I teach (primarily) in a non-subsidized graduate program; in other words, our tuition includes no state subsidy. I have doubts about whether or not we should continue to call the University of Washington a “public” institution, since less than 50 percent of undergraduate tuition is subsidized by public dollars, if I remember my faculty briefings correctly.
But we are not a private for-profit educational institution.
It turns out that private for-profit educational institutions — a growth industry — may not be the solution to higher education challenges (access to seats). In May, The Economist noted that a trader who sells short “warned investors that for-profit colleges could echo subprime mortgages.”
The Apollo Group’s University of Phoenix, the biggest proprietary college, now enrolls 476,500 students. With more students comes more public money. In 2008-09 $24 billion in Pell grants and federal loans went to for-profit colleges.
Looking at the numbers:
- In 2008, private secondary education institutions accounted for 7.7% of all secondary enrollment.
- For the 2008-2009 period, those institutions accounted for almost 1-in-4 federal dollars ($26.5 billion in loans and Pell grants last year).
- Students at for-profit institutions are more likely to default on those loans, according to the GAO: 1-in-4 versus 1-in-10.
- In 2009, the average yearly tuition at a for-profit institution was about $14,000 versus about $2,500 at a community college.
Given that dismal data, today the Obama Administration released new guidelines for for-profit institutions:
Starting in the 2012-13 academic year, for-profit colleges … [would need to] show that at least 45 percent of former students are paying down the principal on their federal loans … [or] show that graduates are paying no more than one-fifth of their discretionary income, or 8 percent of total income, toward student debt.
The rules are slated to go into effect for 2012-13. “If the rules were in effect today, programs enrolling about 8 percent of the students at for-profit colleges nationwide would lose eligibility,” according to Bloomberg. There are three tiers of eligibility; the weakest tier (schools with the worst record) would have access to federal funds dry up.
In June, Education announced other rules: one would require “schools to give prospective students their graduation and job placement rates.”
Some for-profit secondary education is a glorified trade school. For example, Mike’s brother is enrolled in an Arizona one that will reportedly equip him with an electrician’s license upon graduation. I don’t recall the total tuition fee, but I was flabbergasted at the sum when he signed up for the program last fall.
