Judith Scott-Clayton: The Hidden Majority of for-Profit Colleges - NYTimes.com: "Whether you support or oppose the growing role of the for-profit sector in postsecondary education, you probably don’t know the half of it. Literally. . . Given that many for-profit colleges rely on Title IV aid for 80 percent or more of their revenue . . . it previously seemed implausible that so many other institutions could survive without it. But Professors Cellini and Goldin shatter this perception by compiling administrative data from postsecondary regulatory agencies in five states . . . . there is significant overlap in the types of non-degree programs offered at non-Title IV and Title IV for-profit institutions. Most strikingly, the authors find that similar non-degree programs cost about 75 percent more when offered at Title IV institutions – with the difference in tuition roughly approximating the size of a Pell Grant. This lends support to the so-called Bennett Hypothesis that federal student aid simply enables institutions to increase prices, at least when those institutions are profit-seeking. . . . While the Title IV cosmetology programs charged nearly 70 percent more than their non-Title IV counterparts, their students’ pass rates were virtually identical. . . . An alternative argument is that Title IV for-profit institutions spend more on recruitment and marketing – which account for 31 percent of their overall expenses, according to some estimates – and then pocket the remaining federal subsidy as profit. . . . "
Sunday, February 26, 2012
Federal money driving up the cost of college for students
Great story in the New York Times exposing the fact that federal aid to for-profit colleges through grants and loans, drives up the cost of college for students--
Judith Scott-Clayton: The Hidden Majority of for-Profit Colleges - NYTimes.com: "Whether you support or oppose the growing role of the for-profit sector in postsecondary education, you probably don’t know the half of it. Literally. . . Given that many for-profit colleges rely on Title IV aid for 80 percent or more of their revenue . . . it previously seemed implausible that so many other institutions could survive without it. But Professors Cellini and Goldin shatter this perception by compiling administrative data from postsecondary regulatory agencies in five states . . . . there is significant overlap in the types of non-degree programs offered at non-Title IV and Title IV for-profit institutions. Most strikingly, the authors find that similar non-degree programs cost about 75 percent more when offered at Title IV institutions – with the difference in tuition roughly approximating the size of a Pell Grant. This lends support to the so-called Bennett Hypothesis that federal student aid simply enables institutions to increase prices, at least when those institutions are profit-seeking. . . . While the Title IV cosmetology programs charged nearly 70 percent more than their non-Title IV counterparts, their students’ pass rates were virtually identical. . . . An alternative argument is that Title IV for-profit institutions spend more on recruitment and marketing – which account for 31 percent of their overall expenses, according to some estimates – and then pocket the remaining federal subsidy as profit. . . . "
Judith Scott-Clayton: The Hidden Majority of for-Profit Colleges - NYTimes.com: "Whether you support or oppose the growing role of the for-profit sector in postsecondary education, you probably don’t know the half of it. Literally. . . Given that many for-profit colleges rely on Title IV aid for 80 percent or more of their revenue . . . it previously seemed implausible that so many other institutions could survive without it. But Professors Cellini and Goldin shatter this perception by compiling administrative data from postsecondary regulatory agencies in five states . . . . there is significant overlap in the types of non-degree programs offered at non-Title IV and Title IV for-profit institutions. Most strikingly, the authors find that similar non-degree programs cost about 75 percent more when offered at Title IV institutions – with the difference in tuition roughly approximating the size of a Pell Grant. This lends support to the so-called Bennett Hypothesis that federal student aid simply enables institutions to increase prices, at least when those institutions are profit-seeking. . . . While the Title IV cosmetology programs charged nearly 70 percent more than their non-Title IV counterparts, their students’ pass rates were virtually identical. . . . An alternative argument is that Title IV for-profit institutions spend more on recruitment and marketing – which account for 31 percent of their overall expenses, according to some estimates – and then pocket the remaining federal subsidy as profit. . . . "
