Since education is expensive, it is reasonable for a student to expect a return on their investment (ROI). Given that the taxpayers contribute to the education of students, it makes sense that they also receive a return on their investment.
A practical measure of the ROI for a student is often the salary of the job they get relative to the cost of their education. Roughly put, a student should be able to work out of their school debt and be able to live with the job that education is supposed to get them. In terms of the ROI for the taxpayer, the return is similar: students funded by the taxpayers are supposed to get jobs and repay the investment through the taxes they pay. The student becomes the taxpayer, thus enabling the next generation of students to also become taxpayers. One could also factor in the role of the worker as a consumer and the impact of the very few who become job creators.
Because the cost of education grew so high, some folks placed their hopes on the free market. The idea was that for-profit schools would provide a high-quality product (education that leads to a job) at a lower cost than the state and traditional private schools. As might be suspected, the ideal turned out very different from the real.
While state schools obviously receive state funds, the for-profit schools received massive federal support. Unfortunately, this money was ill-spent: 20% of the for-profit school students defaulted on student loans within three years of entering the repayment period. About half of all student loan defaulters went to such for-profit schools, although these schools made up only 13% of the student population. The estimate was that about half the loans funneled through students to the for-profit schools were lost to default, which is not a good investment for the taxpayer.
Students most often default on loans due to financial hardship. As might be imagined, not earning an adequate paycheck leads to hardship. While there are over 2,000 programs where the students had loan debt, but whose earnings put they below the poverty line, 90% of these programs were at for-profit schools. As such, these schools were a bad investment for both taxpayers and students. While public and traditional private schools did account for the other 10%, they have been a better investment for taxpayers and students. This is not to say that such schools do not need improvement—but it is to say that the for-profit model was not a solution and probably never will be. For all the obvious reasons you suspect.
There were some attempts, such as in 2011, to impose regulations against the predatory exploitation of students (and taxpayers) by institutions. Not surprisingly, these were countered by the well-paid lobbyists working at the behest of the for-profits. Under the Trump regime, the stated goal is to destroy the Department of Education, so little help for students can be expected from that department.
Interestingly, some states pushed hard for performance-based funding for public institutions. For example, my adopted state of Florida has seen the Republican dominated state legislature micro-managing of education and imposing their professed ideology. In any case, we have been operating under a performance-based model in which funding is linked to achieving goals set by the state. Naturally, for-profit schools do not fall under the same rules as public schools, which could give them an advantage.
Some might suspect the performance-based funding approach is cover for reducing funding even more. This approach also shifts funding towards schools that have more political influence—which is supported by looking at where the money goes.
It might be suspected that performance-based funding was designed to harm public schools and push students towards for-profit schools. These schools often enjoy political connections and would benefit from reduced public education opportunities. Of course, the profits of such schools come largely at the expense of students and taxpayers. They are well-subsidized by the state in a new twist on the old corporate welfare system. Shockingly enough, there has been little conservative rage at this wasteful socialism and these academic welfare queens.
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