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For-Profit Schools Under More Scrutiny

July 09,2010 by: admin

For-profit schools are under more scrutiny for their growing use of federal aid dollars despite a strong defence in a Senate hearing last Thursday.

This hearing is the first in a series Senator Tom Harkin, D-Iowa, who was also the chairman of the Senate Health, Education, Labour, and Pensions Committee plans to hold concerning the issue of the fast-growing industry of for-profit schools. With 90% of for-profit colleges’ money are taxpayer’s dollars according to the senator, there is a need for a more thorough review for kinds of education institutions on how they use federal money because of the high profits and high dropout rates in them.

Sen. Harkin explained that the Senate has a task to make sure that taxpayer money should be used wisely and that colleges for profit use them to serve students, and not just for shareholders.

Sen. Harkin also cited some students who had been misled into enrolling into for-profit colleges but ended up in debts rather than a degree. One such student, a Yasmine Issa from Yonkers, New York, told her story at the hearing about how she had attended Sanford-Brown Institute in New York where she studied to be an ultrasound technician.

Issa mentioned aggressive recruiting practices, and how she ended up with $20, 000 of debt and with no job after finding out that Sanford-Brown Institute was not accredited in her choice of study. She also said that she felt like having wasted her tie and money on a “phony school”.

A critic of for-profit schools, Steven Eisman, the Front Point Financial Service Fund portfolio manager, also testified before the Senate. Having learned on the for-profit education processes and how it gets its revenue likened for-profit schools to the subprime loans processes and even commented that it is a potential social disaster if nothing would be done.

Meanwhile, the for-profit colleges put up a forthright defence with their representative. Senior vice president of Chicago-based DeVry Inc., Sharon Thomas Parrott, said that the money that for-profit schools spends for instruction against what they spend on marketing and other items are more favourably compared to nonprofit colleges.

Parrott also said that the United States need an educated work force that could survive and thrive in today’s changing global economy, and she described that for-profit schools play a key role in doing so by realizing the Obama administration’s goal of educating 8.2 million college graduates by 2020.

This hearing had come at an inconvenient time for for-profit schools when they have been praised for providing educational opportunities for students to meet the country’s needs for such. It was earlier this week that several Democrats made an investigation to the issue of for-profit schools and their use of funds.


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