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The For-Profit Higher Education Industry, By the Numbers

A recent Senate report gave a poor grade to for-profit colleges and universities. We break down the numbers.

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Sen. Tom Harkin, D-Iowa, chairman of the Health, Education, Labor and Pensions Committee, releases a report flagging high rates of loan default, aggressive recruiting practices and higher than average tuition, among other things, at for-profit schools on Capitol Hill on July 30, 2012. (J. Scott Applewhite/AP Photo)

The for-profit higher education industry was the target of a bruising report issued last week. Based on a two-year effort, the report detailed high rates of loan default, aggressive recruiting, higher than average tuition, low retention rates, and little job placement assistance. It was spearheaded by Sen. Tom Harkin, D-Iowa, a longtime critic of the industry. (ProPublica has written a number of pieces looking more closely at the explosive growth sector, including questionable recruiting and marketing.)

The report has provoked some pushback. The Association of Private Sector Colleges and Universities, a membership organization composed of accredited for-profit schools, issued a statement criticizing what it saw as "continued political attacks" on the for-profit sector. Saying the report "twists the facts to fit a narrative," it went on to challenge several figures.

It didn't contest the following numbers.

Growth

number of students enrolled in for-profit higher education schools in 2001
number of students enrolled in for-profit higher education schools in 2010
percent by which enrollment at for-profit colleges grew between 1998 and 2008
percent by which enrollment in all degree-granting higher-ed institutions grew in same time frame (schools awarding an associate or higher degree)

Cost of education

average cost of a two-year associate's degree at a for-profit college
average cost of an associate's degree at comparable community college
average cost of a four-year bachelor's degree at a for-profit college
average cost of a four-year bachelor's degree at state flagship university (Note: Such schools, of course, often benefit from significant taxpayer subsidies)
average cost of a certificate program at a for-profit college
average cost of a certificate program at a comparable public college

Loan — and debt

median debt with which average student at for-profit college graduates
median debt with which average student at a private non-profit college graduates
median debt with which average student at a public college or university graduates
percent of those enrolled in for-profit schools who take out student loans
percent of those enrolled in four-year private, non-profit colleges who take out student loans
percent of those enrolled in public colleges who take out student loans
percent of students at community colleges who take out student loans
amount of federal Pell grants given to for-profit colleges in 2000-01 school year
amount of federal Pell grants given to non-profit private institutions in 2000-01 school year (Source: 2000-2001 Title IV/Federal Pell Grant Program End of Year Report, U.S. Department of Education)
amount of federal Pell grants given to public institutions in same year (same source as above)
amount of federal Pell grants given to for-profit colleges in 2009-10 school year
amount of federal Pell grants given to non-profit private institutions in 2009-10 school year (Source: 2009-2010 Title IV/Federal Pell Grant Program End of Year Report, U.S. Department of Education)
amount of federal Pell grants given to public institutions in same year (same source as above)

Recruitment and lobbying

amount the for-profit education industry spent on marketing, recruiting and admissions staffing in fiscal year 2009
amount Apollo Group Inc. agreed to pay in December 2009 to settle a whistleblower lawsuit for tying University of Phoenix recruiters' pay to student enrollment
number of recruiters hired by 30 for-profit higher education companies in 2010 — roughly, one recruiter per 49 students enrolled at a for-profit college
number of career services staff employed by for-profit schools in 2010

Executive compensation

average compensation of CEOs at for-profit higher education companies in 2009
average compensation of five highest-paid presidents of non-profit colleges and universities in 2009
average compensation of five highest-paid leaders of large public universities in 2009

Academic progress

average amount publicly traded for-profit higher education companies spent on instruction per student in 2009
expense spent on instruction per full-time student at public institution in 2009-10 (Source: The Condition of Education 2012, National Center for Education Statistics)
expense spent on instruction per full-time student at private non-profit school in 2009-10 (Source: The Condition of Education 2012, National Center for Education Statistics)
percent of students who completed bachelor's degree within four years at for-profit schools, matriculating in 2004 (Source: National Center for Education Statistics)
percent of students who completed bachelor's degree within four years at public institutions, matriculating in 2004 (Source: National Center for Education Statistics)
percent of students who completed bachelor’s degree within four years at non-profit private schools, matriculating in 2004 (Source: National Center for Education Statistics)

And yet, getting yourself a great education in many fields can be had for less than a thousand bucks in equipment.  You can do DNA analysis (OpenPCR), explore waterways (OpenROV), test mechanical designs (RepRap, among many 3D printers) or circuit boards (CNC routers), and a few other serious “when I grow up” kinds of things.

Software?  Writing?  History?  Literature in nearly any language?  There’s this thing called “the Internet,” where you can find and talk to people all over the world, learn from the best, and build a portfolio for the money you’re already going to spend do watch cat videos.

Where schools used to excel was in giving students an environment to compete with other motivated students on a day-to-day basis and give them the opportunity to network with each other and professionals, to help motivate them and prepare them for the workplace.  But faced with near-free competition, what are schools doing?  Raising prices and putting courses on-line, so that students don’t need to meet one another or go to the trouble of networking.  They’ve also started reducing out-of-major requirements, so that students can ignore anything they don’t think they want to learn.

It’s a very foolish scenario, and speaking as an adjunct professor at a semi-important school and someone who has tenured professors at Ivies as friends, I can’t help wonder if and worry that the price increases is something like a last gasp before sinking to the bottom.

The declining graduation rates aren’t, though.  Most administrators I’ve met are panicking about that, not pleased.  In fact, I know a few schools are rolling out a policy of dropping students at the first sign of trouble, rather than gobbling up the increased revenue of a student who needs to retake a few classes.  It makes no sense at all.

When you consider that the students aren’t raking in money with entry-level jobs and the schools are having trouble staying afloat, there aren’t many entities left that could be seeing a benefit from the situation…

(I’m baffled by the Apollo thing, though.  Why wouldn’t you pay a recruiter based on how well he recruits?  The University of Phoenix is a little shady to begin with, as a graduate program with no networking opportunity, but that sounds like a perfectly rational and honest way of doing business.)

What’s almost as shocking as the fraud of for-profit higher education institutions is the fact that students at “public” universities (slowly being privatized through tuition) still graduate with debt.  When I went to the City College of New York it was FREE.  Evening sessions offered complete majors for students working full-time jobs.  Taking fewer courses per semester allowed me to get good grades and qualify for a graduate school fellowship.  This is no longer possible for working class students.  The ladder of social mobility has been greatly narrowed.

This ongoing criminal scam in higher education exposes only the visible tip of private sector corruption but should cause everyone to look for the massive and growing rot hidden beneath the surface and out of public view. The corporate world has a dystopian vision of our future which does not include the 1%. They’ll be having cocktails outside the wire.

I work for a for-profit post-secondary education institution . I can’t, and won’t attempt to, speak for other colleges of our general type; only ours. We have an extraordinarily high retention / graduation rate, licensure rate for the single program we offer (massage therapy), and we have an extraordinarily high PLACEMENT rate. One rather conspicuously important set of numbers LACKING from all of these collected and posted above - the numbers that the writer uses to attempt to throw dirt on schools that HAVE to make a profit in order to stay afloat because they don’t suckle at the public teat - have to do with certification or licensure (where applicable), and placement IN THEIR FIELDS OF MAJOR. How many of the folks graduating from the public schools ever actually work in their fields of major? Grads of our school only get licensed 100% of the time; and only 100% of those go to work in their field of major. And only 100% of them begin their careers earning an annual income equal to well more than four times the cost of their education (our students who completed in 2011 averaged more than $37 per hour, and worked an average of slighly more than 30 hours per week). Why are THOSE sorts of numbers I’ve cited lacking? Because public colleges and universities are NOT REQUIRED TO REPORT THOSE NUMBERS - only the “evil” for-profit schools have to prove that they’re worth the investment. And becasue public colleges and universities - and probably most private colleges and universities, of which I am a product - would have to admit that they are abyssmal failures when it comes right down to it. We have spent $5,000 in advertising expense year to date in 2012; and our campus population is approximately 40 students year to date, with roughly another 30 or so expected to be added by the end of the year; at an average total cost of tuition and all related expenses of less than $12,000 per student. Let us see some numbers that make a difference - show us what students actually earn and what percentages actually ever work in their fields of major on both sides of the ledger. Care to wager who comes out on top in that comparison? Why do you suppose the for-profit schools, on the whole, have grown so much more rapidly than the others? Maybe it’s not the marketing, most of which isn’t really all that good or clever, or even interesting. Maybe it’s because you don’t need a four-year degree to do most of the work - an awful lot of good-paying work, at that - in this country. Maybe a year-long program in a specific area where jobs actually exist is of greater value than 3 years of courses in subject matter that you’ll never, ever get any use from - not even in a game of Trivial Pursuit - just to take roughly a years’ worth, or less, in an area in which you may never actually be able to secure employment. Maybe.

Darryl Lynn Jones

Aug. 9, 2012, 4:30 p.m.

I am seeking another degree. I have a BA, a MA, and currently pursuing a doctorate. Millennial subsistence requires an educational foundation in information systems and/or technology; so an application to schools that offer degree programs in Computer Forensics is desired. The issue is the recent cancellation of subsidized student loan eligibility for graduate and professional students; effective July 1, 2012. Does your school allow campus-based aid and undergraduate grants based on cumulative enrollment or school-specific enrollment? In other words, although I am a graduate student at another institution which makes me ineligible to receive subsidized student loans for doctorate study; am I eligible to get subsidized student loans for undergraduate study at another school?
The answer is vital. I am certain that there are high numbers of learners who have more than enough loan availability; such as the 100K that I still have left. The issue is whether or not it can be used. There is a low probability, amid the recent investigation about for-profit schools, that graduates who want to continue the lifelong learner odyssey will be afforded the flexibility and subsistence dollars as simultaneous undergraduates in different programs at more than one postsecondary school. After all, every industry is becoming more and more technology-driven; so where does that leave the student who has the aptitude without the money? It appears as if the recent unveiling of information about for-profit colleges by Congress and the recent passage of the 8-year budget which slashed funding for graduate education is going to limit eligibility across the board. What do you think? What is your school’s policy?

Richard Masters

Aug. 9, 2012, 4:43 p.m.

A few comments come to mind:
  1) The Doonesbury comic strip has been taking this issue on in a most interesting way. He mentioned one CEO who received $71 mil, while providing a decidedly second rate education.
  2) I suppose that this is the new normal - go to college to get a job.
And the colleges and universities become trade schools. This is all part of the dumbing down of America.
  3) If you like for profit education on a higher level, you’re going to love it at the elementary and secondary level, because that’s where education is headed in the U.S. if people like Arne Duncan and other “reformers” have their way.

Darryl Lynn Jones

Aug. 9, 2012, 4:54 p.m.

In defense of the United States Department of Education; privatization is a right-wing philosophy not left-wing! In other words, Democrats are not at fault for the passage of the recent 8-year budget. It is a Republican tenet; as has been so proudly extolled by right-wingers since the bill was initially drafted and sent to the floors of Congress for assessment. Secretary Duncan inherited established privatized clusters of elementary, secondary, and post-secondary schools from guess who?

MaryEllen Boudman

Aug. 9, 2012, 6:03 p.m.

I’m a retired High School Visual Art Teacher still living near that high school. I have continuos contact with some students who have been
duped by this huge industry.
Talk about integrity as part of education?
Not much of it here.
For Profit Education is definitely the school of hard knocks when
students find out they are not ‘qualified’ after taking courses and
they may lose their shirts because of the loans to pay back.
The lenders should have to suffer at least somewhat for not checking
this out prior to loaning the money?

All (or almost all) of these statistics might be more acceptable if these schools provided value. The unfortunate fact is that students from for-profit institutions default on their student loans at MUCH higher rates than other borrowers. If I recall correctly, nearly half of defaulting borrowers attended for-profit schools in the most recent cohort. Some specific programs have appalling default rates nearing 100%. Given that Federal (and private) student loans are not dischargeable in bankruptcy, these students are on the hook for accruing interest and penalties for the rest of their lives. And given that student loan default precludes any future Federal aid eligibility, not only have the schools failed in the promise for substantial career benefits, they have locked those students out of any reasonable opportunity to return to school for more marketable credentials. To me, these failures suggest that public policy has been perverted. And efforts by the Feds to take action against these most egregiously bad programs (the ones with 100% defaults) have been derailed and buried by the corporate interests and their supporters on the Hill.

Jean Clelland-Morin

Aug. 10, 2012, 2:17 a.m.

For-Profit education, For-Profit healthcare and For-Profit prisons have NO place in a moral society. This is a system that keeps the powerful in their unmerited place of power. The rest of us are manipulated and controlled by For-Profit institutions. // Jean Clelland-Morin

It occurs to me, after reading the other comments, that there’s another major factor at work.

The deal (when I went to school) was that graduating from college gave you the grounding and discipline TO learn whatever skills were required for your first couple of jobs.  You’d go and apply for what we used to call a “revolving door,” an entry-level position with a high turnover.  You’d get a week or two training on the corporate culture and the product line (I come from an engineering school, software, in my case), and pick up everything else along the way.

Somewhere along the way, this changed.  Companies didn’t want to “waste” the expense of an entry-level salary to teach someone the ropes and find out if they’re worth promoting, so they want a new hire to “hit the ground running,” which they judge by experience.

There are two results to this, both mentioned a couple of times.  First, there aren’t any jobs for recent graduates, because corporate America has decided it’s wasteful to put resources into someone who might leave—I’d like to see the relationship success rate among these decision-makers, now that I think about it.  But anyway, second is that colleges have tried to fit this by becoming trade schools, training where they should be educating.

I still think college is a great idea for a lot of kids (I wouldn’t teach if I didn’t think it helped—I have a day job that pays fine), but be mindful of what you can and can’t get out of a degree program, and what other learning and networking resources are available and realize that being able to show a real-world contribution that you made blows away anything on your resume, including your degree.

For example, a wannabe programmer with a degree from a “lousy” college who supplies links to her last hundred patches to a project like OpenOffice, say, will blow the doors off the kid waving his MIT degree, but who’s only experience is assigned homework.  The former has a track record of working with others and can show what his code is like.

If you can also show that/how you worked on the documentation or the marketing plan (or even that you blogged about the experience—in other words, can demonstrate some peripheral skill that might benefit the employer), so much the better.  You’re now the candidate who can hit the ground running, basically.  (And one of the great things about Open Source projects is that they keep records of everything everybody contributed, so you can tease it out and show it off when needed.  Other projects work, too, but it’s harder to sell without hard evidence.)

clarence swinney

Aug. 10, 2012, 10:04 a.m.

SUCCESS—FAILURE?
  1945-1980 Democrats worked hard in creating a successful Middle Class.
They had jobs that paid a wage that allowed home ownership, health care, education for children and retirement pensions. There was little worry about the future—it looked good.

Since 1980, it has been 30 years of loading them with Debt in order to afford a middle class life style. Since 1980, the Top 1% gained 281% in after tax income. The middle 20% gained 25% or less than inflation. The wealth had the money and loaned it to the middle class.

The outsourcing of our manufacturing Industries was worst thing for the Middle Class.
Since 1930 America thrived on building industries that provided the Middle Class good paying jobs with excellent benefits. The outsourcing boomed with Wal-Mart the leader in selling low labor cost goods from afar.

The Tax Code has been load with Exemptions for the Rich and for Corporations some make billions in profit and pay no tax on it.

SOLUTIONS ARE AVAILABLE——

1. Progressive Flat Tax by Group—Tax Total Income not not after exemptions.
Burn the Tax Book—-No exemptions gives us extra revenue of $1100 Billion that balances our budget plus pays down some debt. Start anew. Exemptions must add to the Common Good not fat wallets.
2. Fed fund campaigns and elections for Congress and President. Six months time frame.
Three primary-three general. A debate a week=12=Adequate to evaluate candidates. No personal or outside money.
3. Since there will be no need to raise campaign finds BAN all federal employees from taking anything with a financial value. This closes the K Street Bribery empire.
4. The Middle Class will have a chance at winning elections

Stop selling our government to the highest $$$$ Spender—It can be done—-
                        IT IS UP TO YOU IN 2012
clarenceswinney burlington nc

clarence swinney

Aug. 10, 2012, 3:29 p.m.

ctj.org
If Romney kept his pledge to avoid increasing the deficit (aside from the enormous deficit increase resulting from the Bush tax cuts), then someone will have to face a net increase in their taxes. These figures demonstrate that the very rich won’t be the ones paying for Romney’s proposals.

The estimates used to calculate the figures in the table above assume that the Romney plan would:

-Make permanent the Bush income tax cuts for all income levels.
-Further reduce all income tax rates by a fifth.
-Repeal the Alternative Minimum Tax.
-Repeal the estate and gift tax.
-Exempt up to $200,000 of long-term capital gains, dividends and interest from taxable income for taxpayers who do not have $200,000 of other income.
-Maintain 15% rates for capital gains and dividends.
-Repeal all itemized deductions (all taxpayers take standard deduction).
-Repeal all tax credits.
-Repeal exclusion for employer-provided health care.
-Repeal deduction for health insurance for the self-employed.
-Repeal the Hospital Insurance tax increase on the wealthy that was enacted as part of health care reform.

Stephanie Palmer

Aug. 10, 2012, 3:35 p.m.

Too many of these for-profit outfits have contributed large sums of money to Congress and congressmen have championed them. And yet, knowing the prices they charge and the very low rate of graduation, it looks like the Congress’ yelling about the debt is a false one. If they really cared about it, they would have been denying access to federally backed student loans a while ago. The congress is permitting these fake outlets to put people in debt and actually abets the fraud they’re committing.

John
One of the saddest things I ever saw on the job was an engineering grad who was completely lost while watching our electricians trouble shoot a PLC.  Like most he was told “now you are an engineer” upon graduation.  If only he had been told the truth, that he was then prepared to learn engineering.

To all:
I do not have the disdain for learning to make a living that some of you guys have nor do I have disdain for learning to make sparkling conversation at cocktail parties.  Each in its place is best. 

It is my contention that there is a need for a central database that compares the number of recent grads with the number of hires in specific fields and this database should be required viewing for college students and their parents.  This was driven home to me by the daughter of a friend.  This girl had been the victim of a horrific auto accident and underwent a great deal of physical therapy.  Not coincidentally she wanted to major in this type of therapy.  Before she could do so the local hospital ran and ad for just such a therapist.  Two hundred applicants showed up waving their degrees.  Even at her young age she realized she should change her plans.  Think of the waste of time and her parents’ money if the hospital had not run the ad.

This plan would not cure all ills in the choice of careers.  There will always be those who want a career in the arts even if they know it is a million to one shot (which usually they don’t). 

This may not be too important for those with endowments but it certainly is for those whose entire future can depend on their education.