A critique of for-profit "education" companies from an unlikely source..
http://insidehighered.com/content/download/350088/4329742/version/1/file/EismanSohnConference.doc ----------------------------------------------------snip Good Afternoon. I would like to thank the Ira Sohn Foundation for the honor of speaking before this audience. My name is Steven Eisman and I am the portfolio manager of the FrontPoint Financial Services Fund. Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong. The For-Profit Education Industry has proven equal to the task. The title of my presentation is “Subprime goes to College”. The for-profit industry has grown at an extreme and unusual rate, driven by easy access to government sponsored debt in the form of Title IV student loans, where the credit is guaranteed by the government. Thus, the government, the students and the taxpayer bear all the risk and the for-profit industry reaps all the rewards. This is similar to the subprime mortgage sector in that the subprime originators bore far less risk than the investors in their mortgage paper. In the past 10 years, the for-profit education industry has grown 5-10 times the historical rate of traditional post secondary education. As of 2009, the industry had almost 10% of the enrolled students but claimed nearly 25% of the $89 billion of Federal Title IV student loans and grant disbursements. At the current pace of growth, for- profit schools will draw 40% of all Title IV aid in 10 years. How has this been allowed to happen? The simple answer is that they’ve hired every lobbyist in Washington D.C. There has been a revolving door between the people who work or lobby for this industry and the halls of government. One example is Sally Stroup. She was the head lobbyist for the Apollo Group – the largest for-profit company in 2001-2002. But from 2002-2006 she became Assistant Secretary of Post-Secondary Education for the DOE under President Bush. In other words, she was directly in charge of regulating the industry she had previously lobbied for. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
