A report compiled by the Senate Health, Education, Labor and Pensions Committee has uncovered huge waste of taxpayer money and poor educational outcomes at for-profit colleges across the country. Senator Tom Harkin led a two-year investigation of the for-profit higher education industry and has been publicizing the report this week.

While investigating for-profit colleges, Harkin has previously publicized high drop-out rates, “deceptive recruiting practices,” and “deceptive marketing to veterans” by various institutions. Click that link to access charts and documents supporting those early findings. Harkin’s office summarized the more lengthy report on this problem in this statement:

For-Profit College Investigation

As a result of rapid increases in the amount of federal financial aid and other federal student assistance programs flowing to for-profit schools, Senator Tom Harkin has launched a broad-based oversight effort to better understand how well for-profit schools, many of which are highly profitable publicly traded corporations, are serving students and taxpayers. As part of this effort, Senator Harkin has led five hearings and collected internal document[s] from 30 for-profit schools.

Senator Harkin’s investigation has found:

Enrollment at for-profit schools has grown dramatically over the past decade. Between 1998 and 2008, the number of students attending for-profit schools has grown from 553,000 to 1.8 million, an increase of more than 225 percent.

In order to drive enrollment growth, for-profit schools spend heavily on television advertisements, billboards, phone solicitation, and web marketing. The pressure on recruiters to enroll as many potential students as possible can give rise to recruiting practices that are overzealous or misleading.

For-profit schools are far more expensive than comparable programs at community colleges or public universities. The average tuition for a for-profit school is about six times higher than a community college and twice as high as a 4-year public school.

For-profit schools provide access to many students who have historically not been well served by traditional institutions of higher education. But data collected by the Senate H.E.L.P. Committee shows that many for-profit schools are not providing the support structure to help these students succeed. The data shows that fifty-four percent of students who enrolled in the 2008-2009 school year withdrew by summer 2010.

Close to one in four students who attends a for-profit school defaults on his or her federal student loans within 3 years of leaving school. This high rate of default combined with the fact that nearly all students at for-profit schools must borrow money to pay the cost of tuition, has resulted in a sector that enrolls approximately 10 percent of American higher education students but accounts for nearly 50 percent of all student loan defaults.

Despite poor student outcomes, for-profit schools are highly profitable companies. Profits at 16 of the largest for-profit schools totaled $2.7 billion in 2009.

Click through the links in that statement for charts and data supporting the findings.

It’s amazing how inefficient the private sector is at providing college degrees to adults.

“Since these schools don’t have bricks and mortar – they don’t have to pay heating bills and cooling bills and upkeep of dorms and all that kind of stuff – you would think that they could offer these courses much cheaper than what they’re doing,” Harkin said on the senate floor. “That’s not the case – much more expensive.”

According to Harkin, a Democrat, the cost of a for-profit education is about four times as much as a degree from a community college or public university. Federal officials say 47 percent of student loan defaults are from loans used to attend a for-profit college, but only 13 percent of Americans who are enrolled in higher education are taking classes at a for-profit college.

The association that represents the University of Phoenix and other for-profit colleges called Harkin’s report flawed, and accused Harkin of “unfairly” targeting “private sector schools.”

Harkin addressed that accusation during an interview on National Public Radio this week.

HARKIN: Well, if we’re going to give Pell Grants out and direct government loans, we need to know how every student with an I.D. number is doing. We’ve got to make it very clear that federal money is spent on education, not advertising, not recruiting, not lobbying.

We need to make sure these schools are providing student services that will give these at-risk students a fair shot at completing their education. That’s mentoring, tutoring, employer partnerships, career counseling – all the way through. And we need to think, seriously, about outcome-based thresholds, especially for these colleges that get a huge amount of revenue from taxpayers.

MONTAGNE: Well, let me just ask you, though, some Republicans in Congress who support for-profits as a good free market idea and a good way to reach nontraditional students, I gather, were upset that this focused only on for-profit colleges when quite a few tax dollars are being put into local community colleges, as well, very directly, and this didn’t scrutinize them.

HARKIN: The reason we were focusing on the for-profits is because of what’s happened in the last 10 years. Enrollment grew from 760,000 to 2.4 million. The amount of Pell Grants that started going to these colleges, skyrocketed. And what we saw was that about 83 percent of all the money going to the for-profits came from federal taxpayers. Plus, the amount of profits they were making, plus, all of the stories we were hearing of students who were getting Pell Grants, getting loans, dropping out.

I mean, look at it this way. The for-profit schools take in about 10 to 12 percent of all the students of higher education. They get 25 percent of the Pell Grants and they account for over 50 percent of the defaults. Right away, you look at that and you say something isn’t right here. And I can tell you it is not right. Something needs to be done here.

Politicians complain about “waste, fraud, and abuse” of taxpayer dollars and talk about the need to reduce federal spending. Tighter rules on colleges that profit from student loans while delivering very little to most of their “customers” would seem to be a great opportunity for bipartisan cooperation. Unfortunately, it sounds like few members of Congress besides Harkin are motivated to address this problem. Paul Fain reported for Inside Higher Ed,

One reason for more legislation, Harkin said, is the industry has become adept at “regulatory evasion,” such as by gaming the 90/10 rule, which requires that institutions receive no more than 90 percent of their revenue from federal sources, primarily student aid and loans.

But Harkin acknowledged that any new or pending legislation that seeks to tighten the screws on for-profits has little chance of moving forward in the coming months in a badly split Congress in an election year. A better bet, he said, would be for bills to be considered in 2013, as Congress moves to reauthorize the Higher Education Act.

“Honestly, this year I don’t think we’re going to get much done,” he said.

The report was not officially endorsed by other Democrats on the committee, and was submitted instead by committee staff. That may be a sign of a lack of legislative urgency behind its recommended fixes, some observers said. […]

Republicans clearly aren’t backing it. The committee’s GOP staff criticized the investigation for not being conducted in a bipartisan manner and for unfairly singling out for-profit institutions for problems shared by some nonprofit colleges.

According to Fain, Harkin and his Senate allies may push for reforms that would apply to non-profit colleges and universities as well as to for-profit schools. For instance, one bill Harkin has co-sponsored “would ban the use of revenue from federal financial aid for advertising, marketing and recruitment.”

Most members of Congress voted earlier this year to extend lower interest rates for Stafford student loans. They should do more to make sure students taking out those loans have good chances to get educated rather than bilked.