Government should stop supporting for-profit companies (opinion)

The federal government should at least do no harm when it comes to helping students earn a college degree. Instead, through student loans, our tax dollars are used to support institutions that are more predatory than for-profit educational institutions.

These institutions charge their mostly low-income students so much that the involvement of the federal government amounts to exploitation. Too often, these institutions aim to make money before their duty to educate students. Their aggressive sales tactics convince vulnerable people to go into debt for a degree that is less usable — and more expensive — than an equivalent degree from a community college or four-year institution.

That is, if students graduate. The fact is, most don’t.

Only 30.7 percent students entering four-year for-profit institutions graduate in six years. Their education is often a broken promise. In contrast, 48.7% of students in public four-year institutions and 58.5% of students in private non-profit four-year institutions graduate in six years. The numbers are even worse for Pell Grant recipients entering four-year for-profit institutions, with 27.9% graduating within six years.

These dismal results are more troubling because many of these students are low-income or first-generation, often from families with little or no college experience.

For-profit colleges disproportionately enroll recipients of federal grants, including Pell Grants. Of all students attending four-year for-profit institutions in 2019-20, 69.2% were federal grant recipients. That’s about 20 percentage points higher than the proportion of students receiving federal scholarships at four-year public institutions.

Marketing ploys convince students with fewer resources or little family support to attend for-profit institutions. They see the promised education as the key to entering the middle class. Yet too often all these students get from this experience is mind-boggling debt that makes them financially worse, not better.

Students at for-profit four-year institutions borrow significantly more than those at non-profit four-year institutions. About 87% of students who earned a bachelor’s degree in 2015-2016 at for-profit colleges took out student loans, compared to 66% at public institutions; among borrowers from for-profit institutions, the borrowed medium for bachelor’s degree graduates was $44,610, compared to $34,430 in private nonprofits and $29,070 in public nonprofits.

The cost is breathtaking. Too many of these students go into huge debt for a substandard education.

Yet our government continues to allow 704 for-profit institutions in our country to administer student loans to 787 811 students who attend.

Our tax money should not be used in this way. The federal government should stop providing student loans to attend for-profit colleges. These institutions do not provide a public service, and their results and degree data have proven that the government should not support expensive speculative higher education institutions when student lives are at stake. At a minimum, the government should develop stricter laws and regulations based on the success of the few successful for-profit institutions.

For-profit organizations will oppose the end of student loans for their institutions. They will say they are market-driven, more flexible than traditional colleges, and provide students with hands-on classroom learning to enable them to work in the real world. They can even say that their market-based approach will inspire creativity, efficiency and effectiveness to satisfy shareholders and consumers.

But if they’re so market-driven and proud of their role in our capitalist system, they shouldn’t need the federal government to continue supporting them with student loans. They should not rely on making money by trapping students in debt. They should be completely market driven and make money from the strength of their product, like every other company in America. As we all know, if your product fails, your business will shut down. Let these for-profit colleges stand or fail on their own merits, without help from the federal government.

The federal government has taken steps to forgive student loan debt for students who attended former for-profit institutions. However, maintaining grants to allow other for-profit institutions to continue to drop off students is an insult to taxpayers. It is also a disservice to students who only want to improve through education.

It is time for the government to stand with the students, not those who exploit them.

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