While media arts is the most popular degree sequence at the Art Institutes, the school trains many individuals for careers in food service. “Most of those who want to will probably get some sort of a job in the business,” said Jana Wardle, a former Culinary Arts instructor at the Art Institutes and currently a professional pastry chef in Miami, “and make around 10 dollars per hour. I think paying back huge loans would be really hard with that paycheck. Impossible.”
Jaqueta began Art 1000, Introduction to the Visual Arts, on June 6. She was awarded $4,359 in financial aid from a mix of federal loans and grants. Because Jaqueta never replaced her laptop, she planned to do her school work with her Kindle Fire.
But again, Jaqueta could not finish her coursework. She says she called and asked to drop out almost as soon as the term began. As she was active for a very short time, she received a partial refund.
In August, she signed up for Art 1000 again.
For-profit schools have to heed pressure from Wall Street analysts to boost enrollment. Keeping enrollments up – and share prices as well — depends upon finding a constant stream of new students. The churn rate is often very high, as many students drop out in only a semester or two.
“Without enrollment growth, said Piper Jaffray’s Peter Appert, “it’s hard to make a case for sustained improvements in margins and profitability. Business will remain profitable, but at depressed levels.”
Given that, spending tends to focus on recruiting new students. Expenditures on marketing and admissions exceed those for instruction. Senator Harkin determined that for-profits spent $4.2 billion – almost all from federal aid – on activities related to marketing and admissions. In all, Harkin said that only 17 percent went to pay for the cost of instruction. $3.6 billion ended up as pre-tax profit.
Still, there is money left over to enrich their top executives. CEOs at private for-profit schools can earn far more than their peers at traditional public and private not-for-profit schools. In 2009, Strayer Education paid $41.9 million in salary, bonuses and stock to its CEO, Robert Silberman. From 2010 to 2012, Todd Nelson, the CEO of Education Management, received $21.5 million in compensation. In 2012, Jack Massimino, the CEO of the corporate parent of Everest, received compensation worth $3.1 million. By contrast, the Chronicle of Higher Education says that the average compensation package in 2012 for a president of a public university was $441,392.