Criticism of for-profit colleges

I am no big fan of for-profit colleges but I'm not sure that this fact has been established. Reference link?

 

But remember, it is the school, not the government, that determines the qualifications for a given student to be enrolled.

Maybe the schools should look for more than simply whether a student qualifies for federal financial aid.
Don't many non-profits, both public and private, do exactly that ?

 

Do you really need a link for this? Just ask yourself the following questions:

1. Are some public universities selective ? (Hints: Berkeley, UCLA, Virginia, North Carolina, Wisconsin, Michigan ...)
2. Are some private non-profit universities selective ? (Hints: Stanford, Harvard, Duke, Johns Hopkins, Northwestern, Princeton ...)
3. Are some private for-profit universities selective ? (Hints: )

Now it's certainly true that some schools in Categories #1 and #2 are unselective.
But it's equally true that some of them aren't.

For Category #3, is it fair to suggest that every school is unselective ?
If so, then mathematically it has to have the lowest selectivity overall.

 

Name one for-profit school (in any of these categories) that has responded to those pressures by introducing selective admissions.
If you can't, then why not ?
Is it possible that profits are higher when admissions standards are lower ?

This is perfectly true. But it is equally true that there are private non-profit schools which are extremely selective (and which tend to have very low default rates).
So there doesn't seem to be any correlation between private non-profit status and selectivity.
And since some private non-profits are selective, they drive up the average selectivity for the class of private non-profits as a whole.

But what schools drive up the average selectivity for the for-profits ? Are there any ?
If not, then is there a correlation between for-profit status and low selectivity ?

 

Not if your business model is that of the for-profit osteopathic medical school in Colorado. Or the for-profit law schools with ABA accreditation, or the for-profit pharmacy schools with CEPH accreditation. Or the for-profit schools with large online doctorate programs. Or the for-profit Great Books school. Or the for-profit schools running as low-cost low-price providers, either within the federal student aid systems (APUS) or outside them (Patten, some DETC schools).

There's a good complaint here against a business model that DOES seem to be followed by too many for-profits. But not nearly all.

And some of these "boutique" for-profit school business models do involve selective admissions. I expect Rocky Vista University College of Osteopathic Medicine is comparable in selectivity to other osteopathic medical schools, all of which are public or private non-profit. RVUCOM is probably not one of the most selective of this set. But no recent start-up private osteopathic school – RVU admitted its first class in late 2008 – would be likely to be.

 

Nice try -- but for-profit schools that have selective admissions because this is dictated by professional accreditors don't count.

For example, some for-profit law schools aren't accredited by ABA. Would you call the unaccredited law schools selective or unselective ?

And would you call these schools selective or unselective ?

It's true that some for-profit schools are low-cost, low-price providers. If so, then hopefully they have relatively low default rates, even if they aren't selective. And that's great.

My personal favorite in this category is Penn Foster, which is not merely low-cost -- they don't even participate in federal financial aid programs. They truly survive in the free market, and have done so for more than 100 years. No taxpayer-funded loans, default rate = 0.

Even if we accept this point, do a few "boutiques" change the overall picture of the for-profit sector as having low admissions standards and high default rates ?

 

If those "qualified" applicants end up defaulting on taxpayer-subsidized student loans at unusually high rates, then yes there is something wrong.

 

Why don't they count? You seemed to be arguing that all for-profit schools were unselective.

I'm pretty confident that we could find numerous public and non-profit degree programs in digital media that are less selective than the for-profit DigiPen Institute or Full Sail University. (Full Sail and DigiPen hold NA from the ACCSC but, if I'm not mistaken, no specialized programmatic accreditation e.g. from NASAD for their design programs or NASM for their music programs.)

My sense is that they fall in a range from not selective to "less selective."

Would you call the non-profit law schools that aren't accredited by the ABA or going for accreditation by the ABA selective or unselective?

It might be worth remembering here that some schools don't participate in mainline federal financial aid – Pell, Stafford, etc. administered by the DOED – but do receive public funding for students through military tuition assistance, vocational rehabilitation programs, and tuition assistance for public employees. So there's public spending and public interest in these.

Probably not.

 

I am suggesting that there is a correlation between low selectivity and for-profit status (and between low selectivity and high default rates). Professional schools in regulated fields are subject to minimum admissions standards as defined by professional accreditation organizations. They aren't good examples of the for-profit business model, because the model is artificially constrained.

But even in these cases, the for-profits tend to be on the less selective part of the scale. For example, the for-profit ABA-accredited law schools are all at the bottom of the USN&WR law school rankings. So they still fit the pattern.

Can you name a single unaccredited for-profit law school that requires the LSAT -- which is a standard requirement for ABA law schools ?

While you are at it, can you name a single for-profit school that requires undergraduate applicants to take the SAT/ACT ?

If not, why not ? Is it because a standardized test requirement would discourage applications ?

How many unaccredited non-profit law schools are there ? The only one that comes to mind is Oak Brook -- which is often considered the most selective California DL law school. So it still fits the pattern.

 

An acquaintance of mine graduated from a for-profit university called Coastal Law School. She held her head in shame when she admitted it, but she passed the BAR and is an excellent practicing attorney.

Caldog: For-profits definitely have a wider mouth that entry-level students enter through, but the funnel that leads to graduation is very small. Non-profits have a smaller mouth that entry-level students enter through and the funnel that leads to graduation is small. So the for-profits admit many students who eventually washout of the program, but until they washout, they are paying their tuition. It's the American way. If you have the money and drive, then you have an opportunity to graduate. If you find that academics are not for you, then you can dropout. But should you be barred from entry in the first place for assorted reasons?

 

Are the students really paying their tuition -- or did they take out federally guaranteed student loans to pay their tuition ?

If the latter, are they paying back their loans, or are they in default ?

As stated in Post #6 above, the for-profit education companies get 86% of their revenue from federally guaranteed student loans or other sources of government aid.

So they succeed or fail based on their ability to tap taxpayer money. Is this how successful American companies like Apple, Exxon, Ford, or Coca-Cola work ? Is dependency on government aid really a viable long-term business model ? Or is it better to succeed in the free market ?

If you have the money and drive, then hey, no problem. Do whatever you like.

The problem is with students who don't have money, and who don't have particularly good academic qualifications. They take out federally guaranteed loans, find schools with low admissions standards, then default on their loans. The default rates at many schools (especially, but not entirely, at for-profit schools) are now unacceptably high.

And in such cases, taxpayer funding no longer makes sense. Why should anyone -- government or otherwise -- loan money to people don't pay it back ?

Of course, any school that gets dropped from government aid programs is still free to provide scholarships and loans to promising students. They will just have to use their own money -- for a change.

 

So according to your model, there is more waste and spillage with the for-profits: bigger mouth, smaller funnel.
And less waste and spillage with the non-profits: smaller mouth, larger funnel.

So which "funnel" represents a more efficient use of taxpayer dollars ?

 

I expect that yes, there is a correlation between low selectivity and for-profit status, but let's not forget what correlation doesn't equal.

I expect that there's also a correlation between low selectivity and high default rates among expensive for-profit schools. Of course, community colleges are thrifty and almost always less selective, many state colleges are thrifty and less selective, etc.

Even carving out professional schools in regulated, I think that the universe of for-profit schools is still diverse enough that it generalizing about a single "for-profit business model," and especially drawing such generalizations from the worst of what some for-profits do, is problematic. American Public University System, Le Cordon Bleu, Harrison Middleton University, ITT Technical Institute, Academy of Art University, the University of Phoenix… these are all following one "for-profit business model" in any cohesive sense?

Yes. The for-profit ABA schools are also relatively young. I think most recent non-profit startups are also concentrated toward the bottom of the rankings.

No. Concord (RA non-ABA) and Abraham Lincoln University (DETC non-ABA) do have in-house admission tests.

It looks like Dr. Piña's Sullivan University requires either the SAT, ACT, or an alternate test of academic skills administered by Sullivan.

People's College of Law, of course non-DL, also comes to mind.

 

Here is my theory for the observed correlation. I think that for-profits have low selectivity because (1) their mission is to maximize profits, (2) more students means more profit, and (3) low selectivity means more students. Each of these points seems quite plausible to me.

But I am open-minded. Do you have an alternative explanation for the observed correlation?

I just checked them all at College Navigator (except HMU, which is too small to rate an entry), and found one common element: "open admissions".

The very new UC Irvine law school has only provisional ABA accreditation at this point, but just beat every California law school except Stanford in terms of 2012 bar pass rate. They won't debut at the bottom of the rankings.

Just checked College Navigator. No scores listed -- "open admissions". Sound familiar ?

And they fit the pattern, because they are also selective -- just not in the conventional academic sense. They require that applicants "demonstrate a commitment to progressive social change" through "verifiable evidence of recent volunteer service, whether in community, international, political, labor or other spheres of activity, and whether in organizing, membership, leadership, or other forms of involvements." And they mean it. PCL would reject applicants that "mainstream" unaccredited law schools, like Concord or Taft, would accept without a second thought.

 

CalDog, you make some excellent points.

There is unquestionably wastage of taxpayer dollars at the federal level. Just look at Fannie Mae, Freddie Mac, social security, medicaid and now Obamacare. And now you add to the equation defaulted student loans, which are the highest in for-profits (22%), according to the figures that you provided (source).

However, as you noted, taxpayer supported public schools have student loans that are almost twice as high (11%) as non-taxpayer supported private schools (7%). Maybe a case should be made that taxpayer supported public universities should also be abolished, based on the outrage of this wastage. If taxpayer dollars are withdrawn, then it would be impossible for state universities to survive. The private sector is the most cost efficient, so why stop with the elimination of federal student loans?

Defaults within 3 years after leaving school:
Public schools: 11.0 % defaulted
Private non-profit schools: 7.5 % defaulted

If we're going to go with the most efficient model, then the private non-profit schools are the only ones that should be allowed to survive. In the name of efficiency and wastage, all taxpayer monies should be completely removed from:
- public universities
- federal student loans
- medicaid
- medicare
- social security
- Obamacare
- and all the other fat cat federal programs.

Exactly where should the federal wastage stop? And exactly who should be deprived of finances or potential opportunities, based on federal government loans, handouts or entitlements? The for-profits are reaching a segment of the student population that nobody else wants -- or cares about.

 

With all else held constant, less selective or open admissions means more students admitted and enrolling in their first term of courses than a school would see otherwise, of course. But every school also has to worry about retaining students, maintaining a reasonable academic program, maintaining accreditation, maintaining reputation and thus credential value and brand equity, etc. Low selectivity without a strong academic program threatens a school on these other fronts. I think we can agree that some for-profit schools are or have been, and that some probably should be, in serious trouble on some or all of these other fronts.

They share having open admissions policies with community colleges and the Big Three (generally), and Harvard Extension School in its way. Should we generalize that these are all following one meaningfully consistent business model?

 

blah, and blah blah. it's just words, not facts. show me the facts. don't get me wrong. we're on the same side of this arguement (who started this thread?) but you need facts to make your case. facts.

 

I take it you mean student loan default rates that are almost twice as high, not student loans that are almost twice as high. The difference is important especially in light of the argument that follows.

This doesn't show that the private schools are more cost-efficient at all. All it shows is the percentage of borrowers of public student loans who defaulted within 3 years. If someone borrows $4000 to attend a public community college for one term but stops and defaults, that's one default and moves the public default rate up by 1 / the number of public borrowers. If someone borrows $400000 to attend a private non-profit for years and defaults, that's one default and increases the private non-profit default rate up by 1 / the number of private non-profit borrowers. I don't think we can say that one category is more cost-efficient without looking at what each category costs, which we're not actually doing here.

There's something here, though I think it's overstated. There are open admissions public and non-profit schools who would accept every for-profit student who can complete their applications. Many, especially adult students with some college credit, could get in to schools that were somewhat selective too. Some for-profit students, especially B&M,are getting specialized resources and opportunities they might not easily get elsewhere. An example would be a student at a for-profit program in nursing who wasn't accepted at other nursing schools in the area because of fierce competition relative to seats. They might well have gotten in to a public or non-profit program in nursing in another part of the country, but you can't apply everywhere and some people can't easily move.