CEPR

For Immediate Release: July 9, 2019
Contact: Karen Conner, (202) 293-5380 x117, This email address is being protected from spambots. You need JavaScript enabled to view it.

Private equity firms seem to be taking a page from the now-defunct for-profit Trump University. In today’s CEPR Blog, researcher Hayley Brown explores what’s behind private equity’s increased purchase of a dwindling number of for-profit colleges.

As Brown points out, recent developments have improved the chances for private equity to exploit for-profit colleges. The Trump administration’s Department of Education now allows predatory programs to pocket billions of dollars in federal aid and has shut down the team investigating fraudulent activities in for-profit colleges.

When private equity firms buy a for-profit college, there’s a corresponding 10 to 20 percent increase in the reliance on federal student aid programs. Private equity-owned for-profit colleges have more student loan defaults, per-student borrowing, and receipt of federal grants, but students have lower graduation rates, earnings, and loan repayments.