According to its website, the Atlanta campus of the for-profit University of Phoenix offers bachelor’s degree programs in English, environmental science, accounting, business, health administration and other fields.
According to federal data made available by The Education Trust, first-time, full-time freshmen seeking a bachelor’s degree — the type of student most likely to graduate on time — have a four-year graduation rate of 2.4 percent at the Atlanta campus.
Systemwide in its 42 campuses, according to federal data, the University of Phoenix graduates only 9 percent of first-time, full-time, bachelor’s degree-seeking students within six years. And unfortunately, most of those failed students leave school burdened with loans they have to repay. In a new report, The Education Trust reports that the University of Phoenix “brought in over one billion dollars in Pell Grant funding alone in 2009-10, and this year the school risks exceeding federal limits by deriving over 90 percent of revenues from federal financial aid.”
That 90 percent figure does not include additional revenue derived from veterans’ benefits, which have also become a lucrative funding mechanism for proprietary schools. At 20 for-profit education companies, for example, revenue from Veterans Administration and Defense Department programs “increased from $66.6 million in 2006 to a projected $521.2 million in 2010, an increase of 683 percent,” a new investigation by the Senate Health, Education, Labor and Pensions Committee has found.
In many of those schools, veterans and active-duty personnel are squandering their hard-earned GI Bill benefits and federal loans on an education that just isn’t worth much, the committee found.
“For example, one veteran interviewed by HELP Committee staff decided to earn his bachelors of science in a construction management program at a for-profit school because it was a 3-year program. His wife has muscular dystrophy, so he wanted a program that he could finish as quickly as possible to begin working. He received benefits from an earlier version of the GI Bill and also borrowed $12,000 in federal loans from Sallie Mae to attend. The veteran was told that the school was accredited and that his credits would transfer if he wanted to pursue a masters degree.
After enrolling, he became disappointed with the quality of education and said that many students were not engaged and did not complete their work, but that they always received passing grades. One teacher pulled the veteran aside and told him the school did not provide a quality education and that he should enroll in a better school.
At that point, he had earned 52 credits. When he went to transfer to a public, non-profit institution, he found out that none of the credits would transfer.”
It should be noted that some proprietary schools have a significantly better record than their peers. DeVry University, for example, graduates 31 percent of its freshmen within six years. ITT Technical Institute graduates 67 percent of its freshman class. But the industry average is just 22 percent, compared to a 55 percent graduation rate at public colleges and 65 percent at private non-profits.
The proprietary sector is growing incredibly fast, again on the taxpayers’ dollar. Between 1998 and 2008, enrollment in for-profit schools jumped by 236 percent, and its draw on the federal Treasury grew even faster. For example, proprietary schools quadrupled their revenue from Pell Grants in that same time frame.
In its report, Education Trust likens much of the proprietary school industry to the pre-crash subprime lending industry, and the comparison seems unfortunately apt.
They prey on the dreams of ill-prepared people, putting them in situations where most will not succeed. They help their victims arrange loans that they won’t be able to repay (federal loans, unlike mortgage debt, can’t be voided through bankruptcy or foreclosure). And when the loans go bad, the U.S taxpayer is left holding the bag while the industry counts up its profits and bonuses.
Is any of this seeming familiar?
The Obama administration, under Education Secretary Arne Duncan, is moving to try to tame the worst excesses of the industry. One possible reform would be to bar federal loans to students attending programs where fewer than 35 percent of former students are paying back loans or are capable of doing so. That hardly seems an unreasonable guarantee that taxpayers and students are getting their money’s worth.
However, U.S. Rep. John Kline, the incoming chairman of the House Education Committee, has already indicated that he will try to block new laws or regulation. The announcement sent proprietary school stock prices to their highest level in two months.
I know I know: Business good, government bad. The mantra is familiar.
But these schools — this industry — would not exist without federal financial aid to students. The idea that the federal government should not regulate an industry that it has created and sustains through taxpayer money is ludicrous.
– Jay Bookman