The commercial college biz grows: For profit, for shame

American students are responding in record numbers to the constant drumbeat that they must go to college to succeed.

Unfortunately, the most vulnerable of these students, those without a college-going culture in their families to inform their higher-education decisions, are marching into institutions that have little incentive to ensure they graduate.

The fastest-growing campuses in higher education today are for-profit schools that rely on sleek marketing, big promises and online ads to entice low-income and minority students to their pricey programs.

But these colleges post far lower graduation rates, even when compared to nonprofit open-enrollment colleges that serve the same students.

And they get higher tuition from these students, often the first in their families to attend a college.  “And who’s waiting for them with open arms?” says Amy Wilkins, vice president of the Education Trust, which just released a blistering report on for-profit colleges. “These shysters,” she says.

A Washington-based nonprofit research and advocacy group, the Education Trust has been chiding nonprofit colleges for years about their underenrollment of low-income and minority students but targeted the burgeoning commercial college industry in its latest report, “Subprime Opportunity: The Unfulfilled Promise of For-Profit Colleges and Universities,”

The study cautions:  “As with the collapse of the subprime lending industry, the showdown between for-profit colleges and the government shows how the aspirations of the underserved, when combined with lax regulation, make the rich richer, and the poor poorer. For-profit colleges provide high-cost degree programs that have little chance of leading to high-paying careers, and saddle the most vulnerable students with heavy debt. Instead of providing a solid pathway to the middle class, they pave a path into the subbasement of the American economy.”

Largely unregulated by either state or federal governments, for-profits grew their enrollments by 236 percent in a decade, outdistancing the expansion of the public colleges, such as the University of Georgia or Kennesaw State, and the private nonprofits, such as Berry, Mercer or Agnes Scott.

But their graduation rates trail the nonprofit campuses.

On average, for-profit colleges graduate 22 percent of their first-time, full-time students seeking bachelor’s degrees. Public colleges graduate 55 percent, and private, nonprofit colleges graduate 65 percent.
Rates vary by institution. The six-year graduation rate at the biggest player in the commercial field, the University of Phoenix, is 9 percent, according to the study. The graduation rate at DeVry is 31 percent.
Students in for-profit institutions finish with far more debt, according to the study.

n 2008, the median debt of graduates of for-profits was $31,190, nearly twice that of  private nonprofit graduates, $17,040, and more than three-and-a-half times that of public college graduates, $7,960.

The for-profits have rebutted these criticisms by citing the weak academic histories of their students, countering that they often admit students who are not traditionally regarded as college material.

But the Education Trust also examined the graduation rates of open-enrollment, nonprofit colleges that accept all comers. And their rates are three times as high as those of the for-profit schools. Same students. Far different rates.

One reason is that for-profits don’t invest as much in their own students. Despite having lower tuition and fees, nonprofit schools put three times as much money into direct student services than their for-profit counterparts.

“This is our 10th report on higher ed,” says Wilkins. “The for-profits say we are beating up on them unfairly. We have beat up on nonprofit colleges and universities plenty. The fact is that these for-profits are not getting their kids out.”

The U.S. Department of Education is also concerned with the poor track records of the for-profit schools and has proposed new regulations to improve graduation and to impose penalties on schools that award staff bonuses for enrolling more students.

The government has more than a passing interest in the success of these schools; they have a substantial investment.
In 2008-09,  for-profit colleges enrolled 12 percent of postsecondary students but collected 23 percent of all the federal student grants and loans that went to U.S. universities.

“These schools — and their investors — benefit from billions of dollars in taxpayers subsidies,” said U.S. Education Secretary Arne Duncan, “and, in return, taxpayers have a right to know that all of these programs are providing solid preparation for a job.”

– Maureen Downey, for the AJC Get Schooled blog

41 comments Add your comment

ChristieS.

December 23rd, 2010
3:42 pm

Maureen, does the report state how the rates of Associates degrees compare?

Dr. Craig Spinks /Augusta

December 23rd, 2010
3:52 pm

College “open-enrollment” is an oxymoron. How might any institution worthy of the name “college”* admit anyone without his/her demonstrating high reading, math and writing skill-levels as well as expansive knowledge in other content areas? Enrolling anyone deludes incapable students and frequently defrauds the U.S. taxpayer. We can only hope that any privately-financed loans extended to persons accepted into these colleges have not been securitized by Wall Street. We don’t need a subprime student loan catastrophe.

* I don’t care if the “college” is accredited by SACS or NCACS.

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catlady

December 23rd, 2010
4:41 pm

You are right–it is a shame, even a crime, facilitated by the US government and banks. Those banks lose nothing when the “students” default, as the government (us) picks up the cost. I am in favor of cutting that out. If you graduate less than x%, you are not eligible for federal financial aid for your students. This would serve as an incentive for colleges to admit bona fide students. Of course, they could “dumb down” the curriculum even more. At some point, however, we have to ensure that public money is well spent, to viable students enrolled in real colleges. Don’t think we can count on the accrediting agencies, with the GOB network and the “buy an accreditation” that we have now.

Yes, it seems harsh for unprepared students. However, a student can enroll in a public community college, whose mission includes helping such students, on their own investment. That would up the incentive. While I don’t think we should shut down these for-profit “colleges”, they need to sink or swim on their own, not on the back of the taxpayers who guarantee these loans.

GNGS

December 23rd, 2010
4:51 pm

One more piece of information from Andy Kroll (“For-Profit College Loan Fail”, Mother Jones, 12/22/2010):

“According to new data from the DoE released on Wednesday, 46.3 percent of all loan money lent to students at two- and four-year for-profit colleges in 2008 would eventually go into default. By comparison, the overall default rate in 2008—lumping together loan money given out to students at community colleges, for-profits, and traditional undergraduate and graduate schools—was only 15.8 percent. You know something’s wrong when the for-profit default rate, dollar per dollar, is nearly three times higher than the rest of academia.”

Freedom Education

December 23rd, 2010
5:17 pm

At what point are adults responsible for their own actions?

Fred

December 23rd, 2010
5:27 pm

Freedom Education

December 23rd, 2010
5:17 pm

At what point are adults responsible for their own actions?
+++++++++++++++++++++++++++++++++++++++++++++++

At the point when they are spending their OWN money and not MINE I would think there Freedom Education. If you want to steal taxpayer money then you need to be held accountable for the lack of education you give your “students.” Spend more of that money you are stealing from us on teaching and less on the hustlers signing them up…………..

TopSchool

December 23rd, 2010
6:21 pm

And “FAKE” Awards …Where do they fall in line with all of this?

Freedom Education

December 23rd, 2010
6:24 pm

Fred

I’m not sure what your point is, but I will explain mine. All adults are responsible (or should be in a republic) for their loans, education, and paying them back. It’s called self-determination. It’s not the government’s job to protect us from ourselves, provide funds for loans, or provide any social(ist) programs.

TopSchool

December 23rd, 2010
7:15 pm

If a PUBLIC school system lists falsified AWARDS…for their schools and for the system as a WHOLE…How should the public view this? LET ME SPELL —C R I M I N A L…

and if that Public System…Took your child’s TEST and filled in the bubbles…to QUALIFY your child for the GIFTED and TALENTED program…Would you call that A FAVOR for a DONATION…and if you were really smart…and you wanted to hide WHAT you did…Would you call that…TAMPERING with a witness by giving them favors to keep their mouth shut…and manipulating information you submitted during an inquiry…CODE 4 of the Professional Code of Ethics…Can you TWIST and TURN those words to apply to only APPLY to those you owe political FAVORS.

And if your dishonesty caused EVERYONE in the NATION to wonder if anything submitted in behalf of your child’s PUBLIC EDUCATION WAS TRUE and REAL…

Would you be outraged?

Everything is on the TABLE…Discuss it.

TopSchool

December 23rd, 2010
7:17 pm

TopSchool

December 23rd, 2010
7:26 pm

I think our public schools are FOR PROFIT for some people.
A total, complete, REAL investigation would show who PROFITED.

Until we’ve corrected the problems “in the public house” why discuss these issues?
For PROFIT…PUBLIC vs. PRIVATE

TopSchool

December 23rd, 2010
7:27 pm

last comment…PEACE…

Karma

December 23rd, 2010
9:42 pm

But wait! If these get shut down, where will Beverly Hall get more principals from?

Cere

December 23rd, 2010
9:43 pm

All so very true, this is the next big financial collapse for the US. So many of these loans were guaranteed by the government. I’ve heard that the feds even plan to use the interest to fund part of healthcare… uh oh. That won’t work, because the defaults on these loans will be the next big bubble to burst. That said, if you want to make fast cash off an investment, follow some of these guys. They get in hot water after collecting millions but not delivering the “product” and then they shut down… only to go down the street and open another for profit, government-backed “college”… BIG bucks here…

Atlanta mom

December 23rd, 2010
10:11 pm

You know, here in Georgia we have only one track when it comes to high school degrees. So, everybody who graduates must be college material. That’s what we tell the kids. And they believe the adults who have been telling them this for four years. So, who here is at fault? The 18 year old who believes what they’ve been told for four years? Or the folks who knew better and didn’t want to crush their dreams?

Teaching in FL is worse

December 23rd, 2010
10:28 pm

It’s been a long time since I have commented…but here goes. (This pushed my buttons) Until we can have an honest discussion that not every child should be pushed into college many of the arguments on this blog are rendered moot.

Freedom comes with a price…so does capitalism.

Toto: speakin' the truth to power

December 23rd, 2010
10:58 pm

Constitutionally, the government has no right to be in the student loan business. This is a non-issue; if students had to fund these expensive ripoff schools themselves, then they wouldn’t attend. If the government schools were in the business of actually educating the students, these schools would hold no appeal.

Unrelated but fascinating:
Blogger accurately predicts northern Europe mini-ice age!
It seems that BP is reaping what it sowed. The Gulf Stream (originating in the Gulf of Mexico) is breaking up. This plus several other factors will lead to prolonged Arctic weather in Northern Europe! Get ready for a flood of Brits to our shores.
http://globalcoolingnewiceageuk.blogspot.com/2010/08/gulf-stream-situation-has-got-worse.html

NWGA Teacher

December 24th, 2010
12:03 pm

My daughter is in 9th grade AP. Her connections classes (art, health, etc.) include students from all grades. She knows two types of students: those who plan to go to college, and those who plan to drop out. The message to students is, “You will go to college or you will have no life.” The community college or trade school option is not mentioned.

justjanny

December 24th, 2010
1:38 pm

r u talking about schools like argosy? if so, buyer beware!

teacher&mom

December 24th, 2010
2:16 pm

It is a shame. I would be interested in seeing a break-down of the number of enrollments per state. Is enrollment higher in rural areas where access to a college is limited. Many people attend these colleges because they need to work during the day or take care of their families. Georgia colleges do not offer many viable options for students who work full-time. Also, the community college option is great and under Zell Miller’s term, the Technical College System of GA was expanded throughout the state. Unfortunately, under the Perdue administration, funds to the Technical College were cut and many have struggled to offer additional degrees….especially associate degrees. It has taken over 10 years for my local technical college to earn SACS accreditation and begin articulation agreements with universities. Georgia is woefully behind on the development of a strong community college network (as compared to NC).

I’m sure many who apply to the online or for-profit colleges would gladly apply to a local program IF they offered more options for the non-traditional student.

A friend of mine teaches at a community college in NC. It is impressive to listen to her describe the network of NC community colleges and the different options for students. BTW, NC has several community colleges ranked in the top 50 Community Colleges.
http://www.washingtonmonthly.com/college_guide/rankings_2010/community_colleges.php

Dr. Craig Spinks /Augusta

December 24th, 2010
2:29 pm

Many of the persons who are scammed by “colleges” which foist high-dollar loans upon them are drawn from a larger population of people who have been scammed by second-class public school systems which foisted upon them the delusion that their high school diplomas have substantial economic value. When will our society learn that one’s long-term success is not necessarily based upon one’s possession of paper credentials? One’s success is more likely based upon his/her possession of the widespread knowledge, the highly-honed skills and the positive attitudes that one’s educational credentials should, but may not necessarily, attest. When will we demand that the educational credentials conferred by high schools and colleges in our state be founded upon proven compliance with standards relating to knowledge, skills and attitudes demanded of our respective graduates by our global society?

Northview Mom

December 24th, 2010
5:09 pm

Maureen, can you do a rundown at some point on move on when ready programs int he state? I hear a lot about different criteria at different places and hear good things about one or two programs in GA.

End the Fed

December 24th, 2010
6:55 pm

The only reason money is available to these kids (and thus to these colleges) is that the Federal government (actually us taxpayers) guarantees to pay most of the loans if the student defaults. This makes the banks willing to loan. Add to that the Federal Reserve printing presses that are working overtime making money available for these loans and you have what is appropriately named “Moral Hazard.” Let’s face it. If these colleges and universities had to fight for the money that parents had saved or were able to affordably borrow, or parents could afford to pay directly, they would be forced to massively lower their costs. Once again, the supposedly “benevolent” actions of government result in the clearly predictable results we see today. Too bad the cheerleaders in the media, the greedy middle class parents, and the higher education monopoly profit heavily from these giveaways. We might actually have far fewer, more qualified kids going to college and ultimately getting out without a lifetime burden of student loans they will never be able to afford. Good job again government. End the Fed.

Patrick Crabtree

December 25th, 2010
3:12 am

Why should this surprise anyone? This is the very reason we do not need charters or privatization. They never had the students best interest at heart………it is about the almighty dollar and profit!!!!!!!!! What will critics say when they privatize and our students can’t compete because they can’t afford to go to school??????? Pull your head out people! Maybe our best and brightest aren’t elite and they cannot afford higher ed, why do think our founding fathers wanted ‘FREE PUBLIC education’?

justbrowsing

December 25th, 2010
7:56 am

I feel that for profits should be made to adhere to the same admissions guidelines as traditional brick and mortar colleges. Everyone is not college material. If they have profited from selling pie in the sky dreams to those unwilling to obtain their educations in meritorious fashions, they should be punished. I would prefer that they place more emphasis on the enrollment guidelines and not the graduation rates, Lord knows you don’t want someone lacking the proper training and experience to work in certain careers/jobs. By placing more emphasis on the graduation rates, they will churn out anyone regardless of their preparation. Students are not motivated to do anything. Education is an opportunity and not a convenience. I find it quite disturbing that a student would obtain a bachelor’s degree from an online university, or for profit college. I know these university’s have problems as I know both those who teach in them and those who attend them. This is not to say that there are not some that lack rigor, but, the majority of them take on a “pay to play” attitude where anyone who chooses to walk into the door can get a degree. It would be interesting to know more about their admissions rates in comparison to their graduation rates.

justbrowsing

December 25th, 2010
8:17 am

Bubba

December 25th, 2010
8:20 am

Let’s look at it this way, if they are not smart enough to figure out if it’s a legitimate school, they probably do not belong in college.

TW

December 25th, 2010
9:47 am

Another liberal attack on the free market.

Wait until Palin hears about this…lol…

TopPublicSchool

December 25th, 2010
11:06 am

And where does the NOVA drive thru rank in all of this?

http://www.TopPublicSchoolCorruptionAtlanta.com

DR. LORRAINE REICH, Ed.D
Principal, Warren T. Jackson Elementary – Atlanta Public Schools- Top School

Education
B.A. Michigan State University – Elementary Education
M.A. University of Louisville – Guidance and Counseling
Ed.D. Nova Southeastern University – Educational Leadership
Post graduate work at Georgia State University and Oglethorpe University

TopPublicSchool

December 25th, 2010
11:09 am

Post graduate work??? is that another twist of words…like “Family Suite”…???

TopPublicSchool

December 25th, 2010
11:15 am

And by the way…Reich did away with the counselor position for one year and collected that salary in her miscellaneous fund?, reorganization account?, discretionary account? Principal’s Fund?… …Justification??? She has a counseling degree, too…she could serve the children at the Jackson school…besides the fact that they farm out any counseling to the neighborhood’s private counselors…no need for a counselor. “Just give me the money for that position, too.”

Elleln Fix

December 25th, 2010
11:37 am

Two main points are entirely missed in this article:
1) There is no guarantee of a “path” to employment made by ANY school – private, public, profit or nonprofit. Do you really think the gal who majors in Feminist Literature from some small, widely accepted, residential, private liberal arts college is any better off than the gal who majors in Fashion Design from one of those for-profit chools you speak of? Either graduate has the same percentage chance of NOT finding a job in this economy. And do you really think those for-profit school loans of $30k are somehow more of a strain than the same $30k debt incurred after attending any ivy league school? Furthermore, you use semantics to make a point; isn’t a “private” college making profit just like a “for-profit” college is?

2) Many of the for-profit schools you speak of are designed as primarily distance learning and online programs. Thus, the student has zero access to tutoring, after-class help, mentoring, or basic study skill training as might a student who attends a class with a teacher and classmates. The method works for many, but for so many more, as soon as the student gets “stuck” (and there are many chances for this to happen; most students have likely never opened a dictionary in their lives) they drop the program then and there — despite the availability of phone support by most online schools.

These factors must be figured into the evaluation. Why doesn’t the government pinpoint the huge expense associated with attending ALL private, for-profit colleges — including the residential schools that are extolled in all those college recommendation books? The student loans are rising every year for those residential schools, too, because the price of attendance is rising to pay for elegant gymnasiums, souped-up dorm lounge facilities, extravagant athletic programs — is this any less a waste of taxpayer money than an online for-profit school?

Steve

December 25th, 2010
12:35 pm

Go to a real college. It used to mean something when you could say you graduated from college. But now with all the “businesses” that are operating with “college” in their name, you have this class of idiots who likely could not get into a small government college without having to take a year of remedial classes, paying their dues so they can buy themselves a degree from a “college.” But trust me, when an employer looks at the name of the college, suddenly having a college degree doesn’t have the weight that it used to.
I see many jobs requiring a degree from an accredited college, these business for-profits colleges aren’t accredited, so that puts the degree buyers at more of a disadvantage.
Non-profits do offer degree programs that cater to the working person getting a degree, these people should not rule out a real college.

Dr. Proud Black Man

December 25th, 2010
6:54 pm

Argosy 08′ :)

Dr. Proud Black Man

December 25th, 2010
6:55 pm

Happy Kwanzaa folk!

True Grits

December 25th, 2010
8:35 pm

What happens next is fairly predictable. The for-profit colleges are catching hell for the low 22% graduation rate, so look for them to begin relaxing their standards. Then these poor saps (and the taxpayers) will just be buying degrees that are increasingly worthless.

shasta college community garden | COLLEGES

December 26th, 2010
4:11 am

[...] The commercial college biz grows: For profit, for shame – Atlanta Journal Constitution (blog) [...]

Bill

December 26th, 2010
8:19 am

Maureen Dumbney

Graduation rates are low, because they actually make the students learn something. Why? Because they want to attract people with money that realize the public school system is a farce, so they must demonstrate the ability to actually teach people something useful.

The public school system exists to re distribute wealth from families to school administrators and teachers in the NEA. It does not exist for the students.

Maureen Downey

December 26th, 2010
9:04 am

@Bill, Not sure of your comparison as these for-profit colleges stack up very poorly to their non-profit PRIVATE counterparts and their public ones as well. The non-profit privates include Emory, Harvard, Yale, Duke, Rhodes, etc. The public institutions — UGA, Tech, UNC, UVA, UF — attract far stronger students than are being courted and underserved by the for-profit corridor.
Maureen

ABC

December 26th, 2010
9:06 am

This reminds of me something my father once told me. He had set up college funds for my sons and I was concerned that the type he set up reverts to them when they are 16, and they can be used for any purpose. So he said: “If he is dumb enough to use that money to buy a motorcycle instead of for college, he’s too stupid to go to college anyways”

As a previous poster mentioned, not everyone SHOULD go to college. And people dumb enough to fall for scams like that do not deserve a college education, and certainly not at our (taxpayers) expense.