I've believed for quite a while that most colleges and universities in this country have become businesses. And, as we all know, there are now colleges who make no bones about it; their aim is to make money. Throughout the 1990s, for-profit college and university enrollment grew by nearly 60 percent, compared to a mere 7 percent rise in the traditional nonprofit sector. For-profit colleges are now a $35 billion industry. The price of their stocks rose more than 460 percent between 2000 and 2003 with much support from public subsidies. The prices have risen so much because investors look at student loans as federally subsidized “annuities” that, via their Pell Grants and student loans, produce a fat and stable return in the form of tuition fees. And the companies spend more on marketing than on teaching, more than twice as much. They do well in obtaining federal money, receiving a quarter of all federal aid disbursements. They don't do too well in the results as they account for 44 percent of all loan defaults although they have only 12 percent of the post-secondary student population. Student debt is now $1.2 trillion.
At the same time that for-profit colleges have been booming, public colleges have not. There has been a fall in state funding for public education, resulting in budget squeezes at nonprofit state colleges. Eight years ago, states provided roughly $9,000 per student for higher education. Today, that number has fallen to around $7,000, the lowest level in thirty years. Prices have risen at nonprofit public colleges and universities at nearly twice the rate of private four-year institutions since 2000.