Criticism of for-profit colleges

Discussion in 'General Distance Learning Discussions' started by Kizmet, Aug 22, 2013.

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  1. Kizmet

    Kizmet Moderator

  2. Rich Douglas

    Rich Douglas Well-Known Member

    As described by Matthew Yglesias in Slate: Obama college cost speech: The White House wants to measure outcomes not inputs. - Slate Magazine

    Higher education is a mix of right-wing ideas (like no government interference) with left-wing ideas (like lots of government subsidy). Also, it is focused on inputs, not outcomes. Thus, the taxpayers AND the consumers (students and their families) are getting fleeced. Add to that the for-profit schools who, like good businesses anywhere, are going to take advantage of these conditions and you have a recipe for trouble.

    When the for-profits first came on the scene, they tried to seem indistinguishable from the not-for-profits. And for a long time, I defended them as being no different, except that the excess revenues went to the owners in the case of for-profits. But like the scorpion and the frog, the for-profits just couldn't help themselves, and as their need to continue to grow ran unabated, they expanded in ways that were very different than the not-for-profits. This, combined with a sheer disregard for outcomes, like graduation rates and post-graduation employment--made them even worse than the not-for-profits, and obviously so. (NB: The for-profits were able to ignore post-graduation employment for so long because they catered primarily to working practitioners looking to advance careers they already had underway. That has changed.)

    I hope the government gets this right and creates outcomes-based measures. Not inputs. Not outputs, but outcomes. (The article doesn't quite get this right.)

    Inputs: The things that go into the production system. In a factory, this could be parts, labor, materials, energy, equipment, etc. In a school, this could be students (and the quality of students selected), instruction, teachers, facilities, etc.

    Outputs: Graduates.

    Outcomes: How the graduates (and society in general) benefits from the outputs.

    I believe the biggest barrier to holding the for-profit industry accountable has not been their lobbying--although that has been significant. Rather, I feel the primary barrier is the inability of the government--and, by extension--the accrediting agencies--to hold ALL schools accountable. It would be nice to see someone try, especially as long as taxpayer dollars (Title IV) are at stake.
     
  3. Anthony Pina

    Anthony Pina Active Member

    ALL for-profits? ALL 3,000+ of these schools act like this? They all act this way? How many non-profits report their graduate employment rates? (none of those for which I have worked did). Why only mention the accountability for one form of taxpayer dollars being used for education (Title IV), while ignoring the infinitely higher amount of local and state taxpayer dollars. Is it because those free gifts of public funds go to subsidize the operation of state colleges and universities? This is disappointing, particularly coming from someone who I know knows better.
     
    Last edited by a moderator: Aug 23, 2013
  4. Kizmet

    Kizmet Moderator

    With all due respect, I don't know where you've worked but it's probably a vast minority of schools. But even if you're right it doesn't negate the facts that have been presented.
     
  5. Kizmet

    Kizmet Moderator

    I'd like to make a few points clear.

    I have had no personal experience with any for-profit university.
    I have no personal axe to grind against any for-profit (or even non-profit) school.
    If you have facts that negate or mitigate those that have been presented then I'm sure that we would like to see them.
     
  6. Anthony Pina

    Anthony Pina Active Member

    Yes, let's look at the "facts":

    1. For-profit education companies get 86% of their revenues from taxpayer dollars. That’s according to the findings of a Democratic Senate panel, looking at 15 publicly traded companies in 2009.

    AP: So do most community colleges and many state universities. If you count ALL taxpayer dollars (not just Title IV funds) the total taxpayer funds received by a student is similar. The problem with Harkin is that he deliberately ignores the major sources of tax subsidies received by public institutions (local and state taxes, which do not go to for-profit schools). Then he compares the apples to the oranges and complains that the oranges' tuition is so much higher. I have read all of Harkins' reports and none of them compare the total tax cost of for-profit vs. non-profits and he NEVER compares private for-profit tuition to private non-profit tuition. He knows precisely what he is doing.

    2. Veterans are big business. For-profit colleges claim about 37% of post-GI Bill education benefits, about the same amount as public schools. Yet, they received twice the amount of money per veteran student as public schools, at $10,000 per student versus $5,000 per student respectively. That’s according to the Government Accountability Office.

    AP: True. Because public school tuition is kept low (far lower than the cost of operating the school) because they are receiving a bulk of their tuition from other tax sources that Harkin and the Chronicle of Higher Ed know about, but curiously, never mention.

    3. For-profit schools account for 13% of students but almost half of all student loan defaults, according to Department of Education data compiled in the same Senate report cited above.
    Related: Student Loan Debt is the Biggest Financial Worry of Millennials: Wells Fargo Survey
    Related: Student Loan Crisis Can’t Be Fixed Without Write-offs and Writedowns: Robert Kuttner

    It is absolutely true that for-profit colleges and universities are more likely to admit students whose demographics put them at a higher risk for loan default. The reasons that students and former students decide to stop paying their student loans are varied and could include that they attended a school that prepared them poorly. However, it could also be that they have other priorities than meeting their financial obligations. Remember, it is the government, not the schools, that determines the qualifications for a given student to receive federal financial aid.

    4. The graduation rate for students at these schools is almost half that of other types of colleges. The Department of Education found that for full-time, first-time students graduating within six years, for-profits saw a graduation rate of 28.4% compared to 56% for public schools and 65.4% for non-profit schools.

    AP: The majority of students who enroll in for-profit schools bring transfer credits with them, which makes them ineligible to be counted in the Dept. of Ed. IPEDS data. Also, many students at for-profits complete certificates instead of staying for bachelor's degrees, so they will never be counted as bachelor's graduates, thus decreasing the six-year BA numbers. Since the for-profits student is more likely to be an older learner, many will take courses for personal/professional enrichment, rather than completing a degree. The public community colleges have been lobbying the US DOE for different IPEDS metrics, as their numbers are often worse than the for-profits, due to the same limitations of IPEDS.

    5. It’s not just about delivering education, but also shareholder value. The Senate panel cited above also reported 76% of for-profit college students attend schools that are publicly traded or owned by private equity investors.

    AP: I agree with the criticism of the publicly-traded for-profits that have focused on large and fast enrollments, while ignoring quality instruction and measurable student outcomes. I believe that ANY school that engages in deliberately deceptive tactics should be punished. When EDMC falsifies its data about graduates, it deserves what it gets, but non-profit law schools that falsify the same type of data should be punished no less.

    I know that I sound like an apologist for the for-profits, but I worked 21 years as faculty and administrator for non-profit public and private higher ed institutions before my present position at a small non-publicly-traded private sector university with a 50 year history. I know what the economic and "bottom line" priorities are at non-profits and the sources of revenue. I have seen what happens at some of the bigger for-profits and I want know part of it. But I also know that "facts" like those above, which are based on selectively omitting data that would weaken the argument, as disingenuous at best and deceptive at worst. It is ironic that the article (whose title displays its bias) is based on bad data provided by EDMC, when the GAO has had to "revise" its original hit piece on for-profits due to its own bad data and misleading methods.

    Just as it is unfair to paint all 2,000 community colleges with the same brush as City College of San Francisco and Compton College, it is unfair to paint all 3,000 private sector education institutions based on the misdeeds of the largest corporate universities. I will not excuse bad deeds at for-profits, but not all of them do these bad things.
     
  7. Rich Douglas

    Rich Douglas Well-Known Member

    As I'm sure you know, there is a difference between examining a group and discussing each individual within the group. Variance and all that.

    I've worked in the for-profit sector of two industries once thought not to be available to corporations making profits: higher education and corrections. They behave in a remarkably similar fashion. Revenues are dictated largely by market and governmental forces. Profits, thus, are generated largely from cost-cutting. Sometimes, that produces efficiencies. But usually, it just diminishes quality to minimal levels.

    If my post seemed incomplete, it is because it was a post on a discussion board, not an academic treatment on the subject. While I strive to be accurate in what I say--and I'm not always successful with even that meager goal--I seldom claim to be comprehensive.

    Is that really necessary?
     
  8. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    I assume this refers to military benefits and Title IV. I think it's fair to say that the percentage that comes from military benefits and for Pell grants is from taxpayer dollars, but not fair to say this from loans, even federally guaranteed ones, since students have to pay taxpayers back for these. That doesn't mean that institutions that participate in Title IV don't get an awful lot of money from these loans that they couldn't get in a free market, but still, that percentage is suspect.
     
  9. jam937

    jam937 New Member

    Here's an excerpt from an article written in 2011. There is a lot of interesting facts, figures and charts in the article.

    "For public institutions, taxpayers are investing more than $60,000 for each bachelor’s degree granted in the three less competitive categories, close to $75,000 in the highly competitive institutions, and more than $100,000 for each bachelor’s degree granted in the most competitive flagship institutions. Note that each bachelor’s degree granted from the non- or less competitive institutions actually costs more than a bachelor’s degree from competitive institutions, which in turn costs the taxpayer slightly more than a bachelor's degree from the very competitive public institutions. This is a function of the high costs of dropouts and the longer time to graduation for students in less selective institutions."

    "Taxpayer costs for bachelor’s degrees in private institutions range from a net profit of more than $6,000 per degree from for-profit institutions to a net cost of around $8,000 for not-for-profits in every category of selectivity except the most selective ones, where the costs jump to more than $58,000 per degree."

    Cheap for whom? - Education - AEI
     
  10. Rich Douglas

    Rich Douglas Well-Known Member

    Which Colleges Should We Blame for the Student-Debt Crisis? - Jordan Weissmann - The Atlantic

    From the article:

    Public colleges, because they educate so many students, generate the most debt overall.

    Private nonprofit schools, generate an outsized amount of student debt, but a relatively small portion of troubled borrowers.

    The for-profits have contributed in an especially malign way to the debt problem, both generating a disproportionate amount of loans, and an even more disproportionate amount of student loan defaults.


    And the ol' bottom line:

    This is not particularly shocking. About three-quarters of for-profit college students attend nominally four-year schools. And I say "nominally," because only about 28 percent ever graduate, about on par with the bottom rung of public institutions. They cater to a class of student that is disproportionately poor, and frankly don't always belong in college to begin with.

    And that, ultimately, is why the for-profits might currently be the single most important driver of what we call the student loan "crises." The growth of student debt is not good, but it also not inherently a disaster. The fact that millions of students have defaulted on their loans and ruining their financial lives, however, is a disaster. And the for-profits are especially at fault for that development.

    So here's the bottom line: Student debt has grown all across higher education. It' has grown disproportionately among private schools. But it has grown most destructively among the for-profits.


    Not your school, of course.
     
  11. Rich Douglas

    Rich Douglas Well-Known Member

    The academics weigh in, too (very recent articles):

    For-Profit Colleges by David Deming, Claudia Goldin, and Lawrence Katz. "The Future of Children", Vol 23, Issue 1, Spring 2013

    Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges by Stephanie Riegg Cellini and Claudia Goldin. National Bureau of Economic Research, Working Paper 17827, February 2012.

    Encouraging Exploitation of the Military by For-Profit Colleges: The New GI Bill and the 90/10 Rule by Jaclyn Patton, 54 South Texas Law Review 425, 2013.

    Just a taste. The for-profit sector expands its tuition to meet the maximum amount of financial aid that can be extracted from students. The U.S. skews the marketplace tremendously with Title IV funding that is distributed with little attention paid to the prospect of ROI--either from students paying back their loans or society benefiting from its investment. This skewing takes place in all sectors of higher education, but the for-profits take it to the maximum possible.

    Not your school, of course.

    I remain convinced that for-profit schools can have a positive impact on higher education. They have the potential to introduce innovation and entrepreneurial success to the higher education sector. The for-profits could shake higher education to its roots and challenge it to be as good as possible. Instead, these schools are just in it for the cash grab. While there are certainly individual exceptions, this slice of higher education has been very disappointing. We need to look at the whole enchilada, of course, but I'm fine with scrutinizing the worst offenders first.
     
  12. Rich Douglas

    Rich Douglas Well-Known Member

    Strayer University, a for-profit, is advertising its "Graduation Fund" on TV. The commercial makes it sound like you're saving/investing towards your education. But it actually works more like those cards you get at the deli...you buy-10-sandwiches-and-the-next-one-is-free kind of thing. Only in this case, for every three classes you pay for, they give you a credit you can use to pay for one.

    In economic terms, this is a slacking of the demand curve and, thus, a need to lower prices to reflect the lessened demand. In political terms, IMHO, this is Strayer trying to look like anything but. Instead, they hope to look like they're sensitive to the criticisms of their sector of the higher education market while simultaneously trying to avoid a weakened perception of the value of their product that might be brought about through a tuition reduction.

    Strayer University Launches

    The lobster market is going through the same thing, with prices terribly low. Restaurants are offering more of it, but not lowering their prices since they don't want to change the perception of lobster being a high-prestige item. (And they don't want to put pressure on the prices of other menu items perceived to be less prestigious. Also, the lobster over-supply could dry up as oceans continue to get warmer, driving the prices back up.) So, you still pay a bunch of money for a product that's going for about 2 bucks a pound on the dock.

    Booming lobster population pinches profits for Maine's fishery

    Lobster Prices vs. Lobster Prices
     
  13. sanantone

    sanantone Well-Known Member

    I think one of the problems is how much some for-profits spend on education vs. marketing. The largest ones that have been studied spend a much greater percentage on marketing than non-profits. They also spend more on marketing than education.
     
  14. Lerner

    Lerner Well-Known Member

    Where Colleges Have Gone Wrong
    Op/Ed Credit.com
     
  15. me again

    me again Well-Known Member

    Measuring outcomes would be difficult -- and if an attempt is made to measure outcomes, then all schools should be measured, to include the for-profits and the not-for-profits. A comparison between the two would be interesting.

    The for-profits offer degrees to a unique segment of society i.e. minorities and middle aged adults -- instead of to the traditional 18-24 age group bracket. Is comparing a 40 year old graduate from a for-profit with a 22 year old graduate from a non-profit (state university) a fair variable or a confounding variable?

    The for-profits offer non-traditional degrees to a segment of society that the traditional non-profit state universities are unable or unwilling to go after.
     
  16. CalDog

    CalDog New Member

    There is one important outcome that is already measured for all schools that participate in Federal financial aid programs. It's called the "Cohort Default Rate". It measures whether students have defaulted on their loans within 3 years after leaving school.

    Average three-year CDRs for students who left school in 2009:

    Public schools: 11.0 % defaulted on student loans within 3 years after leaving school
    Private non-profit schools: 7.5 % defaulted
    Private for-profit schools: 22.7 % defaulted

    The comparison is indeed interesting.

    From the point of view of the taxpayer who has to foot the bill for a defaulted student loan, does it matter ? Default is default.

    Including alcoholics at homeless shelters.
     
    Last edited by a moderator: Aug 26, 2013
  17. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Do you think it's more reasonable to blame just Phoenix for this, or also to blame every other school that share its tax status?
     
  18. Rich Douglas

    Rich Douglas Well-Known Member

    My personal anecdote: I once worked as a financial aid director of a branch of a trade school. The recruiters did just this: finding people who were without any means so they'd qualify for the maximum Pell Grant (which was, coincidentally, just below the total tuition cost of the program). The feds required these people to have fixed addresses, but it seemed that the recruiters were always able to come up with those. After several months of that becoming clear, I just couldn't stand it. So I quit, even though I really, really needed the job. (I was in the AF Reserve, going to grad school while awaiting my start date in Officer Training School and re-entering active duty.) I've always been glad I left.

    It was an outfit that used its Title IV approval to deliver crummy training as a cash grab. Sound familiar?
     
  19. CalDog

    CalDog New Member

    duplicat post, delete
     
    Last edited by a moderator: Aug 26, 2013
  20. CalDog

    CalDog New Member

    Every school that shares that tax status has the same financial incentives as UoP. And those incentives include enrolling as many students as possible -- including students that are grossly unprepared or unfit for college-level study -- as long as they qualify for federal financial aid.

    The recruitment of homeless alcoholics is admittedly an extreme example, but it drives home the point that for-profit schools, as a class, have the lowest admissions standards in the US higher education sector.

    And for-profit schools, as a class, have the highest student loan default rates in the US higher education sector.

    Coincidence ?
     
    Last edited by a moderator: Aug 26, 2013

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