For-Profit Colleges Disproportionately Responsible for Increase in Debt and Defaults

Discussion in 'General Distance Learning Discussions' started by sanantone, Mar 20, 2019.

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  1. sanantone

    sanantone Well-Known Member

    Comparing the 2000 and 2014 lists of colleges where students owe the most total debt, one can see an obvious difference. The 2014 list includes many more for-profit colleges.

    https://www.brookings.edu/wp-content/uploads/2015/08/Chart_LooneyYannelis_StudentLoanDefaults.png

    For-profit colleges and private and public 2-year colleges account for the increase in student loan defaults, but the average amount defaulted on at community colleges is around $5,000.

    https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2016/05/10/the-student-debt-crisis-at-state-community-colleges

    https://www.brookings.edu/wp-content/uploads/2015/12/Chart2_LooneyYannelis_StudentLoanDefaults.png

    University of Phoenix, Devry, Kaplan, Strayer, Ashford, and Grand Canyon University had disturbingly high 5-year student loan default rates in 2014. They were also among the colleges responsible for the most accumulated debt.

    https://www.brookings.edu/wp-content/uploads/2015/09/LooneyTextFall15BPEA.pdf

    The majority of students who default between 3 to 5 years attended for-profit colleges.

    https://www.forbes.com/sites/dereknewton/2018/12/09/20000-more-reasons-to-never-go-to-a-for-profit-school/#7cb180b630e5

    For-profit colleges have worse labor market outcomes. Additionally, those who earn associate's degrees at non-profit and public colleges see large, statistically significant benefits but for-profit students do not.

    https://www.nber.org/papers/w25042.pdf
    https://www.nber.org/papers/w18201

    For-profit colleges have been disastrous for African American students. The student bodies at for-profit colleges are disproportionately African American, and AA students have more debt than AA students at non-profit colleges.

    https://www.responsiblelending.org/student-loans/research-policy/2014-CRL-Policy-Brief-For-Profit-Colleges-and-Students-of-Color-Summary-April.pdf

    This article compares the 12-year (and 12-year projected) default rates among students who started school in 1996 vs. 2004. The default rates for for-profit colleges was 46.5% among those starting school in 2004. The next highest sector, private non-profits, had a default rate of 13.2%. AA students had the highest student loan default rates at 37.5%.

    In the 2015-2016 school year, half of black doctoral students were attending for-profit colleges. Overall, for-profit colleges only had 17% of doctoral students. 80% borrowed an average of $109,000 for their for-profit doctoral degrees.

    https://hechingerreport.org/opinion-black-students-unprecedented-and-unequal-college-debt-is-cause-for-alarm/
     
  2. sanantone

    sanantone Well-Known Member

    Something else to digest. Other than psychology and criminal justice, for-profit colleges are less likely to offer degrees in the liberal arts.
     
  3. Phdtobe

    Phdtobe Well-Known Member

    It is getting more difficult to argue that for-profits have been good for students. For-profits did force other institutions to adopt technology .However State colleges were just to slow in reaching out to students who did not have the time and resources to attend classes.
     
  4. sanantone

    sanantone Well-Known Member

    This article nicely summarizes the stats with graphics.

    https://capseecenter.org/research/by-the-numbers/for-profit-college-infographic/

    Community colleges often get compared to for-profit colleges because of the student loan defaults. There are multiple problems with this comparison. The amount CC students are defaulting on is far lower, fewer CC students borrow in the first place because CCs are cheap, and the 12-year default rates of CCs and for-profit colleges aren't even close.
     
  5. Phdtobe

    Phdtobe Well-Known Member

    I hate to say it, as a former student of a for-profits did prey on the poor, and visible minority. The statistics is becoming very difficult to refuse. I think we can safely say that government is better at providing education than the free market.
     
  6. Kizmet

    Kizmet Moderator Staff Member

    My take on it, as purely a casual observer, is that the golden age of the for-profits occurred just before the explosion of online degree programs in the world of non-profit universities. Once upon a time the for-profits commanded a larger share of the online education world. Depending on your area of interest there were instances where the only degree programs available in certain disciplines came out of the for-profit world. Now that students have a real choice, the for-profits are not seen in as favorable a light.
     
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  7. sanantone

    sanantone Well-Known Member

    I just think that taxpayer dollars should not go to private schools, especially for-profit schools. Many private, non-profit schools are great, but they're largely inaccessible to poor students. They have a right to exist. For-profit schools also have the right to exist, but they should do so without government money.
     
  8. sanantone

    sanantone Well-Known Member

    I get why their popularity exploded. I disagree with some, however, that for-profits were great before the advent of online degree programs. I can't speak for other parts of the country, but the for-profit vo-tech schools that advertised during Jerry Springer and Maury were always considered a joke. Devry and ITT Tech were also considered jokes in my area before most even knew about University of Phoenix.

    Online degree programs had worse reputations in the early 2000s because most of the schools offering them were for-profits, and online degree programs were a new concept to most. So, I wouldn't say that for-profits were seen in a more favorable light back then. They were, often, the only options as you stated.
     
  9. sanantone

    sanantone Well-Known Member

    I was a poor, black person who was misled by University of Phoenix/Western International University/Apollo Group. I didn't understand the financial aid and admissions process, and I had no one to guide me. University of Phoenix made the process easy, but the admissions counselor also lied to me.
     
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  10. Phdtobe

    Phdtobe Well-Known Member

    I am very proud of your success - 5 degrees with more to come.

    Education has been good to me. I can truly say it saved my life.
     
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  11. sanantone

    sanantone Well-Known Member

    That's great! It also saved mine. I was getting nowhere without a college degree.

    The cousins in my family who graduated from college (all state universities) are making middle class salaries. The cousins who didn't go to college are working low-paying jobs at restaurants and warehouses. I know they were all receiving food stamps at one point, and they probably still are.

    It's not like the old days when you could get a manufacturing job with a unionized company and make $18+ per hour.
     
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  12. Neuhaus

    Neuhaus Well-Known Member

    I think that there is a very reasonable case to say no public funds to any private institution. I just don't agree with how private institutions would love to limit that to for-profit schools. Of course, how we would treat discretionary programs like the GI Bill would be another story.

    I feel that if we funneled all of that federal money not into just every college but into only public institutions then public institutions would get more money and should be offering better programs at a lower cost to the student.

    Even if you took out loans to fund, say, a J.D. from CUNY, you're talking about $15,000 annual tuition. Law degree for a loan of $45k? Even if you went into public interest law, you could probably manage those payments. Compare that to the $51k per year you'd be looking at for Syracuse Law. Now, tiering aside, I feel that my tax dollars shouldn't need to support Syracuse. Syracuse is private. They have an endowment. They have an active philanthropy program. They should either be able to survive on all of that private funding or not.

    At the time I earned my CTU degree, there were far fewer players. And the non-profit and public options were simply not marketing well. You could find them, but you had to dig. Plus, especially in the military, it seemed like everyone was using UPhoenix. Accreditation was what we looked for, not profit status, for better or worse. Today, there are just so many options out there I cannot imagine choosing a for-profit school except in certain instances. ACE, for example, is priced very competitively. And CTU periodically gives full scholarships to service members. I'd take a free CTU degree over a Colorado State degree that required debt, personally.

    I think the for-profits had a golden age. I think they helped break down a lot of the objections employers had to "online degrees." But now that everyone is in on the act, the business seems to be in for-profit curriculum companies that partner with recognized schools. No more accreditation drama at all. No more brand recognition issues. Of course, that's a whole different set of issues when you have, say, Villanova, the University of Scranton and Loyola all offering the same curriculum at different prices. But that, to me, seems like more of a consumer issue rather than the societal issue created by infusing taxpayer funds into private institutions.
     
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  13. Kizmet

    Kizmet Moderator Staff Member

    I agree with this. The situation now is that if University X wants to offer an online degree program in subject A they approach one the many curriculum companies and buy a package deal. They implement it with existing staff or hire a few adjuncts to supplement existing staff. If they choose the program(s) wisely they can make some profit which can be used to float other elements of the school that are not so profitable. It starts to feel like eating at fast-food restaurants though. A Happy Meal is a Happy Meal is a Happy Meal. Why should I pay more for yours than I could pay down the street at another restaurant? (especially since, in this case, I don't even have to drive down the street, I just login to a different website.) This whole thing is going to continue to evolve and one likely scenario is that competition will force more closures. I'm still waiting to hear about some of these MBA programs closing. It's hard to believe that 200+ online MBA programs are sustainable over time.
     
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  14. chrisjm18

    chrisjm18 Active Member

    I can't say my for-profit experience was the same. Thankfully, I earned my AAS and B.S. at Ashworth College for less than 10k and incurred no student debt.
     
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  15. Neuhaus

    Neuhaus Well-Known Member

    My for-profit experience was also fairly innocuous compared to these media reports. I finished my B.S. with around $15k in debt, total for CTU. I had financial aid. I used tuition assistance in the Navy and I used the GI Bill. What was really taking a bite out of my paycheck was the ~$22k I had in student loan debt for my two years at the university of scranton which, by the way, was only as low as it was because of work study and a "generous" financial aid package.

    Now, we can argue that UofS carries a bit more weight than CTU. Realistically, however, UofS's reputation outside of the region is, at best, neutral. The nearly $60k my employer paid for my MBA from the same institution is quite a lot of money. AACSB aside, this isn't a degree that is likely to land me a job at a Fortune 100.

    Then again, my NA experience has also been pretty positive. My UMT degree enabled me to teach at a community college, get a promotion and a pay raise and check the box needed for me to get tuition assistance for an MBA (my company only pays for MBAs for VPs and above unless you have management approval which is typically only granted if you already have another Masters in your field, long story).

    At the end of the day, responsible adults could and should make responsible decisions. Weigh options, evaluate their choices and do what works for them. If your AAS from Ashworth gets you where you need to go, then go for it. I've seen people use Penn Foster and Ashworth associates degrees to pull themselves off of the floor and make significant strides. I've also seen graduates of public and reputable non-profit universities working entry level retail.

    To tie in to the thread on elite schools...

    The elite schools aren't making amazing people. Elite schools are able to recruit top students who are more likely to go on and do amazing things. Send an average person to Harvard and they'll emerge just as average as they were before. Send someone who is a rockstar to American InterContinental University and they'll light the world on fire, just with more debt than they could have managed at a cheaper school.
     
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  16. sanantone

    sanantone Well-Known Member

    Penn Foster and Ashworth are DEAC-accredited schools that are dirt cheap and don't take federal funding. They're outliers among for-profit colleges, and they also come with their limitations. Additionally, many of their programs have very low graduation rates. College isn't worth much if you don't finish. Some of you have had very positive experiences at for-profit colleges. I had negative experiences at for-profit colleges and was only able to finally graduate at public schools. Keep in mind that I was a good K-12 student who scored high enough on abilities tests to be placed in advanced courses, and my high GRE scores got me into a competitive doctoral program and a master's program at a Top 35 school, so the whole "could have been successful at any college" didn't apply to me.

    The difference between me and the others here is that my experiences are more typical, especially for economically disadvantaged and minority students. These aren't just media reports. These are research studies and data gathered by the government. So, not matter how many hypotheticals or anecdotes you come up with, it doesn't change the fact that community colleges have similar student bodies, but they have higher graduation rates, lower unemployment rates, lower debt loads, and lower student loan default rates. It doesn't change the fact that African Americans who graduate from non-profit colleges are usually better off than African Americans who graduate from for-profit colleges. It also doesn't change the fact that the student loan debt crisis was mostly driven by the growth of for-profit colleges in the 2000s.

    If you want to bring schools like Ashworth and Penn Foster into the discussion, then you're only making the argument that for-profit schools aren't as predatory when they aren't accepting financial aid. You're just helping to make the case that for-profit businesses should not be making 90% of their profits from taxpayer dollars allocated to help the needy. No matter how dumb you think people are for choosing to attend expensive, for-profit, predatory colleges, it doesn't exonerate the colleges of the unethical practices they engage in to take advantage of the most vulnerable members of society who qualify for the most financial aid. I could make a lot of money too starting a business to take advantage of people who were born poor, went to bad schools, and have no one to guide them in the admissions and financial aid process, but I have a conscience.

    You can stick your head in the sand and deny reality, but someone made the argument that working class Millennials are worse off than past generations because they decided to study anything in college. No, the truth is that those students are mostly worse off because they decided to go to a for-profit college due to not being able to hack it at any other college.

    Since you guys trust anecdotes and outliers more than statistics that are representative of the general population, I can say that I just accepted a high-paying job that I got because of my master's degree and performance on the required assessments. I went from being in a family that often had to depend on donations for food to being on my way to being upper-middle class. Like the majority of public college graduates, I am not working an entry-level job in retail.
     
    Last edited: Mar 29, 2019
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  17. sanantone

    sanantone Well-Known Member

    Oh, and if I would have taken the advice of the elitists on this forum who think that poor kids shouldn't aspire to be anything that requires a college degree, I would have avoided college altogether and remained in low-paying jobs. Thank goodness that I am a responsible adult who knows not to listen to random people on the Internet.
     
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  18. Maxwell_Smart

    Maxwell_Smart Member

    Having had good and bad experiences at both for-profit and non-profit schools, I've come away with the firm belief that each school's quality is commensurate to the quality of its administration just like any other business.

    With regard to schools with low graduation rates, I can see both sides of the coin depending on which side you choose. If you believe the more degrees the merrier, then higher graduation rates are ideal. Personally, I feel the market is already flooded with too many degree holders--many of them being blithering idiots (just look at our politicians)--and it has cheapened the college degree an awful lot. Programs like Ashworth and Penn Foster have low degree grad rates as a combination of being open-enrollment and independent study. Most people are not motivated enough to finish their studies on their own and programs like those will quickly expose these sorts of people. I like that. But, both schools do have many diploma graduates.
     
  19. sanantone

    sanantone Well-Known Member

    Well, for-profit schools don't have low graduation rates because they're hard. Open enrollment plays a huge role, but I also believe that educational quality plays a role. It is a fact that for-profit colleges spend more on marketing than instruction. The schools I respect the most are the schools that accept almost anyone and still manage to have graduation rates above 50%. Those are schools that are supporting their students and helping them become successful. Accepting anyone and not requiring placement tests for remedial courses shows that a school does not care about their students' success or even their school's reputation; they only care about collecting tuition. I once heard that many for-profit schools had the goal of having students complete a minimum number of courses because that's when they profit off of them; after that, they couldn't care less about what happens to them.
     
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  20. Maxwell_Smart

    Maxwell_Smart Member

    Well, for-profit schools don't have low graduation rates because they're hard

    Non or for, none of the work is hard for a reasonably intelligent person until they get into hard sciences. For a mid-career or upper adult, most of this stuff is redundant. It's things you've already done, and in many cases you know better than the material because the materials often discuss best-case scenarios rather than the realities of when things go wrong and in how many ways they can go wrong.

    In my own experiences, I never found much if any difference in difficulty between for-profit and non-profit schools, NA and RA, private and public. I constantly hear there is a big difference, but I have yet to see it. What I have seen is a difference in quality between schools that defies the conventional wisdom people hold to on these kinds of boards. I've actually been surprised at how similar the course offerings, course designs, textbooks and course structures are between schools (some being practically identical), be they for profit, non-profit, nationally accredited, regionally accredited, public or private. This is why I don't get hung up on those designations. Certainly, a person should do their research on what each avenue will get them and then choose the school that suits them best.

    There are so many schools out there that thousands of fake degree holders slip through the cracks every day and land big jobs, LinkedIn is full of them, so I wouldn't recommend people outside of these boards to spend as much time worrying about these things as we do because in the real world the choice is neither the ticket to fortune and fame, nor is it the end of the world. There are too many factors involved to simplify it the way it often is in degree discussion circles where the conclusion is that we either take door A and be happy and successful, or door B and find misery and shame for all eternity.

    There will always be some knock a person can throw on:

    You went to a <<<insert school type>>> school? Oh, but it was for-profit? Garbage!

    You went to a <<<insert school type>>> school but it wasn't in the top 10? Weak!

    You went to a <<<insert school type>>> school, but it lacked <<<insert programmatic accreditation>>>? Laughable!

    You went to a <<<insert school type>>> school? Oh, but it wasn't in the Ivy League? Trash!

    You went to a <<<insert school type>>> school? Oh, but it didn't require a dissertation! Joke!

    You went to a <<<insert school type>>> school? But it has an open major policy so you can pretty much make your own degree! What a crock!

    You went to a <<<insert school type>>> school, but you did it... ONLINE! Ha!!!!

    It's a never-ending road of criticisms.
     
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