NYT's Floyd Norris: Colleges for Profit Are Growing, With Federal Help
http://www.nytimes.com/2012/05/25/business/us-subsidies-to-for-profit-colleges-keep-growing.html
The volume of federally guaranteed student loans to students at so-called proprietary colleges — the ones that intend to operate at a profit and get nearly all their revenue from the government — continues to grow.
At the same time, state and local governments across the country are slashing spending on higher education, and community colleges — the ones most likely to offer alternatives to the students recruited by the far more expensive proprietary schools — are suffering some of the largest reductions.
That trend has been welcome news to the proprietary colleges. “The competitive landscape” is getting better, Kevin M. Modany, the chief executive of ITT Educational Services, one of the larger for-profit colleges, told analysts this year. “When you look at what’s going on right now from a community college perspective,” he said, “we’re seeing a lot of state budgets being constrained. We’re seeing dollars being pulled from their budgets and they’re really capped in terms of their enrollment opportunities.”
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In Washington, the Obama administration has been trying to write rules that would stop loans going to students at the most exploitative of the schools, ones whose students are most likely to default on the loans and least likely to get jobs if they graduate. The Department of Education is expected to announce within a few weeks which programs at which schools are failing, but that determination will have little immediate impact. The earliest that any school will lose financing is 2014.
