"For-profit colleges, for instance, give taxpayers a net gain of more than $6,000 per bachelors degree. For the same degree, equally selective, private not-for-profit schools post a net taxpayer cost of $8,000; however, comparable state schools are at a net cost of more than $60,000 per degree."
What planet was this research done on? The for-profit universities have earned massive levels of revenue FROM THE PUBLIC through the grants and loans subsidized from federal funding. They have virtually duplicated the sub-prime mortgage fiasco in tapping into monies that they are protected from having to risk by letting government subsidies "insure" these revenues. In the case of loans, the terms are such that students who default, and there is a distressingly large majority of students who do default. This owes to the low-earning jobs characteristic of grads from these schools because they are targeting low-income populations, to the point of recruiting in homeless shelters! Students can't declare bankruptcy from these loans which follow them through life and jeopardize their credit ratings, drag on the economy, etc. Meantime the schools are charging tuitions significantly higher than in the public sector while posturing as filling a niche no one else cares for. Read Daniel Golden's investigative series on for-profit schools as published in Bloomberg News.
Democracy sees society members as not made in the image of the marketplace, a commodity to be traded in, but as beings whose dignity and whose "returns" have to be reckoned on a different calculus than mere materialism measured in bucks.
When it comes to colleges, is there an “education bubble,” with students borrowing to the hilt, for uncertain returns on their investments? What about all that government money pouring in to support higher education as well? A new study finds the payback has been mixed.
Harvard U library. Credit: Wikipedia
However, as a new study released by the American Institutes for Research (AIR) and Nexus Research and Policy Center points out, not enough attention is being paid to how well or how badly taxpayers are being served both by the institutions they are helping to fund and by the students they have helped to graduate.
The AIR/Nexus study looked at data to determine “who wins and who pays” across the full spectrum of higher education institutions in the United States, combining information on “institutional control” (public, private not-for-profit, or private for-profit college or university) and selectivity (ranging from open admission to most selective.
The study found that individual students make out well as a result of their investments in obtaining a bachelor’s degree. From the students’ viewpoint, the lifetime return pays off in the hundreds of thousands of dollars:
“In terms of wages, a bachelor’s degree, whether from a public, a not-for-profit, or a for-profit institution, pays a handsome net financial reward in comparison to a high school diploma—a reward that over a lifetime can vary, on average, from more than $230,000 at less selective not-for-profit colleges (such as the University of Bridgeport in Connecticut and Dowling College in New York) to well over $500,000 at the most competitive public or not-for-profit institutions (such as the University of California at Los Angeles and Amherst College).”
However, the return to the taxpayer is less than certain:
“Taxpayers benefit from the higher state and federal income taxes paid on the higher salaries earned by college graduates, varying from $60,000 in additional taxes paid over the work life of a graduate from a less selective public institution to almost $150,000 in additional income taxes paid over the work life of a graduate from the most selective not-for-profit colleges or universities. However, taxpayers also subsidize the education that students receive in most colleges and universities. This takes the form mostly of direct state appropriations for public universities and tax exemptions for not-for-profit ones. Taxpayers subsidize bachelor’s degrees in nearly all not-for-profit institutions at around $8,000 per degree. In public institutions, the taxpayer investment is more than $60,000. Taxpayer subsidies increase dramatically among the most selective institutions, from almost $60,000 in the most selective not-for-profit institutions to well over $100,000 in the most selective public institutions.
For-profit colleges, for instance, give taxpayers a net gain of more than $6,000 per bachelor’s degree. For the same degree, equally selective, private not-for-profit schools post a net taxpayer cost of $8,000; however, comparable state schools are at a net cost of more than $60,000 per degree.
The report urges states and government agencies to target funding to the neediest students, and base expenditures on student performance, rather than enrollment.”Given the financial return to graduates for each completed bachelor’s degree and the high cost of dropouts, the nation must focus its resources and policies on increasing degree completions and re-enrollments. One way to do this is for states to make a substantial share of their appropriations based on performance rather than enrollment.”
The report’s authors also conclude that government will see better value from supporting lower-cost, nontraditional college such as for-profit institutions. “Given that the research on cost shows that not-for profit and for-profit institutions are the best deal for taxpayers, to lower cost and increase capacity, the states and the Federal Government should support high-quality, nontraditional providers.”
Government agencies are urged to to modify their regulations so that these “education options…that operate across state lines, on-line institutions, and competency based institutions” can “lower cost to states and the taxpayer.” While some for-profit colleges and universities already fit this description, other models should also be looked at more closely, including those that are more radical departures from business as usual, such as Straighter Line or Carnegie Mellon University’s Open Learning Initiative.
The report concludes that these steps and more need to be taken to “transform higher education into an affordable, successful endeavor because, as is becoming clear to many, ‘business as usual’ will no longer work.”
The full report is available on the AIR website.
