A poor government investment

For-profit colleges are producing lots of revenue but few degrees.

by Daily Editorial Board

For any institution of higher education, the highest priority should be its students and the quality of education being provided to them. The federal government sees economic value in making higher education more affordable and provides financial aid to students who otherwise might not be able to attend. According to a report given in July by the Health, Education, Labor and Pensions Committee, for-profit colleges such as Minnetonka-based Rasmussen College Inc. received $32 billion in taxpayer money in the last year, yet the majority of enrolled students end up leaving without a degree. The report also points to a business model in which more revenue is spent on things like marketing campaigns than the education itself. While some argue the free market will hold these for-profit institutions accountable, it’s unclear if the business of making money and higher education should mix. Even the most casual daytime TV watcher can learn their specific recruiting techniques, which target lower-income individuals and promote themselves as a quick and easy gateway to more lucrative careers. While the true value of a degree from many for-profit institutions is still a mystery, they are likely to continue to see a steady stream of revenue as the demand for higher education continues to grow. According to the Chronicle of Higher Education, the average salary for CEOs of for-profit colleges in 2009 was $7.3 million. Because for-profit colleges receive up to 90 percent of their revenue from federal financial aid, there must be an increase in regulation, accountability and oversight to ensure taxpayer-backed loans are not going to waste in a marketing scheme. If the American workforce is to remain competitive in a global market, we must ensure good returns on our federal education investments.