As one Credit Suisse analyst looking at the $35 billion industry put it, “it’s hard not to make a profit” in the for-profit education sector. The stock prices of for-profit colleges and universities (FPCUs) reflected that; they rose more than 460 percent between 2000 and 2003 with much support from public subsidies. Their promotional budgets rose, too—Apollo recently spent more on marketing than Apple, the world’s richest company.
But education, sadly, did not benefit. As A.J. Angulo outlines in his detailed history of the for-profit sector, Diploma Mills, that’s because such schools [for profits] spend a large majority of their budgets not on teaching but on raising money and distributing it to investors. In 2009, for example, thirty leading FPCUs spent 17 percent of their budget on instruction and 42 percent on marketing to new students and paying out existing investors. Is it any wonder, then, that investigations into the industry from 2010 to 2012 found that while it represented only 12 percent of the post-secondary student population, it received a quarter of all federal aid disbursements and was responsible for 44 percent of all loan defaults, many of them by working-class students who either couldn’t afford to graduate or, once they did, found their degrees were largely useless in the marketplace?