HUFFINGTON POST: College Owner: Greed Is Good
Career College Central Summary:
To say that education for profit is just about "tax status" – as the industry lobbyists frequently assert – is like saying the distinguishing difference between vodka and water is the calories. The effect on self-control is more important, in both cases.
Federal financial aid makes for-profit colleges more predatory. As an owner, if I enroll 7,500 low-income students–telling them that Uncle Sam is taking care of it, they do not need to think about the price–then I can bring in $100 million from the government. The more I focus on recruiting the poor, the less I need to spend on quality. In 2009 the largest publicly-traded companies brought in nearly $12 billion from the U.S. Department of Education while spending only 23 percent on instruction.
Insiders know it's a problem. The CEO of Kaplan, Inc., admits that he and his fellow executives are constantly tempted to "rev up the recruitment engine" and "reduce investment in educational outcomes" to deliver "a dramatic return on investment." A former University of Phoenix president recently called on for-profit colleges to "stop yielding the future to short-term investor interests." John D. Murphy, the co-founder, laments Phoenix's plunge in quality, calling it "a cautionary tale of what can happen when the financial values of the corporate world are applied to the provision of postsecondary education."
Murphy blames inadequate government oversight of for-profit colleges. Carl Barney and Arthur Keiser, meanwhile, are escaping what meager oversight there is by posing, cynically and dishonestly, as valid nonprofit organizations. There is no reason to wait for an IRS audit: the U.S. Secretary of Education should immediately cut off their access to government financing.
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