"Early death reports are known to be exaggerated. For-profit educators' may be an example. With Congress and regulators threatening to cut off federal funding, share prices for the industry's top six by market capitalization have dropped by an average of 40% since May. From 2000 to 2009, the industry grew explosively, thanks to increased government spending and Bush-era deregulation permitting aggressive sales tactics. Taxpayer-guaranteed loans and grants flowing to the industry more than quintupled during those years, to $26.5 billion from $4.6 billion."
"Earning risk-free profits on taxpayer-guaranteed loans tends to lead to lower lending standards. Such is the case with firms like Apollo Group, ITT Educational Services and Career Education. They often market to low-income prospects -- eligible for the most aid -- and sell them high-priced degrees, maximizing government largess."
Here is the URL for the GAO study: http://www.gao.gov/products/GAO-10-948T
more at:
http://michaelperelman.wordpress.com/2010/08/21/subprime-education-scam-guaranteed-by-government/
-- Michael Perelman Economics Department California State University Chico, CA 95929
530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com