The Senate Committee on Health, Education, Labor, and Pensions is holding a hearing -- "the first in a series," according to Chairman Harkin -- this morning with the title "Emerging Risk? An Overview of the Federal Investment in For-Profit Education."
You can watch online if you have the stomach for it; hedge fund manager Steven Eisman, who has been campaigning for tougher federal regulation of the for-profit colleges while shorting their stocks, is scheduled to testify in the second panel.
A sense of the "gotcha" tone of the hearing is available from a report (pdf) that Chairman Harkin released today; "On average, for-profit schools are more expensive to attend than community colleges or public four year schools...Average annual tuition at a for-profit school was about $14,000 in 2009, while tuition at community college averaged about $2,500 and averaged $7,000 for in-state students at four-year public colleges."
The implication is that federal student grants and loans to the for-profits are an excessive subsidy. But the reason that the tuitions at the community colleges and the state colleges are cheaper is that they are subsidized by taxpayers, too, not only through federal student loans and grants, but through direct taxpayer subsidies. Not to mention that those institutions don't pay corporate taxes or property taxes, while the for-profits do.
Senator Enzi, the top Republican on the committee, complained that the majority had not allowed Republicans to participate in preparing for the hearing. "I am concerned that this hearing will not provide members with a full and objective understanding of all the issues facing the for-profit sector," he said.
Senator Al Franken, the Democrat from Minnesota, complained that the leaders of for-profit education companies were making more money than the president of Harvard, even though the for-profit companies had higher drop-out rates. But faulting the colleges for drop-out rates while at the same time describing them as "diploma mills" is a contradiction. Maybe the students are dropping out because the standards are so high they can't meet them.
Senator Lamar Alexander, a Republican, asked the Department of Education's inspector general why 70% of their investigations were of for-profit colleges, when there are more students at non-profits and at public colleges. The inspector general replied that they open investigations based on complaints that come in via a hotline. He said the Department of Education is about to become the sixth-largest bank in the country based on upcoming changes to student loan financing.
