Forbes: Seven Troubling Facts on American Higher Education You Probably Don't Know 10._Higher_Education

April 10, 2019 07:00 AM
Adam Andrzejewski, Contributor
The recent cheating scandal in which wealthy and well-connected parents paid hundreds of thousands of dollars to illegally game admission at elite universities exposed a rigged system.
However, the biggest scandal facing higher education today isn’t the illegal activity – it’s what’s entirely legal. It’s a system so expensive that the $1.7 trillion in student debt now exceeds America’s credit card debt and auto loan debt.
Last week, our organization at released our oversight report on the U.S. Department of Education (ED). We found billions of taxpayer dollars wasted on outdated policies, misaligned priorities, and weak accounting controls.
Here are seven facts regarding higher education that you probably don’t know:
The wealthiest colleges received nearly $7 billion in federal subsidies last year. The top 25 universities with largest endowments (collectively $272 billion) reaped $7 billion in federal student aid. Rich schools are getting richer and taxpayers paid for it. Wealthy colleges must make themselves affordable.
Bad debt – a billion-dollar boondoggle for taxpayers. ED estimatesthat 26 percent of federal undergraduate student loans made in 2018 will enter default at some point. Considering that $100 billion in student loans were originated last year, it’s a billion-dollar boondoggle. A Brooking Institution study found that 28 percent of college students signed up for student loans don’t even realize that their "award" is a debt and must be paid back.
$11 billion in overpayments to students on loans and grants. ED lacks basic in-house financial accounting controls, and admits to overpaying $11 billion in Pell grants and student loans over the last two-years. About four percent of all student loans and eight percent of all Pell grants are overpaid.
Tax dollars are driving up college tuition costs. Colleges of cosmetology are a great example of this phenomenon. The largest chain of beauty schools, Empire Beauty School, received more than $500 million in federal student subsidies between 2014 – 2017. Empire admits to charging up to $22,100 in tuition and fees – exceeding the in-state tuition costs of all Big Ten universities except Northwestern. It's a 35-40 week program and graduates are qualified to cut hair, manicure nails, and do massage therapy.
Gambling, bartending, golf, and seminaries reaped huge federal subsidies. Who knew that taxpayers fund non-traditional schools like $75 million (2014-2017) into a music and design academy; $10 million into a school where students learn gambling and bartending; and $5 million into the Professional Golfers Career College. Furthermore, nearly $1 billion funded 112 seminaries to mint pastors and priests.
$1 billion in taxpayer subsidies flowed to the 50 worst performing junior colleges as ranked by WalletHub last year. The 10 worst junior colleges had an average graduation rate of 12 percent. Students aren’t graduating. Yet, they’re saddled with large debts.
For-Profit Colleges Reaped $10.5 billion in federal student aid. The for-profit college industry is top-heavy where just 10 schools received 30-percent of all subsidies. Those big players have the clout to capture the market (taxpayer dollars) and fence out smaller competitors.
We reached out to Education Secretary Betsy DeVos for comment and her spokesperson responded:
Secretary DeVos is strong advocate for accountability, transparency and fiscal discipline.  Since coming to office she has worked hard to reduce the federal footprint in education, produce fiscally disciplined budget requests and shine a light on wasteful spending.

She also practices what she preaches—she has not taken a salary as Secretary and does all of her official travel on her own dime, and in the last two years she’s shrunk the department’s workforce and ensured that union activities were not conducted on the taxpayers’ dime.

Improper payments are also of deep concern to the Secretary and she has been actively working with Congress on legislative fixes that could help prevent them.
Who’s to blame? Recent polling released by Scott Rasmussen shows that a majority (51 percent) of respondents feel the federal government has too much influence over higher ed and only 21 percent believe the feds have too little influence.
Since 1980, tuition has increased 6.5 times the rate of income growth and is currently outpacing increases in other cost areas like housing, food and health care. Student aid was supposed to make college affordable again, but is simply going to straight to education institutions that continue to increase tuition.
It seems that higher education is once again proving the rule that the fastest way to make something expensive is for Washington DC politicians to make it "affordable."


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