Homeless in Arizona

Sen. Tom Harkin, D-Iowa seems to forget he and his fellow members of Congress are the CAUSE of this problem because they passed the laws allowing the Feds to give students the money. And of course these laws are probably all unconstitutional, but that is another story.

Last the "free money" that Sen. Tom Harkin and his fellow Congressmen give college students has also caused the cost of education to skyrocket.

The free money has caused colleges to jack up the cost of tuition and books because the colleges know that Uncle Sam will give the students what ever money they need.

Source

For-profit colleges bilking public, U.S. Sen. Harkin says

by Ryan Randazzo - Jul. 30, 2012 10:53 PM

The Republic | azcentral.com

A U.S. senator's examination of for-profit colleges paints them as dropout factories, where billions of dollars are squandered on financial aid and the schools' emphasis is more on attracting students than educating them. The result, according to the report: Too many students are left with bad debt and no degree.

Sen. Tom Harkin, D-Iowa, chairman of the Health, Education, Labor and Pensions Committee, released his report this week after two years probing the education industry, its profits and sometimes aggressive recruiting techniques.

Four of the 30 education companies studied are based in Arizona: Apollo Group, parent of the University of Phoenix, the nation's largest for-profit college; Grand Canyon University; Universal Technical Institute Inc.; and Anthem Education Group.

"In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and profit, and regulatory evasion and manipulation," Harkin said. "These practices are not the exception, they are the norm. They are systemic throughout the industry, with very few individual exceptions."

Taxpayers funded $32 billion in student aid in the 2009-10 year at for-profit colleges, the report said, yet more than half of the students dropped out in that year.

In response, industry officials called the report politically motivated and said it did a poor job representing how the colleges operate. "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," the Association of Private Sector Colleges and Universities said.

The report was also criticized by Republicans on the Senate committee, who acknowledged "significant problems exist at some for-profit institutions of higher education," but called the findings biased and likely inaccurate. Democrats "did not seek bipartisan input or support in this investigation," they wrote. Profit over education?

The report says that for-profit colleges spend a disproportionate amount of money on recruiting students compared with what they spend on education and on services to help people stay in school. As a result, about half of their students drop out.

Because most students at for-profit colleges use federal grants or loans, those dropouts leave with debt that, without a degree, they often find difficult to repay.

The report found that in 2009, for-profit colleges that offered public stock in their companies had an average profit margin of 19.7 percent, and spent 22.7 percent of their revenue on marketing and recruiting.

For Apollo Group Inc., more than 50 percent of revenue was taken as profit or used in marketing, leaving the rest for education, according to the report.

The majority of the company's 346,000 students nationwide study online. University of Phoenix

The report noted that Apollo is taking steps to improve, but said its withdrawal rate is higher than the industry average, as is the percentage of revenue spent on marketing and taken as profits. Students' default rate on federal loans is high and rising, the report said.

Apollo Group officials said the company has spent millions of dollars to provide better learning opportunities for University of Phoenix students.

Harkin, in fact, held out Apollo Group as a positive example of change in the industry. "There are also for-profit colleges that have had very serious shortcomings in the past but are beginning to make very serious changes," he said before mentioning Apollo by name.

In 2010, the University of Phoenix began requiring new students to take a three-week orientation course, allowing those who withdraw to not incur debt to the school.

"Over the last four or five years, Apollo has really thought through the student-learning life cycle," said Mark Brenner, senior vice president of external affairs for the company.

He said that in addition to acclimating students to the curriculum, the colleges have worked to reduce student debt.

"We help students before they enroll to fully understand the obligations through their course of study, and keep loans as low as possible for them," he said.

The report quoted a 2007 training manual for Apollo recruiters, instructing them to develop a sense of urgency in potential students "so they resist the urge to wait and get excited to begin NOW."

Brenner said the industry is regulated in how it compensates recruiters and does not pay them based solely on how many students they enroll.

"It is not a high-pressure sales environment," he said. "We are trying to help students make the right decisions." Grand Canyon University

The report criticized Grand Canyon Education Inc., which operates Grand Canyon University in Phoenix and online, for not offering adequate career-planning assistance, but noted that a smaller proportion of its students default on their debt than the average at for-profit colleges.

Grand Canyon also spent a higher-than-average percentage of its revenue on marketing in 2009, 32.6 percent.

CEO Brian Mueller said Monday that the amount spent on marketing reflects the company's transition from a nearly bankrupt private Christian university in the early 2000s to the for-profit school it is today, with a growing contingent of online students. Switching to for-profit status helped the school pay off the $20 million or so it had in debt and continue to operate.

"If you are going to compete in this environment, you are going to have to market yourself," Mueller said, adding that the marketing budget is decreasing as the college hits its targeted enrollment. The school has about 7,000 students on the ground today and about 40,000 online.

"Private universities don't get huge tax subsidies," he said. "They don't put millions into college football teams ... don't think college football is anything more than a marketing event for a university."

Mueller said the report doesn't reflect the $200 million the company has spent building out its campus, or the $80 million spent on technology in the past four years.

He acknowledged that most students get federal financial aid but disputed the assertion in the report that for-profit colleges are a burden to taxpayers. He said because they build their own campuses without help from the state, unlike traditional universities, for-profit colleges help taxpayers who would otherwise have to support more students at state schools.

"The advantage to Arizona is unbelievable because no state-tax subsidies go into any of our students," he said. "This is such an apples-to-oranges comparison. Arizona taxpayers built the downtown ASU campus." Higher marks

Harkin's report was more favorable toward Universal Technical Institute Inc. of Scottsdale, which trains auto and motorcycle mechanics. It said the amount of money the company allocates to profits and marketing are well below the industry average, and that it appears a higher share of students find jobs after graduating.

"UTI's default rates (on student debt) closely track the rates for all schools (including non-profit) and suggest that many of its students are finding jobs that allow the students to repay the loans," the report said.

It also noted that a smaller percentage of UTI students drop out.

"Although this partisan report is negative about the for-profit education as a whole, we are pleased that the results provided ... validate our higher rates of student completion and successful job-placement support services and outcomes," Bill Odell, vice president of corporate communications, said in a prepared statement.

Anthem Education Group is a privately held company based in Phoenix. It has several college and institute campuses nationwide operating as Anthem College, Anthem Career College, Anthem Institute, Morrison University and The Bryman School. It also operates Anthem College Online.

The report said Anthem suffered from sanctions from one of its accrediting bodies in 2007 and was not profitable in 2008 and 2009.

Anthem's withdrawal rate was lower than the industry average, and its percentage of revenue used in marketing was slightly lower than the average. Its student default rate on federal loans was almost even with the industry average at 21.5 percent in 2009.

One student's perspective

Many students at for-profit colleges are older and have job and family obligations, which make the flexibility of an online education appealing.

Amie Ebert, 25, of Phoenix said she has taken accounting classes for two years and is a few classes short of her degree at Grand Canyon University. But, she said, she liked Rio Salado Community College better.

"The experience overall was significantly better at Rio Salado, and I was paying $70 per credit hour vs. $500 per credit hour," she said.

Online degrees "appeal to people with a certain lifestyle," she said, which is why she has stuck it out. Taking online classes is the only way for her to care for her 5-year-old son and hold down a job.

"I've had six or seven academic advisers in a year," she said. "It's been a nightmare from day one."

Reach the reporter at ryan.randazzo@arizonarepublic.com.