When For-Profit Companies Get Public Dollars

The public gets screwed. Every. Time. The latest in an infinite line of examples is the Commonwealth of Kentucky.

John Cheves at the Herald:

Kentucky has paid $97 million since 1999 through its state scholarships to privately owned, for-profit colleges, including several under investigation for alleged consumer fraud or other possible wrongdoing, according to a Lexington Herald-Leader review of public records.

Some states, such as Ohio, have moved to reduce for-profit colleges' access to state educational aid, citing a need to put students at state colleges first in a time of repeated budget cuts.

Kentucky has not. The state gives nearly 8 percent of need-based student aid to for-profit colleges, which is twice the national average, according to a survey by the National Association of State Student Grant and Aid Programs. Only four states give a bigger portion of need-based aid to the industry, the association found.

Among Kentucky's for-profit schools to collect state aid was Decker College in Louisville, which went bankrupt in 2005 amid allegations of fraud and inadequate accreditation, leaving hundreds of students with loan debt and no chance to obtain degrees. Another, the Sullivan University System, saw a nearly 1,000 percent increase in its assets from 1998 to 2009, accumulating $76 million, according to court records.

A few Democratic lawmakers want to regulate this taxpayer subsidy in the upcoming session of the General Assembly. I don't know how much money the for-profit "college" industry invests in our lege, but my guess is that it's enough to at least kill any such bill, and might be enough to force a bill that actually increases the subsidy.

Some for-profit colleges in Kentucky charge $30,000 a year or more for two-year vocational degrees related to clerical jobs in offices or cooking in restaurants. Data suggest that many of the students struggle later. Nationally, students at for-profit schools represent 26 percent of federal student loan borrowers and 43 percent of subsequent loan defaults, according to federal data.

Funny how the most egregious examples of government "waste" always involve money given to private companies.