Maureen Downey: For-profit, for shame

By Maureen Downey

American students are responding in record numbers to the constant drumbeat that they must go to college to succeed.

Unfortunately, the most vulnerable of these students, those without a college-going culture in their families to inform their higher-education decisions, are marching into institutions that have little incentive to ensure they graduate.

The fastest-growing campuses in higher education today are for-profit schools that rely on sleek marketing, big promises and online ads to entice low-income and minority students to their pricey programs.

But these colleges post far lower graduation rates, even when compared to nonprofit open-enrollment colleges that serve the same students.

And they get higher tuition from these students, often the first in their families to attend a college. “And who’s waiting for them with open arms?” says Amy Wilkins, vice president of the Education Trust, which just released a blistering report on for-profit colleges. “These shysters,” she says.

A Washington-based nonprofit research and advocacy group, the Education Trust has been chiding nonprofit colleges for years about their underenrollment of low-income and minority students but targeted the burgeoning commercial college industry in its latest report, “Subprime Opportunity: The Unfulfilled Promise of For-Profit Colleges and Universities,”

The study cautions: “As with the collapse of the subprime lending industry, the showdown between for-profit colleges and the government shows how the aspirations of the underserved, when combined with lax regulation, make the rich richer, and the poor poorer. For-profit colleges provide high-cost degree programs that have little chance of leading to high-paying careers, and saddle the most vulnerable students with heavy debt. Instead of providing a solid pathway to the middle class, they pave a path into the subbasement of the American economy.”

Largely unregulated by either state or federal governments, for-profits grew their enrollments by 236 percent in a decade, outdistancing the expansion of the public colleges, such as the University of Georgia or Kennesaw State, and the private nonprofits, such as Berry, Mercer or Agnes Scott.

But their graduation rates trail the nonprofit campuses.

On average, for-profit colleges graduate 22 percent of their first-time, full-time students seeking bachelor’s degrees. Public colleges graduate 55 percent, and private, nonprofit colleges graduate 65 percent.

Rates vary by institution. The six-year graduation rate at the biggest player in the commercial field, the University of Phoenix, is 9 percent, according to the study. The graduation rate at DeVry is 31 percent.

Students in for-profit institutions finish with far more debt, according to the study.

In 2008, the median debt of graduates of for-profits was $31,190, nearly twice that of private nonprofit graduates, $17,040, and more than three-and-a-half times that of public college graduates, $7,960.

The for-profits have rebutted these criticisms by citing the weak academic histories of their students, countering that they often admit students who are not traditionally regarded as college material.

But the Education Trust also examined the graduation rates of open-enrollment, nonprofit colleges that accept all comers. And their rates are three times as high as those of the for-profit schools. Same students. Far different rates.

One reason is that for-profits don’t invest as much in their own students. Despite having lower tuition and fees, nonprofit schools put three times as much money into direct student services than their for-profit counterparts.

“This is our 10th report on higher ed,” says Wilkins. “The for-profits say we are beating up on them unfairly. We have beat up on nonprofit colleges and universities plenty. The fact is that these for-profits are not getting their kids out.”

The U.S. Department of Education is also concerned with the poor track records of the for-profit schools and has proposed new regulations to improve graduation and to impose penalties on schools that award staff bonuses for enrolling more students.

The government has more than a passing interest in the success of these schools; they have a substantial investment.

In 2008-09, for-profit colleges enrolled 12 percent of postsecondary students but collected 23 percent of all the federal student grants and loans that went to U.S. universities.

“These schools — and their investors — benefit from billions of dollars in taxpayers subsidies,” said U.S. Education Secretary Arne Duncan, “and, in return, taxpayers have a right to know that all of these programs are providing solid preparation for a job.”