I-Team: Why you paid $30B tax dollars to for-profit colleges

For-profit colleges get more tax dollars than NASA

On Thursday, a U.S. Senate committee began debating how your tax dollars are spent funding for-profit colleges. In a series of investigations over the past year, the I-Team has exposed how many for-profit colleges have been accused of unethical behavior, including providing substandard education and predatory recruiting practices.

Now, the I-Team is looking into how your money keeps the for-profit college system in business.

The industry receives more than $30 billion a year in taxpayer money through federal grants and loans. They get more taxpayer dollars than many federal agencies, including the NASA.

Jaclyn Tapia of Dade City said she didn't expect to be still looking for a job, four years after graduating from the Art Institutes.

"Pretty much all I do, all day, I'm on the computer looking at job openings," she said.

Tapia wanted to be a graphic designer, but she claims the school didn't fulfill its promise to help her find work after she graduated.

"They definitely could have helped me more," she said.

Now, she says she has been working various jobs outside of the graphic design field, and she's struggling to repay $60,000 in student loans. It's not a unique story.

In our previous I-Team investigations, we uncovered allegations against Education Management Corporation (EDMC), which oversees more than 100 for-profit colleges including Argosy University, The Art Institutes, Brown Mackie College and South University. Former students accused the schools of failing to deliver on promises of job placement and internships. A former recruiter accused the school of falsifying success rate statistics and unethical recruiting practices in order to maximize the number of federal grants and loans they receive.

Many for-profit college students end up defaulting on their loans, and the taxpayers end up footing the bill.

Senator Dick Durbin (D-Illinois) said it's a widespread problem in the for-profit college industry.

"They're charging too much money when it comes to tuition, few students are completing the course, and those that do can't find a job," Sen. Durbin said.

Congress says for-profit schools get $30 billion dollars of taxpayer money every year.

David Hawkins of the National Association for College Admission Counseling says without federal tax dollars, these companies probably couldn't survive.

"For-profit colleges get the lion share of their funding from the taxpayers," he said.

NACAC is a non-profit organization dedicated to helping students make choices about their education. Hawkins said student grants and loans are well intentioned, but there's no question they are critical to the for-profit college industry.

In fact, according to the U.S. Senate's HELP committee report, the largest for-profit colleges get 86% of their funding from federal grants and loans. Senator Durbin says he hopes to win support to curb the dollar amount these schools receive as the Senate looks to reauthorize the Higher Education Act this week.

"It's time to clean up this for-profit mess once and for all," Sen. Durbin told ABC Action News.

A spokesman for the Association of Private Sector Colleges and Universities provided a statement to ABC Action News, saying the for-profit college industry provides access to college to people who normally would never have the chance.

"The actual service provided by our institutions is far from the picture painted by Senator Durbin. Our institutions open doors to a brighter future and help new traditional students secure employment in the 21 st Century Workforce. We equip millions of students from diverse social and economic backgrounds with career-focused learning and job skills needed for a successful future.  Central to our mission is our commitment to provide access to those with multiple barriers to college success, 86 percent of our students receive financial aid based upon the formulas established by the United States Congress and the U.S. Department of Education, compared to only 30 percent of the students served by other sectors in postsecondary education. We are proud to provide access to those who otherwise would have no opportunity for postsecondary education."

Noah Black,
Vice President of Communications for the APSCU.

Jaclyn Tapia, meanwhile, says her future is unclear after going to the Art Institutes.

"I regret the cost of it. I regret spending so much time on it," she said.

A spokesman for the Art Institutes' parent company, EDMC, responded to Tapia's claims in a written statement to ABC Action News, telling us,

"We are sorry to hear about Jaclyn's difficulty finding employment in graphic design. We believe once a graduate, always a graduate. We welcome graduates back for continued, collaborative assistance and re-evaluation of the job search techniques they might currently be using on their own.

Graduates have a lot to consider when searching for the right employment fit for them, and this is why our career services department provides an array of services such

as resume writing, interviewing skills, search strategies and an alumni community, and more made available to all graduates.

Our ultimate goal is to not only assist our graduates in their job search, we want to help them start a career.

Our placement rate for students who graduated with a Bachelor of Fine Arts in Graphic Design program at The Art Institute of Tampa for calendar year 2012 is 95% based on graduates available for placement."

Tyler Gronbach,
Senior VP of Corporate Communications for EDMC

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