For-Profit HE costs surpassed Non-profit HE costs for students

There has been much going on of late about the HE degree bubble and the inflationary pressures operating on this particular industrial sector. Now a study has demonstrated that the cost for a student attending a For-Profit HEI has outstripped that of both private and public Nonprofit HEIs. This is particularly concerning when one considers the debt built up and the source of much of the profit.Bloomberg is reporting based on US DOE data that the average full-time HE student paid $30,900 annually at for-profit in the 2007-2008 academic year, while the public nonprofit paid $15,600 and the average private nonprofit paid $26,600. This is worrisome for a couple of reasons.

Default rates among former students at for-profit jumped upwards to 15.2%, the biggest rise in the HE field, according to a DOE report released on May 20, 2011. Some of these same for-profit schools get as much as 90% of their revenue from federal student grants and loans. This is a sector milking a shackled cow. 90% of public funds going into a profit making venture, with 15% of the product failing to be able to pay back their loans, is too costly. This is not prudent use of public money. Rather, there should be more risk accumulation by the private sector. Let the for-profit sell its business model to business, not government.

According to the Condition of Education report, average costs after grants at four-year, for-profit colleges rose 37 percent from $22,500 in the 2003-2004 academic year, the study said. During the same period, costs at public universities rose 8.3 percent from an average of $14,400, and by 8.6 percent from an average of $24,500 at private nonprofit institutions. The Education Department is preparing to release regulations that may further restrict access to financial aid at for-profit colleges. California lawmakers passed a measure that will restrict students’ ability to get state grants to cover costs of for-profit colleges.

The other question is whether this is all a reaction to the inflationary bubble of the need to get the degree in the first place. Why do these students need four year degrees to prove that they can master vocational jobs, or that they are trainable. The liberal arts degree should be aimed at broad based intellectualism, which as many as wish to should aspire to, but it should not be a ticket to a job.