Attorneys General in 10 States Mount Joint Investigation Into For-Profit Colleges

Attorneys General in 10 States Mount Joint Investigation Into For-Profit Colleges - Administration - The Chronicle of Higher Education

 

There's some online schools that deserve this investigation and possibly further action. On the other hand, there are a number of online schools that are providing top quality education with ethical recruiting practices and do not deserve any investigation or action. My hope is that this will only hurt the schools that deserve to be hurt. Unfortunately, the backlash of public opinion will likely damage the reputation of the great schools as well as the bad ones.

 

Or - Release the hounds!!!!!!!!!!!!!!!!!!!!!!!!!


Abner

 

I am a member of the Institute of Management. I this April 2011 of Strategic Finance (the magazine) in the ethics section there is an article on for-profit-schools. It is a fairly balance report but a few issues very much need to be taken care of by for profits.
Here is a summary:
• For-profit 9% of postsecondary student but 25% of student loan
• 87% percent of revenue from student loan
• Highest paid for profit CEO $41.9 million
• Highest paid Ivey league CEO 1.75 million
• State graduation 55%; for profit 22%
• Default rate 25% for profit; 10.8% state; 7.6% private

 

Well, the leader of this effort is the AG of my state. During the past month, we have had our Title IV audit by the U.S. Dept. of Ed. and just completed a separate and independent visit by our accrediting body (SACS) on our new (online & hybrid) Ph.D. program. Both teams were very thorough and came to the conclusion that we are nothing like the negative stereotype of a "bad actor for-profit". In fact, we received that rare gift that all schools crave: an accreditation visit resulting in neither "findings" nor recommendations for change.

 

This is the stat that caught my attention. I would expect that the default rate for for-profits would be significantly higher than for public schools due to the huge tuition disparity, but I didn't expect private non-profits to have the lowest of all 3. These is especially interesting since most private, non-profits that I have encountered are the same price as, or higher than, the for-profits.

 

This is a bit like comparing sticker prices on cars. At selective private non-profits, many students get half or more off of the sticker price.

 

I did not read the article, but I notice that these statistics account for only one source of tax subsidy for students: Title IV federal funding. Why not mention total tax funding going to a student, including local and state taxes? If these were counted, it would show that a student at a community college receives more total tax funding than one at a for-profit.

Is the CEO in question over a large multinational corporation with many different business entities and subsidiaries besides the college/university? And is that person being compared to a president over a single entity (a university)? Just asking.

Does the article mention that the only students counted in these graduation rates are those who come to the school with no prior college experience and that the vast majority of students at for-profit colleges and universities are transfer students that are not counted in graduation statistics. Also, does it mention that community colleges have lower graduation rates than for-profits?

The numbers are not always what they seem when you start asking questions about them.

 

The most expensive colleges and universities are all non-profit. If you look at the various lists of the 100 most expensive colleges, you will find no "for-profits" among them. If you look at the demographics of the different sectors and the(low) percentage of students at private non-profits classified as economically disadvantaged and who are the first-generation of college attendees in their families, then the lower rates of default are not surprising.

The point that is so often missed (or ignored) is that schools do not default on loans. Graduates of schools make decisions about what they will do with their finances and financial obligations after they leave school (sometimes years after leaving school). People decide not to pay their students loans (just like they decide not to pay their car loans or credit card loans) for many reasons. So when a person decides to stop making payments on a car loan, does the government threaten to shut down the car dealership that sold the car? Does the government shut down the bank that issued the credit card? Why should schools alone (and only a CERTAIN KIND of school) be punished for a decision made by one (or many) of its graduates?

Now, I can see a school being punished if its representatives encourage prospective students to falsify their FAFSAs, tell students that graduates will make unrealistic salaries, misrepresent they type and transferability of their accreditation, etc. However, do we shut down the medical schools at Harvard, University of Chicago and Tulane, since over 70% of their graduates are currently in student loan default?

 

A correction, The Strategic Finance Magazine is own by the Institute of Management Accountant, not the Institute of Management. There was nothing new in the article except the comparisons. I cannot link to the magazine because there is a subscription. My copy I left at work. A few members on this board are members of the IMA; they could shed some light on the article. The article was not negative, because many IMA members are graduates, students, professors, employees of these schools. I am guessing here, but I think it was more a reporting piece current event ethical issues. I am still guessing here, I do not think the article took a side in the issue.

 

I see. My point was that these oft-quoted statistics do not tell the entire story.