The reason for the disparity is the formula Congress came up with to spend the money.
After $14 billion was set aside for higher education in the Coronavirus Aid, Relief and Economic Security Act, Houston Community College and the Paul Mitchell Schools both got financial relief.
The fact that half the money going to for-profits can be used for institutional costs concerns critics like Ben Miller, vice president for postsecondary education at the left-leaning Center for American Progress think tank. “We win because we serve lower income people,” said Steve Gunderson, president and CEO of Career Education Colleges and Universities, or CECU, a trade group that represents for-profit and career colleges.
Their focus on short term and workforce programs hindered them, too. They don’t have graduate students, which the formula counts, but they do have large numbers of students in certificate programs. While these noncredit students use the same counseling and career services at the school as full and part-time students, many are uncounted in the formula.
That public colleges didn’t push for the money flow to them through states, which many argue serves them better, “is very telling about their shared nervousness about the moment,” said Clare McCann, deputy director for federal higher education policy with New America, a left-leaning think tank. The Education Department also barred any student who is ineligible for federal loans from getting the CARES Act relief money, cutting out undocumented and foreign students, as well as those in noncredit programs and without high school diplomas. California community colleges are suing over that restriction, which the Education Department has defended.
Publicly Traded Schools Get MillionsUniversal Technical Institute, Inc., which is traded on Wall Street, runs what it describes the leading technical schools for those looking to become mechanics. Thanks to a large number of Pell grant recipients among its approximately 11,000 students, three of its schools were together the top for-profit recipients of CARES Act aid. The Universal Technical Institute schools received more than $33 million in aid.
A spokesperson for Strategic Education, Inc., the parent company of Strayer University, said it declined its $5.8 million because its school is largely online. Only one of the school’s 17 programs passes the federal measure of whether what graduates earn can cover their loans and basic needs, according to a class-action suit filed by Harvard Law School’s Project on Predatory Student Lending. After graduating, students able to find jobs in the area they studied earn between $9,000 and $33,000, the lawsuit claims.
Research shows for-profits have been a key driver of the crippling student debt crisis, with higher costs and worse outcomes. Some Democratic legislators have called for barring them from receiving the same federal loans that allowed about 1,600 for-profits to collectively receive more than $1 billion in coronavirus bailout funds.
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