For Profit Diploma Mills Collect Billions: Students and Taxpayers Left with Piece of Coal

From Pro Publica:

. . . .A recent investigation by the Government Accountability Office found instances of for-profit schools’ engaging in outright fraud to sign up unqualified students [3] (PDF) and warned that "the government cannot be assured that its student aid funds are only provided to students who have an ability to benefit from higher education.’’

Earlier this week, the department made public the default rates for students who graduated three years ago [4], reporting that students at the larger for-profits were defaulting at a rate of around 20 percent. Those are similar to levels, last seen during the early 1990s, that prompted the last major changes in how government regulates the industry.

Previously, the department published data only for defaults in the two-year window after students graduated. In general, those were relatively low. The numbers released this week show that by year three, the rates rise dramatically, as this chart shows. [2]

The three-year rates for some schools are high enough that, if those rates continued for another couple of years, those schools would no longer be permitted to write federal student loans [5] and grants, which cost the federal government $117 billion [6] (PDF), according to the Department of Education. The stimulus package pumped another $15 billion into education grants. The largest recipients [7] of both programs are for-profit schools. . . .