A higher-education bubble?

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New Grilling of For-Profits Could Turn Up the Heat for All of Higher Education (Chronicle of Higher Education)

     Congress plans to put for-profit colleges under the microscope on Thursday, asking whether a higher-education model that consumes more than double its proportionate share of federal student aid is an innovation worthy of duplication or a recipe for long-term economic disaster.
     The review is being led by Sen. Tom Harkin, the Iowa Democrat who is chairman of the Senate's education committee. Mr. Harkin has expressed concern that recent moves by Congress to pump billions of new dollars into student aid might be undermined by corporate-owned colleges interested primarily in maximizing returns to shareholders.
     The evaluation threatens new headaches for an industry that is sometimes exalted by government policy makers as a lean results-oriented example for the rest of academe, and other times caricatured as an opportunistic outlier that peddles low-value education to unprepared high school dropouts.
     Many of the issues at stake, however, could mean harsher scrutiny for all of higher education, as worries about rapidly growing costs and low-quality education in one sector could raise questions about long-accepted practices throughout higher education.
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     Reflecting [higher-education bubble] fears, Mr. Harkin joined other Democratic lawmakers this week in calling on the Government Accountability Office to conduct a study of the quality of for-profit institutions and their use of federal money.
     The lawmakers, including Rep. George Miller of California, chairman of the House education committee, said their concerns included the growing rate of indebtedness among students who attend for-profit colleges.
     That points out another parallel with the housing bubble: Much as the government failed to fully consider the effects of encouraging millions of people to buy homes they could not afford, it doesn't have firm data on how many millions of potential students can truly afford a college education.
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     However complicated to derive, lifetime loan-default figures loom large over the Obama administration's commitment to make Americans the world's leader by 2020 in their proportion of college graduates. That's because the goal, which would require almost doubling the current level of 20-million students graduating from college in a year, will almost certainly require a vast expansion of the sector most capable of rapid growth: for-profit colleges. And the limited loan-default data now available show students who attended for-profit institutions fare the worst.
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     …The Education Department, in an analysis last November, estimated that more than 15 percent of federally subsidized loans, by dollar value, would enter default at some period. And among two-year for-profit colleges, it said, the estimate is 47 percent….