For-Profit Colleges in the US: A Morally Bankrupt Sector?
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Case Details:
Case Code : BECG117
Case Length : 19 Pages
Period : 2008-2010
Organization : -
Pub Date : 2011
Teaching Note : Not Available
Countries : US
Industry : Education
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Background Note
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The GAO defined for-profit colleges as "institutions of post-secondary education that are either privately owned or owned by a public traded company and whose net earnings can benefit a shareholder or individual."...
The Gao Report and its Findings
In May 2010, the GAO began investigation of 15 for-profit schools in six states (Arizona, California, Florida, Illinois, Pennsylvania, and Texas) and Washington, D.C (Refer to Exhibit III for a list of the schools probed)...
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High Tuition Fee
The report stated that the tuition fee at for-profit colleges was high compared to similar programs at other public colleges. Investigators found that on an average, the fee for an associate degree program was between 6 and 13 times higher at a for-profit school than at a public college while a bachelor's degree at a for-profit college cost almost twice that in local public institutions...
Deceptive Recruitment and Marketing Tactics
According to the report, campus officials of all 15 colleges misled potential students and made deceptive statements about their programs' cost, quality, and duration, and the average salary of graduates (Refer to Exhibit V for some examples of deceptive practices of for-profit institutions) For-profit colleges generally paid recruiters by the number of enrollments that they generated...
Loan Defaults
For-profit colleges, which accounted for 10% of all college students in the US as of 2009, derived three-fourth of their revenues from federal grants and loans. In 2009, at 14 for-profit schools, federal aid totaled 87% of revenue in 2009...
Excerpts Contd...>>
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