For-Profit Colleges Continue to Harm Poor Students

[sanantone]

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. 

https://www.forbes.com/sites/dereknewton...-students/

Some may wonder how can this be. Aren't all colleges for-profit?   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.

https://www.brookings.edu/policy2020/vot...-forgiven/

[LevelUP]

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. 

https://www.forbes.com/sites/dereknewton...-students/

Some may wonder how can this be. Aren't all colleges for-profit?   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.

https://www.brookings.edu/policy2020/vot...-forgiven/

1. Predatory recruiting practices.  You just said yourself that this is nonexclusive of for-profit colleges.  What is predatory and what isn't is subjective. 

2. Lack of vetting students.  Who are you to decide who deserves to go to college and who doesn't deserve to go to college?

3. Higher tuition than public colleges.  It is nice to have large college endowments/state/federal funding that help to subsidize education however small schools don't have that luxury.  These for-profit schools are often run more efficiently than non-profit/public schools.

4. Expenditures on instruction.  For-profit colleges spend the least on instruction out of the different types of colleges.  You just proved my point that for-profit schools are run more efficiently than non-profit/public schools.

5. Reputation and quality of graduates. 1000's of schools, different majors, and locations in different areas of the U.S. it's hard to just lump all colleges together giving a label saying bad or good reputation.

6. Majoring in low-paying trades.  How many people major in liberal arts, communications, history, psychology, gender studies, or other types of low-paying majors at non-profit/public universities?  This isn't a problem unique to any one school.  People should be allowed to make their own choice of what to major in and what career they want. 

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.  Where did these clueless students come from?  Didn't most of them come from government-run public schools?  You sort of contradicted yourself by making the point that the public school system is a failing system.  


How do we fix the problem? 
Maybe the fix would be to switch to a privately run school system and get the government out of school.

Maybe people should wake up and realize that college isn't the be-all and end-all of education.  They should take some responsibility for themselves to learn the skills necessary to succeed in life.

[sanantone]

There's a difference between running efficiently enough to make a profit and running efficiently enough to provide quality service to your students. If you're like Capella, where only 12% of their full-time undergraduate students graduate in six years, what is the point in continuing to operate? Capella does great for their shareholders, but they're awful for their customers. Taxpayers shouldn't be propping up for-profit businesses that don't deliver what they offer. You can complain about the subsidies that go to public colleges, but on average, at least they graduate most of their students. You can complain about funding community colleges, but at least their graduates see a positive ROI. What's the point of giving billions each year to an industry that's largely a failure and leaves most students worse off? We might as well set tax dollars on fire because we're not going to collect on a lot of these loans.

Predatory recruiting practices are not exclusive to for-profit colleges, but they are much more common at for-profit colleges. Spending more money on marketing than instruction just to have worse outcomes for your students is nothing to brag about.

Who am I to decide who goes to college? Who are you to waste my money? If you want to pour your own money down the drain, then that's fine. Don't waste my tax dollars on students who are ill-prepared for college and won't receive remediation. If these for-profit colleges were so efficient, they wouldn't need to rely upon public funding. How many other for-profit industries are so reliant upon government funding?

[ss20ts]

I randomly googled 3 of the state schools in the SUNY system - 1 from each type of 4 year school in our system. Only 2 schools had the majority of their students graduate...2 out of 3.

University at Albany/Graduation rate
66%
For first-time, full-time in 2018–19

SUNY Geneseo/Graduation rate
80.9%
For first-time, full-time in 2018–19

SUNY Cobleskill/Graduation rate
41.6%
For first-time, full-time in 2018–19

And a community college

Hudson Valley Community College/Graduation rate
29.6%
For first-time, full-time in 2018–19


Sure looks like billions of taxpayer money is being wasted on state schools looking at these graduation rates.

[sanantone]

I randomly googled 3 of the state schools in the SUNY system - 1 from each type of 4 year school in our system. Only 1 school had hte majority of their students graduate...1 out of 3.

University at Albany/Graduation rate
66%
For first-time, full-time in 2018–19

SUNY Geneseo/Graduation rate
80.9%
For first-time, full-time in 2018–19

SUNY Cobleskill/Graduation rate
41.6%
For first-time, full-time in 2018–19

And a community college

Hudson Valley Community College/Graduation rate
29.6%
For first-time, full-time in 2018–19


Sure looks like billions of taxpayer money is being wasted on state schools looking at these graduation rates.

This is why statistics is important. We're comparing a sector where 51% of colleges have graduates who will never see a positive ROI, on average, to a sector where 80% of colleges have a positive ROI in 10 years. We're comparing a sector where, overall, the graduation rate is below 50% to a sector where the graduation rate is over 50%. You can nitpick, but it won't change the fact that the majority of for-profit colleges are failures, and the public sector, as a whole, performs much better. 

If you were choosing a high school for your kid, would you send your kid to the school with a 30% graduation rate or to the school with a 60% graduation rate? It looks like you would see these two schools as equals because they don't graduate everyone. 

If the majority of businesses in an industry are failing, then there's something fundamentally wrong with that industry. You can either increase regulations or force them to do what other for-profit industries do - have customers pay with their own money. Several DEAC schools already do this as well as a couple of RA for-profit schools. If you're really that efficient, you can operate like Penn Foster, Ashworth, and American College of Education.

---

Randomly google for-profit schools and see how many have a graduation rate above 50%. You just made my point even though your sampling is unscientific. The majority of schools you pulled up have good graduation rates. It's nearly impossible to find a 4-year for-profit college with a good graduation rate.

[ss20ts]

Well considering the community college doesn't even have a 30% graduation rate using your logic it should close its doors.

[LevelUP]

This is why statistics is important. We're comparing a sector where 51% of colleges have graduates who will never see a positive ROI, on average, to a sector where 80% of colleges have a positive ROI in 10 years. We're comparing a sector where, overall, the graduation rate is below 50% to a sector where the graduation rate is over 60%. You can nitpick, but it won't change the fact that the majority of for-profit colleges are failures, and the public sector, as a whole, performs much better. 

If you were choosing a high school for your kid, would you send your kid to the school with a 30% graduation rate or to the school with a 60% graduation rate? It looks like you would see these two schools as equals because they don't graduate everyone. 

Statistics can be misleading too. 

WGU graduation rate is either 21% or 50% depending on which statistics you look at.

https://www.scholarships.com/colleges/we...ion-rates/

https://www.wgu.edu/student-experience/g...rates.html

These statistics probably fail to account if students transfer to another university and graduate later on.

WGU is a good school with a good reputation.

Capella owns Sophia.org  A lot of us here benefited from Sophia courses.

[sanantone]

Well considering the community college doesn't even have a 30% graduation rate using your logic it should close its doors.

It depends on the programs you're looking at. If it's a vocational program, then it should revamp or close if most students are failing. If students are earning transfer credits and eventually earning a bachelor's degree elsewhere, then the CC did its job, which is to offer cheap freshman and sophomore classes. 

It would be cool to see a study asking for-profit students if they're just taking classes to transfer to a 4-year college. You have to select degree-seeking to receive financial aid, but many people have no intention of earning a non-vocational associate's degree. My guess is that most for-profit college students did not enroll into a degree program with the intention of saving money on lower level courses to transfer elsewhere considering that the average for-profit college is more expensive than public colleges and universities.

---

This is why statistics is important. We're comparing a sector where 51% of colleges have graduates who will never see a positive ROI, on average, to a sector where 80% of colleges have a positive ROI in 10 years. We're comparing a sector where, overall, the graduation rate is below 50% to a sector where the graduation rate is over 60%. You can nitpick, but it won't change the fact that the majority of for-profit colleges are failures, and the public sector, as a whole, performs much better. 

If you were choosing a high school for your kid, would you send your kid to the school with a 30% graduation rate or to the school with a 60% graduation rate? It looks like you would see these two schools as equals because they don't graduate everyone. 

Statistics can be misleading too. 

WGU graduation rate is either 21% or 50% depending on which statistics you look at.

https://www.scholarships.com/colleges/we...ion-rates/

https://www.wgu.edu/student-experience/g...rates.html

These statistics probably fail to account if students transfer to another university and graduate later on.

WGU is a good school with a good reputation.

Capella owns Sophia.org  A lot of us here benefited from Sophia courses.

I looked at all of Capella's undergraduate stats, including part-time and full-time first-time students, and part-time and full-time transfer students. The highest graduation rate was 36%. The rest were abysmally low.

[dfrecore]

Well considering the community college doesn't even have a 30% graduation rate using your logic it should close its doors.

Most people don't go to CC's to graduate anyway, so that's not a statistic you can really look at.  Did they learn the skills they needed?  Did they earn some credits and transfer to another school?  I know virtually no one who goes to a CC that's there to graduate - they're either in a program where they need to learn specific skills, they need to brush up on some things before going into another program, they need some pre-reqs for a graduate program, or they just want enough credits to transfer, which does not mean earning an AA/AS.

[GizmoJack]

Well considering the community college doesn't even have a 30% graduation rate using your logic it should close its doors.

Most people don't go to CC's to graduate anyway, so that's not a statistic you can really look at.  Did they learn the skills they needed?  Did they earn some credits and transfer to another school?  I know virtually no one who goes to a CC that's there to graduate - they're either in a program where they need to learn specific skills, they need to brush up on some things before going into another program, they need some pre-reqs for a graduate program, or they just want enough credits to transfer, which does not mean earning an AA/AS.

Good point. I know years ago when I went to CC I had no intentions to graduate. I had crappy math grades in HS and I needed to brush up before attempting admission to the state university.