Students At A For-Profit College Received The Most In Federal Subsidies

Grand Canyon University, a for-profit, Christian institution, received over one billion dollars in federal student subsidies in fiscal year 2020-21, the most of any U.S. higher education institution.

It’s not the only for-profit institution to benefit from huge taxpayer subsidies. Of the 20 colleges receiving the largest amount of federal grants and loans for their students, eight were for-profit schools.

The data were analyzed by Michael Itzkowitz, founder and president of the HEA Group, a new higher education policy and analysis organization. Itzkowitz sorted federal higher-education allocations into three buckets:

• student loans (Stafford, Parent PLUS and Graduate PLUS),
• student grants (Pell Grants, TEACH Program, and Iraq and Afghanistan Grant program), and
• campus-based awards (work study, Perkins, Federal Supplemental Educational Opportunity Grants)

He then computed a total of the three.

Here are the top 20 schools, based on the total of the three federal funds, and designated by their sector. Of the top 20, eight are for-profit schools, seven are private, nonprofits, and only five are public institutions. Several – such as Grand Canyon University, Western Governors University, Southern New Hampshire University, and Purdue Global – are exclusively or primarily online institutions.

Grand Canyon University(for-profit) $1.156 billion

Arizona State University (public) $900 million

Liberty University (private, nonprofit) $830 million

University of Phoenix (for-profit) $830 million

Walden University (for-profit) $782 million

Southern New Hampshire University (private, nonprofit) $773 million

Western Governors University (private, nonprofit) $710 million

University of Southern California (private, nonprofit) $631 million

New York University (private, nonprofit) $615 million

Strayer University (for-profit) $603 million

Nova Southeastern University (private, nonprofit) $584 million

Pennsylvania State University (public) $541 million

Rutgers University (public) $490 million

Chamberlain University (for-profit) $453 million

Capella University (for-profit) $447 million

Colorado Technical University (for-profit) $407 million

Purdue University Global (public) $397 million

Midwestern University (private, nonprofit) $394 million

Temple University (public) $383 million

Full Sail University (for-profit) $377 million

What do taxpayers get in return for these investments? There are many ways to measure the returns, but one common, straightforward measure is an institution’s graduation rate for its undergraduate students. Using the College Scorecard’s most recent data for eight-year graduation rates, here are those results:

• Among the for-profit schools, most of the eight-year graduation rates were below 40%: Capella University (21%), Colorado Technical University (22%), Walden University (29%), Full Sail University (39%), and Grand Canyon University (42%). At 17 sites of Strayer University, the highest graduation rate was for the Virginia campus at 28%; several were below 15%. For the five University of Phoenix campus locations, the range was from 27%-52%. The best for-profit performer was Chamberlain University, with a graduation rate range from 38%-75%, and six campuses at 60% or higher.
• Among the five public universities, the median eight-year graduation rate was 70%, ranging from 27% at the online Purdue Global University to 83% at Rutgers University. Arizona State University’s graduate rate was 68%, Penn State’s was 70%, and Temple University’s was 73%.
• For the six private, nonprofit institutions with undergraduates (Midwestern University is graduate only), the average graduation rate ranged from 36% (Liberty University and Southern New Hampshire University) to 93% (University of Southern California). The other rates were 53% (Nova Southeastern University), 54% (Western Governors University) and 85% (New York University).

Of course, these institutions serve very different student populations, have different missions, and their degree of selectivity in admissions also varies substantially so differences in graduation rates are not unexpected. Nonetheless, the magnitude of the differences should raise questions about whether current federal policies are leading to the wisest investments of more than $100 billion a year in taxpayer money.