For-Profits Spend Big on Advertising

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Voxxi: For-Profits Spend Big on Advertising

On November 29, 2012, Voxxi reported that for-profit colleges are spending big money on advertising.  For-profit colleges allocate enormous amount of funding toward marketing and surprising little amount of money goes towards education.  The Department of Education states that approximately 12 percent of all students participating in higher education attend for-profit colleges and schools which are privately owned and operated by a profit-seeking business.

According the article who cited Reuters, the for-profit University of Phoenix spent upwards of $400,000 a day on advertisements and that the University of Phoenix is the heaviest advertising spender, doubling daily spending on Google advertising over just a one-month period.  Several other big-name for-profit schools are spending, including ITT Educational Services Inc. and are among the top 25 Google advertisers.

Many for-profit schools are struggling and are cutting back funding in other areas. University of Phoenix spent hundreds of thousands of dollars a day attempting to draw in new enrollees, but recently announced it would be closing half of its locations and cutting 800 jobs to save $300 million by the year 2014.

For-profit schools face increasing low enrollment numbers and high drop-out rates.  New regulations will require all for-profit schools to meet a minimum student success rates.  Secretary of Education Arne Duncan stated “[t]hese new regulations will help ensure that students at these schools are getting what they pay for: solid preparation for a good job.”  “We’re giving career colleges every opportunity to reform themselves but we’re not letting them off the hook, because too many vulnerable students are being hurt.”

Secretary Duncan further stated “[w]e’re asking companies that get up to 90 percent of their profits from taxpayer dollars to be at least 35 percent effective.”  “This is a perfectly reasonable bar and one that every for-profit program should be able to reach. We’re also giving poor performing for-profit programs every chance to improve. But if you get three strikes in four years, you’re out.”

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete our online form.