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Democrat Tom Harkin criticized for-profit colleges in a report released Monday. 

By EMILY DERUY

The majority of students who enrolled in for-profit colleges in 2008-9 left without a degree, half of those within four months, according to a new report by a top Senate Democrat.

“They create a churn of students,” Sen. Tom Harkin (Iowa), who is chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said during a press conference Monday afternoon. “They keep recruiting and marketing — aggressive marketing all the time — to get students.” 

The report is the most recent episode in a drawn-out debate over whether for-profit higher education provides a service to students. Democrats have called for more regulation to prevent for-profit colleges from consuming billions of tax dollars for student financial aid while leaving students deep in debt and with degrees that many say aren’t worth much in the job market. According to the report, taxpayers spent $32 billion in the most recent year on companies that operate for-profit colleges (in the form of federal financial aid). 

Republicans have argued that such colleges reduce overcrowding in community colleges and provide training to many who would not otherwise attend college. The report has drawn criticism from Republicans on the committee who say it should also include abuses by non-profit colleges.

The leading trade group of for-profit college issued a scathing statement on the report. 

“Unfortunately, Senator Harkin’s report continues in the tradition of ideology overriding reality. The report twists the facts to fit a narrative, proving that this is nothing more than continued political attacks on private sector colleges and universities,” said former Rep. Steve Gunderson (R-Wis.), the president and chief executive officer of the Association of Private Sector Colleges and Universities.

The for-profit college industry was made up of small independent schools offering vocational training in fields such as air-conditioning repair and cosmetology until the late 1990s. After that, however, enrollment more than tripled, to about 2.4 million students, and three-quarters are at colleges owned by publicly-traded companies and private-equity firms. 

The report indicates that enrolling students and securing their federal financial aid is the main goal of such colleges. In 2010, the colleges studied had a total of 32,496 recruiters, compared with 3,512 career-service employees. And only 17.7 percent of revenue went to actual teaching. 

A former director of recruitment for ITT Technical Institute, a for-profit college, who attended the conference echoed that statement. 

She worked for the company for seven years in Southern California, and said colleagues tossed around terms like “asses in classes” and “kiss ‘em and sit ‘em.” Her company rewarded recruiters who signed up the most students, and punished those who failed to “close the sale,” she alleged. 

“Evaluations were based solely on the number of students recruited and starting school,” she said at the conference, adding that she was taught to “demoralize potential applicants by discussing their life’s shortcomings in order to have them enroll where their life would improve.” 

Such techniques were called “pain funnels” and “pain puzzles” and they were meant to convince vulnerable students that if they spent enough money on school their problems would be solved, she said. 

According to the former director of recruitment, the company even targeted parolees, encouraging applicants with felony records who thought they had insider knowledge of the criminal justice process to enroll in the criminal justice program with the knowledge that few of them would be hired. 

As the Department of Education pushed for new regulations on the industry, the schools spent more money on lobbying — about $8 million in 2010, according to the report. 

Most of the colleges’ revenue comes from taxpayers through the Department of Education. Federal regulations require that at least 10 percent of revenue come from other sources, and because veterans’ benefits count toward fulfilling that requirement even though they come from the federal government, the colleges target students from the military, even sending recruiters to veterans hospitals and wounded warriors centers, said the report. 

The Apollo Group, which runs the University of Phoenix, received $1.15 billion in Pell Grants in 2010. However, less than one-third of Apollo’s associate-degree students actually stay long enough to earn their degree. 

A spokesman for the group, Ryan Rauzon, defended the company, saying it started requiring students entering programs with under a certain number of credit hours to attend a free three-week orientation detailing what will be required of them in terms of time and effort and teaching financial literacy. He added that the college works with employers to develop coursework that will be useful in the field, and provides networking opportunities through a vast alumni network. 

The report also found that the associate-degree and certificate programs at for-profit colleges cost about four times as much as community colleges and public universities. 

So why attend a for-profit college? Who would select one? 

According to the report, the recruiters are often not upfront about all of the costs, and they target nontraditional students “who are often not familiar with traditional higher education and may be facing difficult circumstances in their lives. Recruiting materials indicate that at some for-profit colleges, admission representatives were trained to locate and push on the pain in students’ lives.” 

“They are holding down jobs, they’re older,” Harkin said during the conference. “They come from poor backgrounds, they’re maybe the first in their family to ever attend college.” 

According to an August 2011 report by the Pew Hispanic Center, college-age Hispanics accounted for 1.8 million, or 15 percent, of the overall enrollment of 12.2 million young adults in two- or four-year colleges in 2010. While this number has risen recently, the number of Hispanics with a four-year degree remains low. Among native-born Hispanics 25- to 29-year olds, 20 percent had completed a bachelor’s degree. 

Some of this has to do with difficulty paying for college, the need to work either full- or part-time while attending school, and other obligations, making for-profit colleges sound appealing with their flexible schedules and online learning offerings. 

Rauzon, the University of Phoenix spokesman, said that Latino students, who made up 7.5 percent of the University of Phoenix’ 2009 fall enrollment numbers, and 11.2 percent nationally the same year, especially stand to benefit from the flexibility of for-profit schools. 

Many of the colleges offer courses online, which appeals to students trying to work and go to school simultaneously. Some also tout tailored programs that allow students to stop and start classes quickly, making higher education seem attainable to students deterred by the time commitment traditional universities often require. 

But the schools, said Harkin, are “marketing machines,” adept at pulling in students and sucking them, and their wallets, dry. 

Overcrowding at community colleges has also played a role. The report acknowledges that “The existing capacity of non-profit and public higher education is insufficient to satisfy the growing demand for higher education, particularly in an era of drastic cutbacks in state funding for higher education.” 

“If that’s who they’re gong to recruit,” Harkin said, referring to disadvantaged, minority students, “they have to build into the system different support systems” such as mentoring and tutoring. 

But according to the report, the schools are laser-focused on profits. 

“Publicly traded companies operating for-profit colleges had an average profit margin of 19.7 percent, generated a total of $3.2 billion in pre-tax profit and paid an average of $7.3 million to their chief executive officers in 2009.” 

Nearly all of the students who attend for-profit colleges take out loans, and close to one in four students defaults on his or her federal student loans within 3 years of leaving school. Only about 10 percent of American higher-education students enroll in for-profit colleges, but they account for nearly half of all student loan defaults. 

The report argues that these students are not given adequate support, and the true cost of attending is not made clear at the outset. 

The Harkin report calls for more tracking of student outcomes, including graduation and job placement rates, and more protections for students, including providing minimum services like tutoring and career counseling. 

“We must ensure that students and taxpayers are seeing a return,” Harkin said. 

(Photo: Screenshot, harkin.senate.gov)