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Sunday, November 9, 2014

Whackademia Quote: Federal Money Wasted on For-Profit Schools

     A trade group which represents some 1,400 for-profit colleges and universities sued in federal court on November 6, 2014 to force the U.S. Department of Education to rescind regulations designed to prevent the schools from taking billions in federal aid if they stick students with thousands of dollars in loan debt in return for unmarketable, dead-end degrees.

     Mainly at issue is a federal regulation called the "gainful employment rule." The rule compares graduate job earnings to their debt payments…Schools run afoul of the regulation if graduates can't get jobs which pay enough so that loan payments don't exceed 8 percent of their total annual earnings or 20 percent of their discretionary income.

     Schools that fail to meet these income-to-loan levels risk losing access to taxpayer-subsidized student loans and taxpayer-funded grants…

     For-profit schools rely heavily on federal cash and their chief executive officers bring home obscenely high salaries. For example, the CEO and president of Devry Education Group, Daniel Hamburger, made $5,680,939 in 2013. Edward H. West, president and CEO of Education Management Corporation, made $6,025,304 in 2013. Scott W. Steffy, president and CEO of Career Education Corporation, made $4,837,992 that year…

     Career Education Corporation, reached a $10 million settlement agreement in 2013 with the New York attorney general over charges of gross deception. The…company admitted that only 24 percent to 64 percent of graduates were able to find meaningful jobs. The company had touted an inflated rate of 55 percent to 80 percent…

     For-profit schools in the United States currently enroll about 2 million student.

Eric Owens, "For-Profit College Sue To Keep Billions In Federal Aid Flowing Despite Awful Student Outcomes," The Daily Caller, November 7, 2014 

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