrediting body of american career college and a number of other health care educators. they referred us back to the schools. how do we even know if they are checking that these are accurate or that we are receiving accurate information? isn’t this the sole function of this organization? it is a mess.
if sunlight is the best disinfectant, i say we shine it here. it is by no means radical and it makes everyone responsible – a simple quid pro quo. you want our money, we see how you are spending our money. if we like it, then you can have it. if not, it does not keep them from being educators – they simply need to find a way through private loans or through performance like any other private institution.
or they can educate without the for-profit part of the business. lets see how many Michael Clifford’s stay in the industry after that. we think we could make a pretty tidy profit betting that they would get out as quickly as they came in.