Society and Culture, Education

A college both left and right should be angry about

Democrats in Congress and the Obama administration have spent the past three years going after for-profit colleges in an effort to combat fraud and misuse of federal student aid monies. Some policymakers were careful to cast the onslaught as an attempt to root out bad actors. But most of the heated Democratic rhetoric went further, alleging that there is a fundamental contradiction between serving students and serving shareholders, and that for-profits simply can’t help but choose the latter (for my long take on the politics of this issue area, see here).

Because of this tension, Democrats have argued, for-profits will skimp on education and spend their resources on the things that drive their stock price—marketing and recruiting. In order to avoid wasting federal student aid dollars on such useless expenses, Democrats have argued that the government should regulate access to student aid on the basis of an institution’s tax status. Non-profit? No problem. For-profit? Let me see your hands.

If this logic strikes you as dubious, just wait until read Businessweek’s latest story about High Point University, a private, non-profit college in North Carolina. In 2005, High Point hired Nido Qubein, a motivational speaker, to serve as its president. Qubein proceeded to invest nearly $700 million in the campus, constructing shiny new buildings, high-end dining halls, and a ridiculous array of amenities that would make the manager at a Four Seasons blush. As Businessweek points out, this is a very expensive way to grow the brand. Moody’s downgraded their bonds to junk status after the campus borrowed $165 million in just a few short years. Tuition at High Point has increased 60 percent, reaching $37,800 this past year. (High Point received about $400,000 in Pell Grants and $2.3 million in federal student loan dollars in 2009-2010).

Among the juiciest nuggets in the story:

In 2010, according to High Point’s annual IRS filing, [Qubein] received a deferred compensation package that boosted his pay to $1.38 million. IRS filings show the university pays almost $1 million annually to his family’s public-relations and consulting business, now headed by Qubein’s 28-year-old daughter, Deena Qubein Samuel.

So let’s get this straight: When for-profits spend public money on marketing instead of education, Senator Tom Harkin calls them to the carpet in the Senate. But when a nonprofit university feeds at the federal trough to the tune of $700 million in fountains, marble, and a certified “Director of WOW,” policymakers don’t bat an eye because they don’t pay out dividends to shareholders?

And we wonder why we have a college cost problem.

8 thoughts on “A college both left and right should be angry about

  1. So you are worried because a small fraction of the $700 million on new buildings came “from” pell grants and student loans? Did you miss the part in the article where there has been a dramatic shift from “loan/gov’t” dollars to tuition being paid by the parents privately?

    In other words, only a VERY small fraction of the cash is coming from the gov’t, most of it from happy customers?

    $165 million in debt, with $700 million in buildings, that is a debt to asset ratio of 23.5%? 3500 students x $37,800 per year is $132 MILLION in revenue per year… $165/132 = 125% debt/revenue ratio approx.

    Compare that debt ratio / revenue to the US gov’t debt / tax revenues and you might be in for a shock? Morgan Stanley did the calculation for you, 2009 the debt/revenue ratio for the USA is 358.1%

    These are the folks you want to “regulate” the private sector?

  2. What could also be added, the Feds went after “for profits” because they didn’t provide the jobs that the graduates anticipated getting. The Fed reasoned that this was the reason for default on the student loans. Therefore, punish the “for profits” by not allowing student loans. But — what about the lack of jobs, training, etc. for graduates from the public, state and community college crowd who not only have a similar problem with graduates not getting jobs but they have zero accountability for their lack of success in turning out educated citizens. Where’s the outrage over this mis-use of public funds.

    What a country!

  3. Quem, why don’t you use the institutions that you feel will be best for you and yours. There’s nothing illegal here. We don’t need the government meddling any more in education than we have them already (the miserable K-12 public system).

    Sammy, great points.

    Our family CHOSE HPU because we thought it was the best fit for our daughter. We choose to pay a lot of money and feel that it is worth it for the product we receive. If something changes we will take our education dollars and go elsewhere. What a great free-market concept! High Point teaches these principals too and expects to be held to a high standard.

  4. The sad thing is that there are plenty of students at HPU who love it here and who are here to get an education. But we have to rub elbows and put up with the narcissistic ones with the sense of entitlement who drug the girls to get laid (you guys KNOW this is true…everybody does!) They beat up pledges to make themselves feel more like men and pass out drugs like lollipops. I think the school covers it up because they need the money from these brats and that sucks for the rest of us.

    There have been three deaths in less than a year on this campus. Who is going to report on that? May 3, 2011, May 15, 2011 and March 26, 2012. All of them were preventable if the university would crack down and start genuinely caring about the health of the student and not the size of their pocketbooks!

    Please do something before it’s too late!

  5. Andy N., free markets are all well and good, but this school is tax exempt, which means that taxpayers, at least indirectly, are subsidizing it. For instance when the school buys real estate, it gets taken off the tax books which means other taxpayers have to pay more unless they want their public services reduced. Also, the president and his family seem to be using the place as their personal cash machine, which seems improper for a nonprofit institution.

  6. Allison, do not make statements based on rumors that you hear. I recently graduated from High Point and was extremly close friends with the two people who most recently died on campus in the past two years. The first death was because the girl had a brain aneurysm, the second because of a bad doctor who prescribed the wrong perscription meds for the student. Neither were the University’s fault by any means nor could they have taken any measures to prevent it. Also you saying, “narcissistic ones with the sense of entitlement who drug the girls to get laid (you guys KNOW this is true…everybody does!) They beat up pledges to make themselves feel more like men and pass out drugs like lollipops.” could not be any further from the truth. I was an active member in a well-known fraternity on campus all four years and I never once heard of anyone “drugging girls” without their knowledge or consent. Since it is such a small school, you hear about everything that happens during the weekend, especially in the Greek system. It is people like you that make our school look bad, and just because Nido did an amazing job building this beautiful institution, doesn’t mean that he doesn’t care about his students. I am very close with Nido himself, his son being one of my best friends, and you my friend truly sound like one of the bumbling idiots that is jealous of what we have. So kindly, go f*** yourself and actually do some research before you bash something you don’t know about;

    • I was the faculty advisor of the young woman you mentioned who died of a brain aneurysm – I suggest whoever you are – that you do your own research and actually verify the dates mentioned in Allison’s post above before going off on a rant. If you were really as close of a friend of the young woman who died from the aneurysm then you would know she passed away on Feb 1, 2011 (a date not mentioned in Allison’s post) because of the wrist bands we were all wearing. And one more thing, ending your post on an insult does nothing to help your argument and makes HPU – the school you claim to love so much – look bad, because your comments (and your actions) say much about the type of people associated with the school and reflect on us those of us still working hard to educate.

  7. I was a former student at High Point and I completely agree with Allison in terms of the being drugged and sense of entitlement. I dont remember one night when I ventured into a frat after drinking their famous “PJ” by which I only had like half a cup and blacked out. No I am not a lightweight by any means Im 6ft 2 195 pounds I think I can throw back a decent amount of alcohol but that night was the quickest I ever felt blackout drunk after just half a cup. Also with the exception of maybe about 10-15 students everybody I met was pretty much a clone of the next…self-centered, egotistical jerks with too much time and money to spend. The university doesn’t punish students at all with the exception of fines which only punish students who dont have money handed to them every five seconds (probably like 2% of the population). My roommate was caught with two bongs, literally a pound of marijuana, pills, and alcohol in our room (he confessed it was his) and how do you think High Point punishes him? He paid 400 dollars….thats it….didn’t even get kicked out of our dorm…wow. Another friend of mine who attends South Carolina University was KICKED OUT OF SCHOOL….for having 3 EMPTY beer cases in his room. My high school punishes harsher than High Point does…its literally a playground for rich kids to pretty much do whatever they want when they want…even if I had enjoyed my time there my parents were appalled by the absolute disregard of discipline by the student council and would’ve forced me to transfer. The motto of High Point should be “As long as you pay” or “We invented spoiled”. Good luck to you poor students attending this school because unless your taking over daddy’s multi-million dollar business(again was a common factor amongst the students) the real world wont simply “smack your hand” once you graduate.

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