Pell Grants Fuel Growth Of For-Profit Colleges

For-Profit Colleges are growing rapidly and now serve 6% of all undergraduates. But these colleges include about 20% of all those students receiving federal Pell grants for low income students. Pell grant recipients make up about 50% of enrollment at proprietary institutions, a larger share than at other types of colleges. The University of Phoenix received 657 million dollars in Pell grant revenue in 2008-2009.  Kaplan College got 202 million. (Source, Chronicle of Higher Education, January 8,2010 page A4).

These colleges are flexible on when and how students can enroll. Some spend up to a third of the tuition received to recruit students. For- profit student persistence and completion rates vary, but tend to be in the higher ranges for broad access colleges. Student recruitment costs are high , so retention is essential for expanding profits.

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