Phi Beta Cons

Re: For-Profit Colleges

Carol, you’re right to be concerned about the subsidies for-profit colleges receive — but I’m not sure it’s right to position students as victims here. While they have to pay their federal loans back, so do students at non-profit and public colleges. And all federal loans are given at a discounted interest rate, which is in effect a subsidy in itself.

Also, while it’s tempting to see profits that go to investors as pure waste — and the fact that subsidies are involved makes this plausible — I’m not convinced it’s worse for colleges to get their non-government money from investors than from donors, as non-profits do. Investors have a direct financial stake in the colleges’ performance, and will adjust their contributions accordingly, whereas donors often just give to their alma maters because it’s what you’re supposed to do.

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