More For-Profit Follies

Apparently some for-profit colleges have taken to recruiting the homeless to apply to their institutions. According to an article by Daniel Golden in Businessweek

The boom in for-profit education, driven by a political consensus that all Americans need more than a high school diploma, has intensified efforts to recruit the homeless. Such disadvantaged students are desirable because they qualify for federal grants and loans, which are largely responsible for the prosperity of for-profit colleges. Federal aid to students at for-profit colleges jumped from $4.6 billion in 2000 to $26.5 billion in 2009. Publicly traded higher education companies derive three-fourths of their revenue from federal funds, with Phoenix at 86%, up from just 48% in 2001 and approaching the 90% limit set by federal law.

This particular from of recruiting, while not illegal, is generally prohibited by the colleges themselves. The number of homeless people who are actually able to succeed in college is exceedingly small. Golden found that recruiters from Chancellor University, Drake College of Business, and the University of Phoenix targeted homeless shelters. Phoenix said it doesn’t allow its employees to target the homeless and anyone who did that could be fired.

Drake, on the other hand, is apparently totally okay with recruiting the homeless. “We don’t exclusively target the homeless. We are in a community that is low-income and happens to have a lot of people on welfare,” said the institution’s CEO. About 5 percent of Drake’s students are homeless. Drake apparently provides a $350 biweekly stipend to students, a major inducement to the homeless to sign up for classes.

While the numbers are a little unclear here (which proprietary schools and how many homeless students remain a mystery) this has happened before. In the late 1980’s for-profit schools, according to the article, “had grown wild and unruly, as fly-by-night trade schools siphoned off students from welfare and unemployment lines, ostensibly to train them as truck drivers or hairdressers.” But in many cases actually training was of low quality or nonexistent and the default rates on student loans reached 22 percent.

Congress cracked down on the worst offenders through 1992 legislation. But then the Bush administration, which appointed University of Phoenix lobbyist Sally Stroup to the U.S. Education Department as assistant secretary for postsecondary education, relaxed the rules on for-profits.

I mean, obviously the scope of this problem is unclear but HOMELESS people, really?

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer