[schmidty]

> For-Profit institutions are a plague on our nation

I dont understand. ANY for profit? Like Apple or Ford?

Or just educational institutions? If just educational institutions, what is special about that sector that makes them a plague?

[munchbunny]

The decision is specifically targeting for-profit degree mills.

The problem is that these institutions provide expensive educations, paid for by people taking out student loans (which the institutions actively encourage). However, these same institutions don't provide any sort of education that would give their students even a remote chance of paying off the student loans on any reasonable timeframe.

This creates a system of perverse incentives where the degree mill is essentially farming student loan money, screwing over both the student and the government in the process.

My read on the news is that the policy is supposed to stop exactly this phenomenon.

[imjustsaying]

I'm just going to go out on a limb and say that most of the people going to ITT-esque schools are getting Pell Grants (free money, not loans) first and foremost to cover their costs.

I didn't even know this was a thing until after I graduated (I never got a Pell Grant because my parents made too much money).

Some schools have over 90% of their students funding their entire costs through Pell Grants (look at University of Puerto Rico or Interamerican University of Puerto Rico for some extreme examples).

[saalweachter]

It looks like ITT does/did have a large proportion of students with Pell Grants -- 23,500 out of 57,000 students. The tuition figures I can find for ITT are $18,000 / year, while the average Pell Grant to an ITT student was $1800 / year.

So 40% of ITT students got 10% of their tuition from ITT, and ITT got 4% of its revenue from Pell Grants.

[munchbunny]

The 10% number is really interesting, where are these students getting the other 90%?

To me it feels like it can't have just been paid in cash, because if you have $16,000 per year just lying around... you are probably in a situation where you can find better options than ITT.

[saalweachter]

The reason for-profit educational institutions are a plague is that the US government provides for a special class of loans to allow people to go to college without having the cash up front.

This special class of loans has both a relatively low interest rate (making them appealing for consumers) and cannot be defaulted on, an important feature when there is no collateral for a loan. (This feature is not needed, for instance, when you buy a home, because if you default on your mortgage they can take your home, which you put up as collateral.)

This created the opportunity for investors to create educational institutions with a thin veneer of respectability, suck in any student who could qualify for loans, and funnel that money back to the investors. Which many did.

Removing the eligibility for this special class of loan for (all, or just the known offenders) for-profit universities removes this opportunity without actually outlawing for-profit universities. This opportunity only existed because of the federal government meddling in the free market, so everyone should be happy.

[20yrs_no_equity]

Plus anyone who thinks that "Public" schools are not for profit hasn't looked too closely.

My "Public" University was basically a football program which had classes to try and justify its existence.

Think Stanford isn't for profit? Harvard? University of California?

The only difference is who is making the profit an what their incentives are.

ITT doesn't make money if its students don't get jobs. Does UC Santa Cruz really care more?