BY SHARON BASKIND-WING

For-profit colleges are not deserving of your tax dollars. By now, most of us have heard of the many controversies surrounding these for-profit institutions: that they don’t deliver on employment promises, have poorly qualified faculty, are overpriced, spend too much on a racist recruitment process, and create more debt than their graduates could ever afford to repay. The freedom to commit such abuses expanded during the Trump and DeVos years, leaving a legacy of weakened regulations. As the Biden administration seeks to make education more affordable and inclusive through increased investment in community colleges and Minority Serving Institutions, the extent of the for-profit crisis threatens any potential gains. Federal regulations on the use of such funds are not—and have never been—enough to prevent their abuse. It’s time to make for-profit colleges ineligible for federal student loans.

Though seemingly a model of free-market competition, accredited for-profit institutions generally depend upon federal student aid for 75 percent or more of their revenue. Federal subsidies to for-profit colleges date back at least to the passing of a 1945 amendment to the 1944 Servicemen’s Readjustment Act, better known as the GI Bill, which allowed veterans to use federal benefits towards correspondence colleges. While the GI Bill is popularly regarded as successful in terms of the large numbers of veterans it encouraged to go to college, it also marked the beginning of a new era of educational fraud. In the five years following the signing of the GI Bill, the number of for-profit schools tripled, with the majority of veterans attending them rather than traditional four-year colleges and universities. Unfortunately, many of these schools had more in mind than helping veterans rejoin productive society. They set tuitions at the highest amount possible that the Veteran’s Affairs (VA) would pay, falsified attendance data, overcharged for supplies, and generally tried to milk the government for every cent they could get away with. A 1948 article in Collier’s Weekly details the exploits of the National Chick Sexing School in Illinois, which accepted VA payments in the amount of $500 plus seven months’ room-and-board allowance to train veterans in how—you guessed it—to figure out the sex of chicks. Though traditionally this skill has been taught simply by working alongside a specialist, these students were still not qualified for their vocation upon graduation, as “’the student still requires a year or two in the field before he becomes an expert chicken sexer,’” according to the professor on record. And, as you might have also guessed, demand for professional chicken sexers was not able to meet the supply of these highly trained graduates.  

The scandals didn’t end in the 1950s but became cyclical, with new governmental regulations chasing the latest abuses over decades. In the 1974, ITT Technical Institute was the subject of an investigation that exposed its exploitative use of student loans. ITT provided an education that many students would come to regret after finding poor quality instruction, equipment, faculty, and administrators—sometimes causing them to drop out—while others graduated only to be disappointed by inadequate job placements. While new federal regulations enacted over the next few decades attempted to end such abuses, repeals, deregulation, and shifting strategies on the part of for-profits meant that no real change could take root. ITT, not surprisingly, left its students with mountains of debt after it went bankrupt in 2017 among similar accusations of predatory recruiting and lending practices. Other for-profit institutions have produced equally jarring consequences. Melissa Dalmier, a single mother of three, was one of more than 1,500 University of Phoenix students enrolled in the teacher’s-aide program who defaulted on their loans in 2009–10, five times as many as had graduated in two years. Of those who did graduate, median earnings were just $15,331.

Stories of for-profit college victims have been well-documented, yet we must recognize that not all students have been equally targeted. Part of the appeal of for-profit colleges—that they offer online degrees and flexible schedules for working students—is also what makes them particularly dangerous to nontraditional students, first-generation college students, single parents, and Black and Latinx individuals in disproportionate numbers. Intentionally targeting these populations, who tend to have lower incomes, with TV commercials on stations such as BET (Black Entertainment Television), promising big yachts and expensive cars, is unethical at best. Yet these tactics have had success. Black and Latinx students, for example, represent less than one-third of all college students but make up more than half of those who attend for-profit colleges. Almost 60 percent of Black students who took on student debt in 2004 to attend for-profit colleges defaulted on their loans by 2016, compared with 36 percent of white students. While for-profit institutions claim to fill a gap in the market for flexible, job-oriented education, they in actuality have left more people of color and nontraditional students in worse shape than when they started: shockingly, as a 2018 Harvard Law Review Blog post noted, “those who graduate from a for-profit college do worse in the labor market than they otherwise would with only a high school education,” after paying 30-40 percent more than the same credential would cost at a nonprofit public institution.

Exploitation by for-profit institutions is not new—it’s not even creative anymore. While chicken sexing is no longer a draw, for decades these colleges and technical schools have been using the same kinds of tactics of overpromising and underdelivering to profit off those who can least afford it. In recent years, several states have proposed their own bills to tighten regulations in response to the poor federal oversight during the Trump years, while Senators Warren and Durbin have made their own push at the federal level. But we need more than that. Federal student aid, whether it be from the GI Bill or Pell Grants, is intended to help potential students improve their lives. Allowing individuals to use these funds on programs that have demonstrated again and again that they will not deliver on their promises is harmful, ignorant, and irresponsible. Especially now that COVID-19 safety protocols have increased the capacity of many colleges and universities to provide more flexible online offerings, for-profit institutions can no longer claim exceptionality in this area. By definition, for-profit colleges and institutes can keep any tuition funds that they don’t spend, incentivizing the charging of higher tuition and the cutting of educational costs. Education is supposed to be the great equalizer—but it never will be when profit, not learning, is the bottom line.

Guest blogger Sharon Baskind-Wing is a writer and researcher who has spent her career working in nonprofit and university settings.