For-profit schools with Web, health care classes depend more on federal student aid

Introduction

For-profit schools that specialize in health care, offer web-based classes, and/or are owned by a publicly-traded company depend most heavily on federal student aid, the Government Accountability Office says.

In 2008, these schools collected more than 85 percent of their revenue from federal student aid such as Pell grants, Stafford loans, and federal work-study funding, the GAO said. By law, for-profit schools can receive no more than 90 percent of their revenue from federal student aid and must generate at least 10 percent from students’ cash payments, private student loans, state grants, and other sources.

Several Democratic lawmakers, including Illinois Sen. Dick Durbin, have called for tougher oversight of for-profit schools and criticized their heavy dependence on federal student aid, aggressive recruiting, and higher-than-average student loan default rates.

Virtually all for-profit schools complied with the 10 percent rule in 2003-08, the GAO said in a presentation to the House and Senate education committees, adding that the average percent of revenue received from federal student aid rose slightly to 66 percent from 62 percent. But some schools had “significantly higher” dependence on federal student aid — those that are owned by a corporate chain, offer web-based classes, enroll 2,000 students or more, and specialize in health care.

Enrollment has soared at for-profit schools in the past five years, nearly doubling to 1.8 million students in 2008. These students accounted for about 9 percent of total U.S. post-high school enrollment in 2008 while they their share of total federal student aid was about 23 percent, the GAO said.

FAST FACT: In 2008-2009, about 2,000 for-profit schools received almost $24 billion in grants and loans from federal student aid programs.

Other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities:

FINANCE

• Among the 707 U.S. banks that received taxpayer dollars under the Troubled Asset Relief Program, 79 have missed three or more dividend or interest payments to the government, and 24 have missed five or more (GAO).
• Social Security Administration should work with the IRS to better monitor how public employers report Social Security wages for state and local government employees (GAO).
• HUD should seek civil fines against Sterling National Mortgage Co., Inc. because it failed to follow FHA underwriting regulations with six loans, for FHA insurance fund losses of more than $508,000 (OIG).

NATIONAL SECURITY

• BP, Emirates National Oil Co., and French-based Total each reportedly sold fuel to Iran in the 18 months ended on June 30, 2010. The companies, all of which hold Pentagon contracts, could face sanctions if they violate new provisions of the U.S. trade embargo with Iran that went into effect on July 1 (GAO).

ENVIRONMENT

• Audit launched to examine the Transportation Dept.’s Pipeline and Hazardous Materials Safety Administration’s program that awards about $26 million in annual emergency preparedness grants (OIG).

HEALTH

• Synthes Inc. signed a corporate integrity agreement with the HHS Dept. inspector general and agrees to sell its Norian unit to avoid being kicked out of Medicare and Medicaid. The company also pled guilty in connection with adulterated and misbranded bone cement used in unlawful clinical trials (OIG).
• Nurses need to develop leadership skills and contribute to management teams, boards, and other groups working to transform the U.S. health care system.

MISC.

• Some $15.1 million in FEMA spending by the City of Fort Lauderdale on hurricane clean-up is questioned by auditors (OIG).
• FEMA should disallow $520,000 in costs claimed by the Archdiocese of New Orleans to repair a Catholic school after Hurricane Katrina because the contractor included an automatic 20 percent profit mark-up (OIG).
• The Energy Dept., which spends more than $2 billion annually on information technology, has not yet adopted an IT capital planning process to manage its investments (OIG).