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.

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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/