July 30 U.S. for-profit colleges care more about
how much they earn than about their students and need more rules
to govern them, according to a U.S. Senate report published on
The report blamed colleges, such as Apollo Group's
University of Phoenix and Washington Post's Kaplan, for
their poor quality of education and wasting billions of dollars
of taxpayers' money.
The report - which concludes a two-year long investigation
led by Tom Harkin, chairman of the Senate Health, Education,
Labor and Pensions Committee - mostly reiterated earlier
findings, but called for Congress to take legislative action to
control the industry.
"The available evidence shows that many for-profit colleges
make decisions that prioritize their bottom line, even when
those decisions limit their students' opportunities for academic
success," the report said.
For-profit colleges, which received $32 billion in federal
aid in 2009-10 to fund student loans, frequently misuse
government funds, attract students through deceptive
advertising, and burden students with debt without providing
them with good job prospects, inv e stigations have revealed.
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The report, titled 'For profit higher education: the failure
to safeguard the federal investment and ensure student success,'
blamed Congress for not doing enough to make for-profits
accountable for taxpayer money.
"Congress has failed to adjust the unique legislative
framework that governs this sector of higher education to ensure
that the demands of shareholders and investors do not overrun
those of taxpayers and students," it said.
The report called for significant policy changes to govern
the sector, which it said were necessary to fill capacity gaps
in the U.S. education system.
It said Congress needs to examine placing more rigorous
performance-based limitations on access to federal funds and
should prevent colleges from spending the funds on marketing.
The report also suggested that colleges should be required
to provide a minimum standard of student services, including
tutoring, remediation, financial aid, and career counseling and
BMO Capital Markets analyst Jeff Silber said while the
proposals could pass the Senate, it may prove difficult to get
them passed through the Republican-controlled House of
The U.S. Department of Education had introduced rules last
year to improve the quality of these colleges, but some of these
were struck down by the courts.
The new rules introduced last year prompted a sharp fall in
profits and student enrollments at most for-profit colleges.