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Thursday, June 24, 2010

Thursday, June 24, 2010

UC Regent profits from For Profit Higher Ed...

Frontline has a great segment on for profit education. Today the Senate is holding a hearing on a report drafted by Senator Tom Harkin on the for profit education sector. Steven Eisman, former hedge fund manager and critic of subprime mortgages says that we are on the 'cusp of a new social disaster.'

Bloomberg reports that "The five largest publicly traded for- profit companies received 77 percent of their revenue from federal financial aid programs in 2009, up from 63 percent in 2002, the report said." Richard Blum is a smart investor.

But where is the conflict of interest between Blum's savvy investment in the for profit education bubble and his service as UC Regent?

Today on NPR, the profit education industry defended itself by asserting that it provided education to critically underserved populations. Perhaps thousands of CA students who couldn't get into Cal State or UC's because of budget cuts and enrollment contraction could pick up a degree at one of Blum's for profit universities?

Blum's Capital Partners is the DOMINANT shareholder in two of the largest for profit higher corporations, Career Education Corporation and ITT Educational Services, Inc, both under Senate investigation and cited by Harkin's report.

These companies have learned how to suck taxpayer money into diploma mills that turn handsome profits for their investors while saddling their "students" with crippling debt.

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