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| Northeastern University. (Photo: Kaplan International Colleges) |
By Danny Weil, Truthout | News Analysis
The for-profit college and university business is a $30-billion-dollar industry in the United States. According to investigative journalist Daniel Golden, in the last decade, the for-profit colleges and universities have tripled enrollment and recorded profits of $26 billion.(1)
For-profit colleges have been paying lavish and grotesquely huge compensation to executives, both former and current, using money from student loans and government grants for decades. For-profit college executive compensation is currently under scrutiny by Congress because nearly all revenues that constitute the exorbitant and scurrilous executive pay packages come from federal grants, such as Pell Grants and loans, and such as Stafford Loans under the Title IV program. These grants and loans are tax monies collected by the government; they are then turned into subsidies for the for-profit educational industry. Double-digit annual growth in revenues and excessive executive compensation coupled with deceptive marketing, high tuition, low graduation rates and high loan default rates have driven a climate and culture of student exploitation, misappropriation of public monies and political corruption.
The average three-year default rate has been estimated at 22.4 percent for for-profit colleges, 6.7 percent at private nonprofit colleges and 9.7 percent at public colleges.(2) ProPublica, an online journalistic source, reported that the Department of Education (DOE) indicated that over 40 percent of the money lent to students at for-profit institutions would be in default at some point over the life of the loans. READ MORE
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