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ITT Educational Services Inc. Message Board

  • thedeathrace thedeathrace Mar 6, 2013 11:04 AM Flag

    Great Wall Street Journal Article about state and community colleges - tuition rates skyrocketing

    A interesting article about state taxpayer funded post secondary schools, ie state and community colleges. States are basically lowering the tax payer subsidies to these schools and the schools are raising tuition rates at the fastest pace ever. There has been a great deal of commentary regarding how attending a state school or community college is so much cheaper than attending a for profit school. The comparison is phony. If you attend a community college you are basically getting a handout at taxpayer expense and making someone other than yourself foot the bill. That is fine if you are the student, but not fine if you are the taxpayer subsidizing the student. So at these state funded schools, tuition rates are rising fast and education programs are being cut. Nice combo.

    The for profit schools have no such distortions. The student pays his or her own way and the tax payer does not have to give away money to someone who is able bodied, of voting and working age, and should be able to take care of themselves. Students do get financing assistance through subsidized student loans at a rate that is less than normal, but this is not a huge subsidy. The fact that they can get the money at all is one of the key benefits of the student loan program.

    However, from a regulatory standpoint, the Dept of Education and the Senate can not go after the community colleges. These are state funded entities and telling the California community college system that your tuition hike of 8.5% is too much and your graduation rate too low just does not get traction, especially when the students are getting a local taxpayer subsidy handout.

    Regrading the negative press re the for-profit education companies, all of this does nothing to change the tone of the short sellers and the federal bureaucratic apparatus. What it does do is narrow the gap between the level of pricing that the student pays for one versus the other educational program.

    Sentiment: Strong Buy

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