Senate Report Finds That For-Profit Colleges Shortchange Taxpayers
A recent Senate report stated that for-profit colleges mismanage taxpayer money despite their reliance on federal financial aid which accounts for as much as 90% of their revenue. The report was issued by U.S. Senate Committee on Health, Education, Labor and Pensions which is chaired by Iowa Senator Tom Harkin. Senator Harkin offered these comments, “In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation. These practices are not the exception – they are the norm. They are systematic throughout the industry, with very few exceptions.”
The investigation of the for-profit colleges spanned two years and examined 30 companies. The report found that the 30 companies had an average of 22.4% of their revenue went into marketing, 19.4% to profit, and 17.7% into instruction. Chief executives were paid an average of $7.3 million, and the companies spent $8 million on lobbying in 2010 and the same amount in the first nine months alone in 2011.
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