Tax dollars driving up costs of college education

From seminaries to beauty schools, taxpayers are financing the schooling of millions of students, and the flood of public dollars is driving up the cost of education, critics charge.

A study released Wednesday on Department of Education spending drives that point home, according to OpenTheBooks, a nonprofit dedicated to transparency in government spending.

In many cases, the spending is exactly what one would expect. The City University of New York system collected $1.2 billion in federal money in 2017, with $315 million in student loan payments and most of the rest in direct payments. California State University also cleared $1 billion, with almost all of that in student loan payments.

But more than $700 million went to hair, beauty and cosmetology institutions, including $65.6 million in payments to Empire Beauty School, which has 88 locations in 21 states. A year at Empire Beauty Schools costs $28,680, the school says, although it advertises aid packages to bring the price tag down to $20,910.

From 2014 to 2017, taxpayers loaned $74.2 million to finance education at the American Musical and Dramatic Academy, which the school estimates costs between $38,000 and $48,000 a year. Virtually every student received aid during the six years it takes most of them to graduate, according to outside calculations. Graduates make $28,000 a year on average, according to the Education Department’s “College Scorecard.”

Adam Andrzejewski, OpenTheBook’s founder, said the federal government’s expanding role has become counterproductive, creating incentives for schools to raise their costs, knowing taxpayers are helping pick up the tab.

“Scaling back the amount of public funding flowing to cosmetology colleges should be a nonpartisan reform,” Mr. Andrzejewski said. “Public funding in the form of student loans and grants is so lucrative it has pushed up the cost of student tuition to above-market rates. Many of these beauty schools now charge student tuitions that exceeds Big 10 universities, and students graduate after one year with a license to cut hair, manicure nails, and do massage therapy and they have tens of thousands of dollars in student loans.”

In addition, a spreadsheet from the Office of Management and Budget shows the Education Department pegging the level of improper spending on Pell Grants, the biggest share of college loans, at $12.2 billion between 2004 and 2017, with the figure soaring from less than $1 billion in 2015 to more than $2 billion in 2016..

The department did not respond to inquiries from The Washington Times about improper Pell Grants and other parts of the report, after officials asked for questions in writing and wanted clarification on some questions.

Schools aggressively encourage students to take advantage of federal money. For example, the Crescent City School of Gaming and Bartending, which received $9.5 million in federal funding between fiscal 2014 and 2017, cites federal loans as the most common way to pay.

The school provides a helpful list of taxpayer programs — Pell Grants, Stafford Loans and Workforce Investment Act/Network Funding — that students might access.

“Many Crescent students end up paying for their whole Crescent program from these sources and have living expenses left over,” the school told students.

The Washington Times reached out to the Crescent school, as well as several others that have taken in millions in taxpayer money, such as the Refrigeration School in Phoenix and the Sonoran Desert Institute, a firearms specialist institution, but did not receive any response.

The Education Department’s budget stands at about $115 billion a year, a gargantuan expansion from its early years after it was established by President Jimmy Carter in 1979.

Of that, about half goes to higher education, or $120 billion in 2017 and 2018 combined. OpenTheBooks said student loans accounted for 79 percent and direct payments were 19 percent. The remaining money was for grants and contracts, including billions spent on companies to monitor and collect student loans.

Most of the money the Education Department spends is in the form of loans, of which the Obama administration made taxpayers the sole source. Students at what OpenTheBooks classifies as traditional schools took in the most, borrowing $66.1 billion, while those at community and junior colleges, for-profit schools, and the aforementioned beauty institutions borrowed another $10.4 billion, the study found.

The loans were soaked up by schools, the 25 largest of which have endowments that, combined, top $250 billion. Mr. Andrzejewski said colleges must open the spigot from their bulging endowment accounts and put their own skin in the lending game.

“They have got to lighten the load on the American taxpayer,” he said.

The regulation of the schools and the outlay of so many billions isn’t cheap, as records show taxpayers provide handsome compensation to Education Department employees.

“The average wage at [the department] in FY2017 was $109,918,” the report said. “The average employee cost taxpayers $143,992, including benefits. In May 2018, [the department] disclosed 3,818 employees — a large decrease from 4,642 employees in 2012.”

The department’s payroll swelled for most of the Obama administration, before dipping in 2016 and falling sharply thereafter, federal records show.

Although the study acknowledges partisan differences between how the Department of Education’s mission is envisioned, steps to reduce its spending are available with a minimum of political wrangling, Mr. Andrzejewski argued.

“Big savings start with small, sensible cuts,” Mr. Andrzejewski said. “With education we often see that the best way to make something expensive is for government to make it ’affordable.’ That’s true of traditional higher education and other forms of education that are alternatives to four-year colleges.”