Test For-Profit Education; Weigh Value of State Aid

It's encouraging that some lawmakers want to review Kentucky's support of for-profit colleges — not to pick on for-profit colleges, but because the legislature has a duty to make sure taxpayers are getting the most value possible from state spending on education.

Kentucky is channeling a big chunk of its student financial aid — $97 million since 1999 — to for-profit schools.

The Herald-Leader's John Cheves recently reported that nearly 8 percent of need-based student aid from the state is going to for-profit colleges. That's twice the national average. Only four states send a bigger portion of their need-based student aid to the for-profit education industry.

For almost 15 years, one of Kentucky's top policy goals has been to raise to the national average the percent of college graduates in its workforce.

That's the goal against which the state's spending on for-profit colleges should be measured.
Kentucky has always had more qualified applicants for need-based financial aid than it's had money to educate deserving Kentuckians.

Last year, Kentucky turned away 76,025 eligible applicants for need-based financial aid, while less than half that number — 37,836 students — won $59 million through the College Access Program.

CAP awards financial aid on a first-come, first-served basis, and the for-profit colleges are geared to marketing themselves to prospective students and helping students apply early for financial aid.

The same amount of financial aid will educate more students in community colleges, where the tuition is much lower, than at for-profit schools.

So, to gauge whether the state is getting good value from state dollars spent at for-profit colleges, lawmakers will need solid information about comparative graduation rates, graduates' post-college employment and their college-loan debt loads.

The for-profit education industry argues that it's a better deal for taxpayers because public colleges and universities require massive subsidies from the state's General Fund.

In return for that General Fund support, though, the taxpaying public gets valuable assets in the form of university and community college campuses and the human capital those places represent.

The tax dollars that go to for-profit schools flow to the bottom lines of hedge funds and corporations.

The largest for-profit recipient of state aid in Kentucky has been the statewide Sullivan University System. According to court records in Jefferson County, Sullivan during the past 10 years has distributed $77 million to its two co-owners and to pay related corporate and personal taxes.

The $77 million does not include the co-owners' salaries, bonuses and other benefits.

Compared to that, the nation's highest-paid public university president, Ohio State's Gordon Gee, looks cheap at just $1.8 million a year.


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