Coronavirus stimulus to for-profit colleges spurs fears of another predatory student loan boom – Yahoo Finance
For-profit colleges in total were slated to receive over a billion dollars from the federal government via the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, which gave U.S. colleges and universities $14 billion overall to fight the pandemic.
After the rush to get the money out the door, questions are now emerging about why some schools — including universities with massive endowments and for-profit entities accused of predatory practices — were receiving millions in taxpayer-backed stimulus money.
The for-profit higher education sector saw tremendous growth after the 2008 Financial Crisis. In 2016, the New York Fed noted that enrollment at these schools had “skyrocketed” as the country emerged out of the Great Recession. Debt levels rose as well: Students graduating from for-profit institutions generally hold far higher levels of debt than those attending other institutions.
“What happened was that budget cuts by states meant that public colleges were not able to serve as many students, and there was increased demand because more people were out of work,” Bob Shireman, a senior fellow at the Century Foundation and former Education Department official during the Obama administration, told Yahoo Finance.