Harkin is particularly concerned about how much money the University of Phoenix gets from the government. In 2011, 86 percent of revenue at the University of Phoenix came from the federal government in the form of student loans and Pell Grants. That’s not unusual in the industry. Senator Harkin’s Senate committee estimates that in 2009, the nation’s 15 publicly traded for-profit education companies received 86 percent of their revenue from taxpayers.
This is a big change from the early days of the University of Phoenix, when students like Muriel Duncan had to pay with cash or a credit card because there was no way of getting federal aid. Still, as recently as 2001, the University of Phoenix got less than half its revenue from federal financial aid programs. Most of the money came from https://getbadcreditloan.com/payday-loans-pa/moon-township/ students paying out of pocket and employers helping through tuition assistance programs.
The University of Phoenix gets a higher proportion of its money from student aid programs because it serves more low-income students than it used to, and low-income students are eligible for both Pell Grants and the maximum student loan amount. In recent years the federal government has increased the amount of aid low-income students can get. More than half of undergraduate students at the University of Phoenix used Pell Grants in 2010. Nationally, 27 percent of undergraduates received Pell Grants.
This shift towards more low-income students has been happening at other for-profits too. Research by the Institute for Higher Education Policy finds that in the last decade, low-income students have been increasingly drawn to for-profit colleges. They now attend for-profits at four times the rate of other students.
John Sperling’s Legacy
Critics of for-profits are concerned that so many low-income and military students choose for-profit schoolspared to community colleges and state universities, for-profits are expensive. The investigation by Senator Tom Harkin’s Senate Committee found that bachelor’s degree programs average about 19 percent more at for-profits than at flagship public universities; associate’s degree programs cost four times as much at for-profits as they do at community colleges.
But that is becoming increasingly difficult for some students. California is a prime example. Drastic state budget cuts in recent years have forced colleges and universities to turn away hundreds of thousands of students because there is not enough money to educate them. Thousands more can’t get the classes they need because of overcrowding.
What’s happening in California is a more dramatic version of what’s happening all over the country: State support for higher education is going down, tuition is going up, and students are being turned away, or can’t get the classes or the counseling they need to be successful.
John Sperling looks at what is happening, especially in California, and sees the same problem he was trying to solve back in the 1970s.
But critics are uncomfortable with the fact that John Sperling can make so much money when the traditional system fails. Sperling has no patience for that kind of criticism.
“Why should [people] be critical?” he says. “What are you supposed to do in life? Am I supposed to work hard to be a failure?”
That total includes federal loans and Pell Grants, as well as government money that helps military members and veterans pay for school
Sperling is in many ways the epitome of the American Dream. He was born with nothing and through education and hard work became wildly successful. That path to success is more expensive today. College tuition has been rising faster than inflation for decades, and students at all schools are being asked to pay more of the cost. The only way most of them can do it is to borrow lots of money.