For-profit colleges need closer scrutiny

Across America, recent higher-ed graduates and dropouts are feeling burned because the educations they counted on to bring them prosperity have instead yielded deep debts but few job offers. The picture is particularly bleak for students at for-profit colleges — a sector that, in an alternate universe, could be leading the innovation in higher education.

For-profit schools often seek to provide vocational skills rather than traditional academic training and could, in theory, move more quickly to respond to changes in what employers are demanding. The industry argues that it gives working parents, returning service members, and other nontraditional students more freedom to earn degrees.

Yet across the sector, there aren’t enough safeguards to protect instructional quality. Recently, Tom Harkin, chairman of the Senate Committee on Health, Education, Labor and Pensions, issued a scathing report; the product of two years of investigation, it found that for-profit universities spend more on marketing, advertising, recruiting, and admissions staffing than on actual instruction. The average salary of a for-profit college CEO was $7.3 million in 2009 — eight times the average presidential pay for the nation’s 50 wealthiest universities, as calculated by the Chronicle of Higher Education.


Other data back up Harkin’s concerns. Statistics from 2011 show the percentage of students who get a diploma within six years of entering a for-profit school is 28 percent — half the 56 percent graduation rate at public institutions. Meanwhile, a 2010 Education Trust report found that the graduation rate at the University of Phoenix, by far the nation’s largest college system of any kind, was only 9 percent; the 12 percent at its Boston campus was barely better. (The University of Phoenix told the Arizona Republic that its internal records show a 36 percent graduation rate.) In 2010 and 2011, the Government Accountability Office found irregularities at a number of for-profit institutions — recruitment tactics in which enrollees were told not to worry about student debt, unrealistic projections of how much students would earn with their degrees, and inconsistent adherence to academic standards, including inaction against plagiarism.

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Industry representatives say the schools now orient students better about financing, and Harkin acknowledges the industry has made “serious changes.” But taxpayers should still be concerned. According to Harkin’s report, for-profit universities received $32 billion in federal student aid program funds in the 2009-10 school year. That amounted to 25 percent of all federal student aid program funds, even though for-profit schools account for only 13 percent of the nation’s college enrollment. Much of that aid went for naught as the majority of students withdrew from for-profit schools without a degree.

Meanwhile, for-profit university students, despite their relatively small numbers, account for nearly half of student loan defaults. This is such a poor return on the nation’s investment that Harkin called for several measures to tighten federal oversight of financing, marketing, student outcomes, and job placement rates. Student outcomes can and should be reported comprehensively to the US Department of Education, and eligibility for aid should be tied to those outcomes.

As college tuitions rise and as the skills demanded by employers change, the federal government must be willing to hear out schools that depart from the traditional public or private nonprofit model. But when students are rooked into paying tuition for programs that don’t help them after graduation, it’s a tragedy for them — and for the American taxpayers who often help pay the bill.