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News / Opinion / Editorials

In Our View: For-Profit Colleges Flop

ITT Tech closure hurts students, workers, but scrutiny of such schools justified

The Columbian
Published: September 12, 2016, 6:03am

The abrupt closure of ITT Technical Institutes is disappointing for students and employees, yet it is the inevitable result of years of questionable practices by for-profit colleges.

The company that runs more than 130 ITT Tech campuses in 38 states — including one near Portland International Airport — announced last week that it was closing the schools, leaving about 35,000 students in the lurch. This followed an August decision by the U.S. Department of Education to forbid the schools from enrolling new students who rely upon federal student loans, and company officials decided they could not continue to operate without access to those loans.

In announcing the closure, ITT officials revealed a snippet of the problems inherent with for-profit colleges: “The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable.” The inclusion of “shareholders” uncloaks the underlying motivation of such colleges.

In a 2010 report, The Education Trust wrote: “These companies aggressively market to low-income individuals and people of color whose dreams of a secure place in the American mainstream include a college degree. And yet these institutions do a far better job at turning a profit for stockholders than ensuring that their students graduate. And while too few of their students acquire degrees, too many end up saddled with crippling debt.”

Various reports over the years have detailed how for-profit colleges typically provide low-quality educations that result in poor employment rates for those who do graduate. Along the way, the schools encourage students to take advantage of loan programs while often inflating their graduation and placement rates to prospective students — and the default rate on those loans is exceedingly high. The Education Trust study found that 22 percent of students seeking a bachelor’s degree at for-profit schools eventually attain one, and that 46 percent of defaults on federal students loans can be traced back to such schools.

That is because for-profit colleges have demonstrated more interest in benefiting shareholders than supporting students. A 2012 investigation by the U.S. Senate and the Government Accountability Office found that, among 30 companies studied, 42 percent of revenue went toward marketing, recruiting, and profits, while 18 percent went toward actual instruction. Following ITT’s closure, Sen. Dick Durbin, D-Ill., a frequent critic of for-profit schools, wrote on Twitter: “ITT Tech’s predatory practices have finally caught up to it. Closure will end its exploitation of students & fleecing of taxpayers.”

For now, the events could be costly for taxpayers, as Department of Education officials said that students might be eligible to have their student loan debt forgiven. But in the long run, it will be beneficial. Holding for-profit colleges accountable for the services they provide will help to ensure that federal student loans represent money well spent — money that taxpayers can reasonably assume will be repaid. Because of that, increased scrutiny of for-profit colleges is most welcome. Corinthian Colleges closed their doors last year, and the practices of similar programs have received attention from federal officials.

None of that helps students who were preparing for classes at ITT Tech, particularly those who were close to graduating. While we can empathize with the difficult situation that has befallen those students, attention to the methods employed by for-profit colleges is long overdue.