A devastating article on for-profit colleges appeared in the Sunday New York Post. A few items:
“The government, the students, and the taxpayer bear all the risk, and the for-profit industry reaps all the rewards. This is similar to the subprime mortgage sector.”
At many of these institutions, TITLE IV money comprises close to 90 percent of total revenue. Much of the federal money is used for spectacular profits and executive salaries. “For example, ITT Educational Services, or ESI, has a roughly 40% operating margin vs. the 7%-12% margins of other companies that receive major government contracts. ESI is even more profitable on a margin basis than even Apple.” But the “growth” is all government money, and much of it goes into large executive salaries.
In 2001-2002, Sally Stroup was the head lobbyist for the company behind the University of Phoenix, but from 2002-2006, she was assistant secretary of post-secondary education for the Department of Education, “regulating the industry she had previously lobbied for.”