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These schools profit big, on taxpayers’ tab

Congress should restrict for-profit colleges’ advertising

Dental students at Kaplan College’s Charlotte campus in a former Toys ‘R’ Us store say they were toyed with.

They were told, many say, that they could graduate in one year with a dental-assistant credential that would boost their earning power. After taking on debt to pay $18,000 in tuition and fees, they learned they could only earn a much less valuable credential.

After they complained and investigations were launched, Kaplan this year gave up its license to operate the program and paid refunds to about 200 students.

It’s not a surprising episode. While there may be exceptions, the for-profit college industry has been marred by a pattern of over-promising and under-delivering, and doing it almost entirely on the taxpayer’s dime.

Now U.S. Sen. Kay Hagan, D-N.C., Sen. Tom Harkin, D-Iowa, and others are trying to put a stop to some of this. Their utterly reasonable bill faces a tough road, however, as the industry’s lobbyists work Capitol Hill to defeat it. North Carolina has a special interest in the problem, and so our delegation should help persuade their congressional colleagues to back Hagan’s legislation.

The big for-profit education companies receive up to 90 percent of their revenue from federal student aid programs. The companies spend 30 percent or more of that on advertising and marketing, compared with three percent or less that traditional nonprofit colleges spend.

Multiple investigations have shown that they recruit using deceptive and high-pressure tactics. As the Iraq and Afghan wars wind down, they are increasingly targeting veterans or active-duty military, who are eligible for billions in benefits from the Post 9-11 GI Bill.

The Hagan-Harkin bill would ban colleges and universities from spending federal tax dollars on marketing. The for-profit companies could still advertise as they pleased, but would need to do it with private money.

It’s a win-win. It could slow the gusher of taxpayer money to these companies’ bottom lines while protecting students – and North Carolina’s many veterans and active-duty military – from clear abuses. Many of these companies spend relatively little on instruction, student support and job placement counseling. As a result, their dropout rates and student loan default rates are much higher than at traditional schools.

Former Observer reporter John Hechinger and his Bloomberg News colleagues documented how these colleges profit off the taxpayer and the jilted students who must repay federal loans. Strayer CEO Robert Silberman was paid $41.9 million one year. Peter Sperling, vice chairman of the University of Phoenix, sold $574 million of company stock over seven years.

The industry should face stricter regulation. Hagan’s bill, though, could at least end all the taxpayer-funded ads (Advertising Age said the Apollo Group, which owns the University of Phoenix, spent more on advertising than Apple in 2009, according to a Huffington Post article).

The bill has made it to the Senate floor, and should not be a partisan issue. It protects taxpayer money and helps veterans. Five Republican attorneys general were among those signing a letter in support.

North Carolina’s delegation should get on board, and stop toying with students looking to join the workforce.


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