Here is a commonsense idea. The U.S. Education Department is considering linking the size of federal loans for students at for-profit colleges to their expected starting salaries after graduation. Too many students in this depressed economy are turning to these schools for career training only to wind up saddled with big loans they can't reasonably repay on the salaries they earn in their new career. It is unfair to the students and to taxpayers — but many of the schools are receiving a windfall.
The Times' Kris Hundley reported last Sunday that enrollments at Keiser Career Colleges and Keiser University are up 24 percent on 21 Florida campuses. The schools had $310 million in revenue last year, and nearly 80 percent came from federal student grants and loans. It's no bargain. Keiser's tuition is about double that of public colleges, and it is not unusual for students to borrow more than $30,000 in federal money to be trained for jobs with annual salaries of less than that amount. Yet college founder Arthur Keiser acknowledged he has a profit margin of about 15 percent. This sort of math only adds up for the operators of for-profit schools, not for the students seeking to improve their job skills.
For-profit colleges such as Keiser and the University of Phoenix are big business, and it's no surprise they are fighting the proposed federal rule change. The industry's trade group has contributed more than $150,000 to congressional candidates and parties in this election cycle, Hundley reported, and Keiser has given more than $66,000. But political contributions should not buy indifference in Washington.
There is a desperate need for workers to be retrained, but not at costs they cannot afford. A recent College Board study found that 19 percent of for-profit school graduates have more than $30,000 in debt after two-year programs. Just 5 percent of community college graduates have that much debt. Another study found that for-profit schools represent 7 percent of postsecondary enrollment but 44 percent of loan defaults. No wonder.
For-profit schools may fill a valuable role, particularly in an economy where workers are seeking new careers. But they should not drive students into deep debt for jobs that are not likely to generate enough income to pay the loans off. The Department of Education should see to it that federal student loan dollars are better spent and that students seeking new skills are not taken advantage of by for-profit schools looking to make a quick buck at taxpayer expense.