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The Leadership Conference on Civil and Human Rights

The Nation's Premier Civil and Human Rights Coalition

The Leadership Conference on Civil and Human Rights  & The Leadership Conference Education Fund
The Nation's Premier Civil and Human Rights Coalition

Report: Students Attending For-Profit Institutions Struggle to Repay Federal Loans

June 1, 2011 - Posted by The Leadership Conference

For-profit colleges charge students more and have a higher percentage of students who receive federal loans than do public or private not-for-profit ones, while significantly under-investing in the instruction of their students, according to a new report by the National Center for Education Statistics (NCES).

The NCES report, "Condition of Education 2011," found that private for-profit colleges spend an average of $3,069 per student on academic instruction, whereas public institutions spend an average of $7,534 per student and private not-for-profit schools spend an average of $15,215 per student on instruction.

Yet, four-year undergraduate for-profit colleges still charge an average net price of $30,900 per full school year, much higher than both public and private not-for-profit schools. This is because on average, for-profit institutions spend nearly 70 percent of their expenses on student services and administrative costs like marketing.

For-profit colleges have come under fire for their recruiting practices – which often target low-income and minority students, women and veterans – and failing to educate students for "gainful employment," leaving students with a mountain of student-loan debt (while the schools themselves make millions). According to the NCES report, 10.9 percent of students who graduate from four-year for-profit institutions default on their loans within two years of starting repayment, which is more than twice the percentage at public and private not-for-profit schools.

The Department of Education has proposed regulations under the Higher Education Act that would protect students from entering into institutions that do not provide them with education that will lead to "gainful employment." These regulations will also protect taxpayers by prohibiting for-profit institutions from prospering off of federal grant money. The Leadership Conference on Civil and Human Rights has strongly urged the Office of Management and Budget to approve these new rules so that for-profit institutions will be held accountable for providing a quality education to their students.

"The real bottom line, however, is students and their future," said Wade Henderson, president and CEO of The Leadership Conference, in a May 9 statement on the proposed regulations. "With millions of students making plans for the upcoming school year, it’s vitally important that a regulation that protects students and taxpayers and holds institutions accountable be in place and enforced as soon as possible."

The final rule is expected to be released soon.

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