By Yaël Ossowski | Florida Watchdog
ST PETERSBURG — Democratic leaders in the U.S. Senate are blasting private colleges for high tuition rates and uncertain job prospects for students, but some researchers have countered that the problems are emblematic of all higher education, a result of virtuously limitless federal subsidies.
A report by the Senate Committee on Health, Education, Labor and Pensions, chaired by U.S. Sen. Tom Harkin, D-Iowa, made the case for more stringent regulation and scrutiny of so called ‘for-profit’ colleges. The report also calls for denying federally guaranteed loans for students attending those schools in some cases. The report was made public July 29.
“For-profit colleges ask students with modest financial resources to take a big risk by enrolling in high-tuition schools,” states the report in its executive summary.
“When students withdraw, as hundreds of thousands do each year, they are left with high monthly payments but without a commensurate increase in earning power from new training and skills.”
The report notes that schools run by both companies take in more than 75 percent of their revenue from subsidized loans from the federal government, provided to students
According to the Department of Education, four-year public universities raised their tuition more than 15 percent between 2008-2010, keeping on par with private universities and pointing toward a larger trend of general price inflation in the nation’s educational institutions.
“The larger critique is how much college subsidies have inflated college prices,” said Lisa Snell, director of education Reason Foundation, a nonprofit free-market think tank in Los Angeles. “Everybody rent-seeks when there is plenty of available money, and especially when it comes guaranteed from the federal government.
“As long as universities are shielded from competition by government subsidies, it means that they have no incentive to seek lower cost alternatives,” Snell told Florida Watchdog.
She pointed to a 2010 study released by Jay Greene, director of the Department of Education Reform at the University of Arkansas, and a fellow at the Goldwater Institute, a nonprofit free-market think tank based in Phoenix, Ariz., that released the report.
The study, “Administrative Bloat at American Universities,” focuses on an oft-forgotten culprit in raising tuition costs: the growth of non-educational administrative staff.
Greene notes that in the past two decades, spending on administrative staff has risen 61 percent — while instructional spending per student rose only 39 percent.
“Higher education is due for performance-based ratings, but there is no motivation at this point. The current debate doesn’t actually examine the problem,” said Snell. “Competition and technology — especially the increasing role of virtual education — are our best hope.”
Other experts point out that the problems outlined by the Democratic Senate report can be attributed to colleges across the board — private or public.
“The growing problem of student-loan debt has led to a questioning of the notion that investing large sums of money in a college education is worthwhile for every student emerging from the nation’s high schools,” said Robert Sanchez, director of public policy at the James Madison Institute, a nonprofit free-market think tank in Tallahassee.
He told Florida Watchdog that students who aren’t successful in traditional education have been able to receive certificates through private colleges.
“One advantage for this subgroup of students is that many of the proprietary (for profit) schools ‘cut to the chase’ by providing career-specific training without requiring students to take traditional college courses in the liberal arts and the humanities,” Sanchez said.
While Sanchez said he believes that most institutions serve a purpose in the community, he does admit that several schools may have set traps aided by the unlimited subsidies guaranteed by the federal government.
“In any field, there may be bad actors. Yet for the proprietary career schools as well as those community colleges and historically black colleges and universities, there are extenuating circumstances that help to explain the higher default rates on student loans,” said Sanchez.
“But whether in education or health care, it is easier to be oblivious to the true costs of a service if you are paying for it with other people’s money—or figuratively putting on a credit card.”
Representatives from Education America could not be reached and a spokeswoman from Keiser University declined to comment because she had not read the report.