The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

For-Profit Colleges:
The Latest Financial Scam

Aug 16, 2010

The Government Accountability Office (GAO) investigated 15 for-profit college campuses recently. They found deceptive practices by admission officials at all 15 campuses.

These included two University of Phoenix campuses, two Kaplan University campuses, and a university run by Education Management Corp, or EDMC.

Kaplan is owned by the Washington Post company, and its 212 million dollars represented 80% of the Washington Post’s operating income last year. EDMC, with an annual revenue of 2.4 billion dollars, is part-owned by Goldman-Sachs.

Clearly, “education” has become a big business. And, this take-over of education by wolves out to make a profit has the backing of the U.S. government. Last year, for-profit colleges received the proceeds from one quarter of the government’s Pell grants and Stafford loans, even though they enroll less than one-tenth of the students.

At every single campus the GAO investigated, admissions counselors lied to prospective students – about their credentials, about expected job pay, and about financial aid. At the Kaplan campuses, officials told students that Kaplan had the same accreditation as Harvard. And several campuses advised students to commit fraud on their financial aid applications.

These places are nothing but high-priced scam artists, telling students anything to get them in the door. They charge outrageous tuition, then arrange loans that the students can’t afford. Students routinely rack up debts of up to $100,000 for a degree they find is worthless. Once the colleges get paid, the students end up defaulting on their loans more often than not. Repayment rates at for-profit schools are 36%.

That’s the only thing bothering the government: that these students are defaulting and the government isn’t getting paid back.

This is what happens when education is turned over to profit-making machines. These companies make that profit by hook or by crook, taking advantage of people desperate for some way to get a leg up on getting a job.