For-Profit Colleges Continue to Harm Poor Students

Discussion in 'General Distance Learning Discussions' started by sanantone, Jul 12, 2021.

  1. sanantone

    sanantone Well-Known Member

    At 51% of for-profit colleges, students will never earn enough to recover the cost of attending. For poor for-profit college students, specifically, the outcomes are even worse. At 68% of public schools, poor students will recover their investment within five years. That figure rises to 80% after 10 years. At 78% of private, non-profit colleges, poor students will recover their costs within 10 years. At only a quarter of for-profit colleges, poor students will recover the cost of attending within 10 years. Six-three percent of for-profit colleges provide no net benefit to poor students.

    Some may wonder how can this be. Aren't all colleges for-profit? [​IMG] I was a poor student who attended two for-profit colleges, and I taught at a for-profit college where most of the students were poor. These are the things I saw.

    1. Predatory recruiting practices. Unfortunately, some non-traditional, non-profit schools, like SNHU, have adopted some of these practices. For-profit colleges intentionally target first generation college students, single parents, veterans, and economically disadvantaged students. Small, for-profit trade schools might be even worse than the large universities in predatory recruiting practices. They often violate federal law by giving admissions "counselors" recruiting quotas and bonuses giving them incentive to lie to prospective students about job placement rates, accreditation, job prospects, and debt. The local, for-profit trade schools run commercials during sleazy, day-time talk shows. When a student expresses interest at a local recruiting event, by calling, or online, they will call the student dozens of times for years to get them to enroll.

    Small, for-profit trade schools will often offer things like daycare, iPads, and laptops. That sounds great until you find out that they include the cost of these things in tuition. The students don't notice the cost because they're using financial aid. At the school where I worked, they were charging students $1,000 for $500 laptops and only providing free technical support for six months. After that, students had to pay for technical support. Those laptops were always breaking because they were cheap, and the students were not tech savvy.

    2. Lack of vetting students and remediation. Most for-profit colleges either require no placement testing, they don't use a validated placement test, or they set their cutoff scores too low. Community colleges, in comparison, usually require placement testing to determine if a student is ready for college-level work. Lately, education researchers have proposed better alternatives to placement testing, but it appears that for-profit colleges have not been implementing those alternatives. So, for-profit colleges end up having low graduation rates. Community colleges also have low graduation rates, but the average student loan debt is very low.

    At the college I worked at, a couple of my students had left community colleges because they couldn't pass English Comp or College Algebra. After paying $19k for a certificate or $28k for an associate's degree at the for-profit school, graduates ended up getting jobs that paid $8 to $11 per hour. Lack of remediation is also an issue. Many for-profit colleges do not have remedial courses. Why would they offer them if they don't even have placement tests? One of my students took English twice and math three times; that meant more tuition.

    3. Higher tuition than public colleges. On average, for-profit colleges cost more than public schools but less than private, non-profit schools. However, for-profit college students leave with the most debt due to lack of non-loan aid and recruiting students who have greater financial need. For-profit college students borrow more money than public college and private, non-profit college students.

    4. Expenditures on instruction. For-profit colleges spend the least on instruction out of the different types of colleges. They typically spend more on marketing than instruction.

    5. Reputation and quality of graduates. It can be harder for for-profit college students to land jobs because of their reputations. Especially with the local trade schools, employers will learn over the years if their graduates are trained well.

    6. Majoring in low-paying trades. For-profit trade schools come with the combination of high tuition and offering training in low-paying fields. Many low-income women study subjects like phlebotomy, medical assisting, nurse assisting, and cosmetology at for-profit schools.

    7. No incentive to do better. The free market does not work well in higher education because there's an endless supply of clueless students, and for-profit colleges will maintain their accreditation and Title IV funding eligibility with low graduation rates. It only takes a term or two for a for-profit college to make a profit on a student, so their goal is to keep students for at least that long. The free market system works best when consumers are informed, and students often know nothing about certification and licensing requirements or how to research the local job market. You can say that is their fault, but these colleges are enrolling people who can't do basic research, and taxpayers are paying for it. Most of my students had no idea that community colleges were much cheaper. They thought paying $28k for an associate's degree was normal, and this was back in 2013.

    How do we fix the problem? Stop giving federal financial aid to for-profit colleges, but this might lead to a court challenge.

    Almost half of for-profit college students owe more than $40k in debt for a bachelor's degree. In comparison, only 12% of public 4-year graduates and 20% of private, non-profit, 4-year graduates owe more than $40k. I know Brookings is using information that's a decade old, but I doubt much has changed.

    Looking at 2-year programs, two-thirds of community college students have no debt, and 59% of associate's degree graduates have no debt. In comparison, only 17% of for-profit graduates have no debt, and 12% of their associate's degree graduates have no debt.
    Dustin likes this.
  2. Dustin

    Dustin Well-Known Member

    Is there something about being for-profit that makes schools more likely to engage in aggressive recruiting practices?

    It's been brought up before that there may be a difference between for-profit schools owned by publicly traded companies and other schools that happen to be for-profit but aren't under the same pressure.

    And then you run into those schools that are nonprofit but act like for-profits like SNHU and Grand Canyon University, and how do you handle them relative to the others?

    Thought provoking, for sure.
  3. sanantone

    sanantone Well-Known Member

    Grand Canyon University was for-profit for a long time. They weren't non-profit again until recently, but they're not fully recognized as being non-profit. If I remember correctly, a portion of the organization splintered off into a for-profit company, but the school and the for-profit company share executives.

    Most of the small trade schools are privately owned. They have low graduation rates and worse employment outcomes than community colleges. They're too small to make national news, so all we hear about is University of Phoenix, Devry, Capella, Walden, etc.
  4. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    People talk about "for profit" as if that's a particularly meaningful designation, but I've seen a big difference between the behavior of publicly traded schools that have to answer to Wall Street expectations of ever increasing quarterly earnings, and privately held schools that don't. For profit even includes some small DEAC accredited schools that don't participate in Title IV at all.
    sideman and Rachel83az like this.
  5. sanantone

    sanantone Well-Known Member

    I haven't. LOL. They may do things a little differently, but they still have the same poor outcomes and predatory recruiting practices. Publicly traded for-profit colleges get about 90% of their income from the federal government putting them right at the line for disqualification. Privately owned for-profit colleges are usually less reliant upon federal funding, but they still perform poorly and account for the majority of college closures in the past decade.
  6. Rich Douglas

    Rich Douglas Well-Known Member

    That article--and those numbers--are based on for-profit tertiary institutions of all kinds. The article even starts with a picture of a beauty school. A couple of thoughts:

    First, this board is called Not to say that this isn't a fair topic for discussion, but let's make the distinction between for-profit degree-granting institutions and other tertiary schools.

    Second, that market--beauty schools and the like--is highly unregulated. Neither the DoE, CHEA, the various accreditors, nor the states do a very good job of protecting students.

    Yes, there have been a few high-profile degree-granting institutions that have folded, some of whom bilked students. But for the most part, that sector delivers what it promises.
    sideman and LearningAddict like this.
  7. sanantone

    sanantone Well-Known Member

    No, it doesn't. The average graduation rate at 4-year for-profit institutions is less than 50%. Public and non-profit colleges have higher graduation rates. My second link breaks down debt by tax status and degree level. Four-year for-profit institutions leave students with far more debt. So, you have a combination of high debt and low graduation rates, which makes it harder for students to pay off their loans.

    Beauty schools are regulated by states. Since these are licensing programs, they are not unregulated. A school cannot qualify for Title IV funding without being accredited. If the school is eligible for federal aid, it's just as regulated as any other school. If it offers a licensing program, it's regulated by even more entities.

    If you click on some of those links, you'll find an Excel spreadsheet with the raw data. They looked at over 5,000 institutions, and over 3,000 of them had enough data to be included in the report. For 2-year and certificate programs, it looks like public colleges are the best deal for the most part. Actually, at all levels, public colleges are the best deal.
  8. sanantone

    sanantone Well-Known Member

    Interestingly, we have one side arguing that privately-held for-profits are less predatory and offer greater value. These schools are mostly vocational schools. Then, we have the other side arguing that degree-granting for-profits, many of which are publicly traded, deliver what they promise. One person agrees with both of those contradictory sides. LOL
  9. sanantone

    sanantone Well-Known Member

    The DEAC schools that do not participate in Title IV are not a factor in debt discussions, and these types of institutions make up a small percentage of the for-profit college sector. If the government were to yank financial eligibility from for-profit schools, the vast majority of them would fold. However, I can imagine that it's harder to track debt at these non-Title IV schools since they claim to leave students without debt even though they do. You're making monthly payments on debt. Regardless, just because a school is cheap does not mean that it has high graduation rates or good employment outcomes.

    Penn Foster's program graduation rates range from 6% to 27%.
    Last edited: Jul 12, 2021
  10. chrisjm18

    chrisjm18 Well-Known Member

    Those schools have been called NINO (non-profit in name only). I'd add Liberty to that list because the online admissions department takes a similar aggressive recruitment approach. Another would Northcentral University.
    JoshD likes this.
  11. not4profit

    not4profit Active Member

    You said low admissions standards are part of the problem. You also use low graduation rates as an indication of poor performance. It seems reasonable to assume any school with lower admissions standards will also have lower graduation rates. Otherwise the for profits are just handing out degrees, which is a claim that has been made elsewhere. As I see it, people are triple taxing for profits. Either you hit them for low grad rates OR you hit them for low entry standards OR you hit them for low quality education because people who should never have been admitted were handed degrees. But I don't think it is fair or logical to do all three.

    The counter argument could be made that non profit or state schools are limiting educational access to poor students by their higher admission standards. Talk about a glass ceiling. State schools won't let you in but for profits are no longer in business because they had funds cut.

    I also think you are over generalizing. If a particular school has poor metrics in one or more ways, or predatory practices are obvious, that school should be handled appropriately (and they are through the govt suspension and debarment process or through civil suits). Otherwise you are saying that Stanbridge University with an 84% graduation rate should lose funding simply because of for profit status, but Blinn College with a 6% grad rate should keep funding because it is state funded. Seems like some ecological fallacy is occurring here. A broad trend across the aggregate data is being applied to every smaller unit in the population.

    Finally, you would need to parse out what programs have what outcomes to make any legitimate inferences. I bet student loans and employability metrics for a public college's gender studies graduates don't fair well against AMU's security studies students.
    Rachel83az, LearningAddict and Dustin like this.
  12. LearningAddict

    LearningAddict Well-Known Member

    The typical for-profit school is more like Sandy's Beauty, Barbering & Nail School next to the bowling alley than they are like University of Phoenix. The schools doing better may be in better buildings in a more "respectable" place but they're still usually a far cry from matching the volume of the schools at the top of the sector. Once you reel off the handful of conglomerates, enrollment sizes and revenues take a dramatically sharp decline in this sector. Most of the numbers that are routinely quoted are the product of three things:

    1. The handful of large for-profit schools at the top of the sector's food chain bringing in a disproportionate number of enrollments (open enrollment at that, a key part of this equation), thusly having a disproportionately high number of dropouts, debt, and lower graduation totals

    2. The aggregate that is skewed by the handful of large for-profit schools at the top of the sector's food chain

    3. Disregarding that schools with open enrollment are more prone to higher dropout rates and lower graduation rates due to their very nature

    Steve actually sparked a thought that I think needs to be investigated: differences between different levels of for-profit schools. It's one thing to look at an overall total and say "Yep, the entire sector is trash! Burn it down!" but it's a better/fairer thing to identify the major players that are highly responsible for driving negative numbers the most and then separate the classes. Why do we need to do this? Simple: every article names the same doggone group of worst offenders to the point that you don't even have to look to know they're there: DeVry, Corinthian, Phoenix, ITT, the usual. This is where Rich is 100% right. If those schools actually represented the typical for-profit, why are the usual suspects the only ones that tend to be mentioned in nearly every article? I can no longer accept the canned response of "well, they've been the biggest so that's why", nope, it just doesn't cut it anymore, not in this information age. If the problem is as deeply interwoven throughout the entirety of the sector as opponents present, then the claim demands that evidence by individual name and incident, not just end totals.

    A perfect example of why we need this comes from an article that was written about California National University for Advanced Studies after it folded, a tiiiiiiiiny school with low tuition rates that never had more than 9 full-time employees. The author did what every other has done, writing in a poorly-veiled disrespectful way as if the school was an offender cut from the same large for-profit cloth, but the reality is that CNUAS was not an offender at all, and I love the response a commenter wrote on the article:

    "This was obviously another lame hit piece to attack for-profit and nationally accredited schools, but your attempt is tripped up by your own words. The fact that the school didn't take Federal OR state financial aid, and had very low tuition in a time when most NON-profit and REGIONALLY accredited schools are charging an arm and a leg and taking in federal aid funds that keep students in debt for the rest of their lives, would've made California National University heroes in the eyes of people with common sense who aren't trying to jump on the bandwagon of a misguided agenda."

    Mhm, but here is the problem with using a school like Penn Foster as an example. When graduation rates are calculated they base it on certain time periods within a certain number of years. But Penn Foster is an independent study school which has for generations allowed students to graduate at times that stretch far beyond the parameters the Government has been known to use as a measure. Whether that's a good or bad thing is debatable and very circumstance-dependent, but it's not totally uncommon for students at these types of schools to finish their degrees in longer than 8 years. That may not look good for the parameters as it won't be captured and that contributes to the low graduation rate total, but at the end of the day when they finished they still finished, and schools like these never have a shortage of graduates at their ceremonies.

    The problem with graduation rates is not with the statistic itself, but that arguments have been formed in more than one direction using them: if "not enough" people graduate then people use that against the school to say it's a bad school, if too many people graduate people use it against the school to say the curriculum is not challenging enough/academic standards are too low, it's an "easy school, everyone gets a degree!" that is until we get into the Ivy Leagues or the just-as-prestigious types like Stanford, and then a high graduation rate of like 98% is suddenly a signal that the school is great. You can even take one for-profit school and one non-profit school both having similar rates, but the media/general public will ascribe opposite meanings to them (for-profit rate means something bad, non-profit rate means something good). Hmphf.

    The other issue I have with the problem being raised in the article is the idea that Penn Foster misled anyone about their accreditation status. I don't recall Penn Foster ever claiming anything other than the fact that their degree programs are nationally accredited and that some of their lower-level programs are regionally accredited all of which is factual. Moreover, Penn Foster didn't misrepresent anything by saying their credits are transferrable because they are. Unless the prospective student reading their info is a child, it should be expected that there are no guarantees with that or anything else in life.

    Yes, for-profit schools have issues. But after about 20 years of this, we've jumped the shark on a snowboard and through a hoop of fire. It's time for a new examination, and new names need to be brought up. Otherwise, we're just watching re-runs that we've all seen so much we can quote the lines without even seeing the show (like being able to guess which notorious for-profit schools will be mentioned before even reading an article/hit piece about for-profit schools).
    sideman likes this.
  13. LearningAddict

    LearningAddict Well-Known Member

    And as much as I like Western Governors, they can be added to the list as well given their publicly-known battles and their sometimes aggressive enrollment tactics.
    chrisjm18 likes this.
  14. smartdegree

    smartdegree Active Member

    You hit the nail in the head. I have always wondered whether there should be a mandatory class in high school that teaches basic ROI calculations and pros / cons of post-secondary education options including choice of majors or trades. All the data is out there - someone can easily write a textbook summarizing all of that.
  15. scaredrain

    scaredrain Member

    The for profits filled a need in higher education that was lacking: they could offer quick degrees, without any standards, and students could be enrolled and starting classes within a month, as opposed to waiting for admissions paperwork, because most traditional universities at the time were lagging tremendously in online learning and online processes.

    The downside to this flexibility of course is that many students were admitted to programs that should not have been and they are in tremendous student loan debt and in some cases not even a degree at all. But it is not just for profit institutions that are guilty of this. For example, my former place of employment, a small liberal arts college, decided to offer an MBA degree that had only 10 classes, so was 10 months long.

    The cost of the program then was 550 USD per semester credit hour or 16,500 USD. This particular MBA program was and is nothing really special per say, its a general MBA and it is offered online. The program accreditation is ACBSP and yet we had students enrolling and signing up for it, getting themselves almost 20k in debt for the MBA program. This was about 6 years ago. Fast forward now and the same MBA program is now 750 usd per credit or 22,500 USD and still has the same courses, nothing has really changed. Is this degree worth the 22,500 USD that will put someone in debt? At the same time if you are a residential student at the same university it will cost you around 32,000 USD for tuition room and board, per year and not counting fees, books basically 128,000 USD + for a 4 year degree. Are these degrees worth the price tag?? Maybe or maybe not...Yet no one is complaining because they are non profit.

    As for admission standards, this particular university had none. As long as you had a high school diploma you were admitted. For the MBA program as long as you had a bachelors degree and it could be in any field, you were admitted. As for graduation rates, we had studnts who washed out a great deal of the time at both the undergraduate and graduate levels.

    The same goes for traditional public universities, which are also putting students in debt, it may not be at the same rate as the for profits but it is getting there. For example, my current place of employment is a large state supported university. We just raised tuition again and it is leaving some students out of pocket because their pell grants can only go so far, so the option is either to get a job to pay the difference, take out loans, ask your parents, or do on campus federal work study which is getting limited every year.

    Currently tuition with room and board will cost you almost 20,000 USD per year, not counting fees, books etc, for undergraduate students. So a bit over 80,000 usd for a a bachelors degree at a 4 year state supported university, yet no one is complaining either about this, because they are non profit. We do have admission standards for incoming freshmen but they are being waived more and more by program, some programs are simply taking anyone to keep their numbers high.

    Even the local community college now has raised its fees and is currently almost 3000 usd per year, so making an associates degree 6,000 usd for 2 years of study, not counting books and fees.

    What needs to happen is the government needs to put tuition caps in place, universities are charging the maximum because they know students can get the loans and pell grants if they qualify, to keep them in business. There should also be more flat rate semester tuition programs like the competency ones, and there needs to be a cap on administrators pay at state supported, tax payer supported universities. These things will help costs to go down.
    Last edited: Jul 13, 2021
  16. LearningAddict

    LearningAddict Well-Known Member

    That would more than likely create a new problem which would lead to a new breed of frustration and uproar: a much larger number of students all funneling into the majors with the highest ROI, but since seats are limited and not everyone can make the grade, you'll have a ton of dropouts and drifters from that. It would be mostly the same people who would've dropped out and drifted from other majors, just all concentrated into fewer ones.

    This would also lead to far fewer majors being offered over time. After all, if ROI with this becomes ingrained into young kids, that adoption is going to lead to ever-diminishing enrollment numbers in other less lucrative majors over time which will eventually kill them off. I actually feel a lot of majors need to die off, but some of those majors actually bring in a lot of money for colleges so they won't let that happen without a fight.
  17. scaredrain

    scaredrain Member

    Actually this is not always true. at my former place of employment, which was a small liberal arts college, the graduation rate was 45%. You can check any university here:

    As for debt the numbers are climbing at non profit universities as well, see my post above. I think both the for profit and non profit education worlds need to change and adapt to be more cost effective and beneficial to students. The current system is broken and no one seems to want to fix it.
  18. LearningAddict

    LearningAddict Well-Known Member

    Agreed on the online part, but "quick degrees"? Ehhhn:

    - Non-profit schools have dominated and continue to dominate the credit-by-exam, test-out, PLA, and competency-based education structures we've seen from non-profit schools like Excelsior, TESU, COSC, and WGU, and there are others. These are normally defined as "quick" ways to earn a degree.

    - Since those avenues are usually heavily restricted or altogether unavailable at most for-profit schools, it's typically going to take a student about 2 years for an Associate degree and 4 years for a Bachelor's degree which isn't quick at all but, oddly enough, traditional.

    - "Without any standards" is a misnomer because every legitimately accredited school has standards, they have to in order to obtain and maintain accreditation. Besides, low admission standards are not exclusive to for-profit schools in the least bit. If anything, that's really become a widespread norm in higher education where even when standards have some variables unique to individual schools, it's certainly not the same as before distance learning became a thing where mailing an application and crossing your fingers was the only way. These days, if you have the money to pay, you have an opportunity to get into almost any school you want (with some reasonable restrictions or achievable prerequisites, of course).
  19. smartdegree

    smartdegree Active Member

    On your first point, that is exactly what they're trying to do here in Ontario Canada. When kids are in high school here, they usually get sorted into either in a university prep program (U courses) or trades school prep. All depends on how capable they are and what their interests are. Thing is, in Canada it is not a shame to go to trades. Heck, a lot of people in trades earn a lot more than those with degrees here. My son's school principal mentioned that 2 out of his 3 kids went to trades even though he himself has a PhD.

    When I lived in the US however, I remember the general attitude is it's your God-given right to get a college degree (just like your God-given right to own a detached home LOL). Anything else, and you're somehow branded a failure or someone who wasted their potential. Crazy. To a certain extent, academics have brainwashed everyone (and themselves) into thinking a 4-year degree is necessary. There are other post-secondary options out there such as trades/apprenticeships. Or perhaps there are even better options out there (MOOC degrees anyone?) - just that nobody in higher education has cared enough to explore because they're too content on the status quo.
  20. scaredrain

    scaredrain Member

    By standards I mean admission exams, higher gpa's, and a review of ones extracurricular activities. In the beginning for profits were applauded because they let in anyone and they were seen as providing access to education to non traditional college students. Plus you do not need entrance standards to be accredited. And admission standards can be lowered and changed.

    For example at the local community college, by law they have to admit anyone as long as they have the space for that student. The student may have to take what we call leveling math or english courses (8th grade level), but they are admitted regardless, as long as they have a high school diploma or GED. So a student could be taking Mat 060, Mat 070, Mat 080, and Mat 090 before getting to College Algebra 1 In some instances even having a GED/high school diploma can be waived if the student is enrolled in an adult high school program at the community college, because they qualify for dual enrollment.

    Even where I currently work, admission requirements and entrance standards are being massively waived to get as many students as we can. It has raised many eyebrows in some departments, but as it was pointed out last year, enrollment = justification for certain programs, if you do not want your department to lose programs, fix your admission standards and requirements.

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