Is Congress Trying to Put For-Profit Colleges Out of Business?

Is Congress Trying to Put For-Profit Colleges Out of Business?
  • Opening Intro -

    For-profit institutions of higher education have been in the news a lot lately, but the press has not been all that favorable.


Bill seeks to defund taxpayer supported marketing campaigns.

Some schools have run into regulatory and repetitional trouble, casting a dark shadow over the entire industry.

Senate Bill

A bill introduced by Senators Kay Hagan (D, NC) and Tom Harkin (D, Iowa) last week seeks to forbid for-profit schools from using what they say is federal money to pay for advertising. That advertising includes marketing and recruitment from T.V. spots to billboards and beyond. The senators contend that the top 15 schools derive 86 percent of funding from student loans and Pell grants, with marketing eating up as much as 40 percent of revenue at some schools, monies that taxpayers ultimately fund reports The Chronicle of Higher Education.

The Senate bill isn’t being welcomed by all including the Association of Private Sector Colleges and Universites, a membership organization that represents for-profit colleges and universities. That group includes represents a number of well-known institutions including Rasmussen College, Lincoln Educational Services, Keiser University, ITT Technical Institute, Corinthian Colleges and Kaplan Colleges, among others.

APSCU Statement

In a prepared statement issued soon after the bill was introduced to the Senate floor, the APSCU offered the following comments. “While the bill introduced by Senators Hagan and Harkin applies to all sectors of higher education, it is clearly another attempt by some policy makers to try and put private sector colleges and universities out of business. It also reflects a fundamental misunderstanding of the students we serve and the public service we provide. Many of our students (79% of 4-year program students and 47% of 2-year program students) are adult, non-traditional students that can’t be reached through a high school guidance counselor.”

The association went on to conclude, “At a time when America is facing a need to increase the number of workers with postsecondary education by 8 – 23 million over the next decade, we should all be working together to enhance access, outcomes, and professional opportunities for all students. Legislative proposals like this only create more burdensome regulations affecting our ability to ensure that all Americans have access to a high-quality education so they can develop the skills needed to compete and succeed in the 21st Century workforce.”

Hagan and Harkin Statements

Sen. Hagan’s office noted that in Fiscal Year 2009, the top 15 institutions spent $3.7 billion or 23 percent of their budgets on advertising, marketing and recruitment, methods the senator called “very aggressive and deceptive.” Typically, businesses spend approximately 4 to 12 percent of their revenue on marketing, while nonprofit colleges and universities typically spend just 0.5 percent of their revenues on marketing.

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Said Hagan, “In these tough economic times, we need to protect taxpayers’ investment of billions of dollars in student financial aid by ensuring that it is used to help students succeed in college, not on out-of-control advertising, marketing and recruitment budgets.” Added Harkin, “Today we are sending a strong message to colleges that choose to spend federal dollars on advertising at a time that middle class students and families are struggling to get ahead: find the money for marketing elsewhere, not from taxpayers. This is common-sense, fiscally responsible legislation to maximize financial aid dollars for educating students.”

Bipartisan Support

The senators are seeking bipartisan support for their bill, but that may be elusive particularly in an election year. In any case the senators have gotten what they wanted: to bring attention to what they say is a problem indicative of for-profit schools, institutions that include the University of Phoenix, DeVry University, Strayer University and Capella University.

See AlsoFor-Profit Colleges Are Enjoying Explosive Growth

College Campus reference:

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Categories: Campus News