A Bloomberg News article about an effort by for-profit colleges to win the repeal of a 1998 law requiring them to get at least 10% of their revenue from outside the federal education department quotes Senator Harkin:
Senator Tom Harkin, the Iowa Democrat who chairs the Senate education committee and investigated student recruitment, job- placement claims and use of government funds by for-profit colleges, called the 90/10 rule "one of the few protections students at these schools have."
"Given the abuses that my committee has documented -- alarmingly high dropout rates and crushing debt loads for students -- the 90/10 rule clearly isn't enough," Harkin said in an e-mail. "I intend to look at ways to make it work more effectively to ensure that for-profit colleges put a renewed focus on the success of their students rather than the profits of their shareholders."
Okay, if Mr. Harkin is upset about how much government funding the for-profit colleges are getting, let's take a look at an institution in his home state, the University of Iowa. Of that institution's $2.6 billion annual budget in 2010, at least $868 million came from the federal and state governments. Another $101 million came from bond offerings with tax-free interest that for-profit colleges don't have the ability to finance their operations with. Another about $14 million came from Pell Grants toward tuition payments. And another more than $75 million came in Medicare reimbursements for services provided by University of Iowa hospitals. And that's not even getting to federal student loans. It may not approach 90%, but there's a lot of taxpayer money in there. Rather than complaining about it, though, Mr. Harkin seems to love issuing press releases each time he manages to find a way to direct some more money there.
Is the difference that the executives at the for-profit colleges are getting rich on the government's dimes? Let's compare compensation. The president of the University of Iowa makes a reported $465,000 a year in base salary and $125,000 a year in deferred compensation. By comparison, the chairman and CEO of the Washington Post Company, the parent of for-profit college company Kaplan, makes $400,000 a year in salary and $72,997 in other compensation. The football coach at the University of Iowa, Kirk Ferentz, earns a reported $3,781,000 a year, which was more than any of the most highly paid executive officers of the Washington Post Company.
The Bloomberg news article doesn't appreciate or mention any of this, instead just pretty much following the standard line of being critical of the for-profit colleges and treating the senator's statement without any of the skepticism it deserves.