Washington
Congress plans to put for-profit colleges under the microscope on Thursday, asking whether a higher-education model that consumes more than double its proportionate share of federal student aid is an innovation worthy of duplication or a recipe for long-term economic disaster.
The review is being led by Sen. Tom Harkin, the Iowa Democrat who is chairman of the Senate's education committee. Mr. Harkin has expressed concern that recent moves by Congress to pump billions of new dollars into student aid might be undermined by corporate-owned colleges interested primarily in maximizing returns to shareholders.
The evaluation threatens new headaches for an industry that is sometimes exalted by government policy makers as a lean results-oriented example for the rest of academe, and other times caricatured as an opportunistic outlier that peddles low-value education to unprepared high school dropouts.
Many of the issues at stake, however, could mean harsher scrutiny for all of higher education, as worries about rapidly growing costs and low-quality education in one sector could raise questions about long-accepted practices throughout higher education.
Congress and colleges still lack a firm sense of "what our higher education system is producing," said Jamie P. Merisotis, president of the Lumina Foundation for Education. "The model of higher education is starting to evolve, but it's not clear to us what that evolution looks like," he said.
Mr. Harkin's review of for-profit colleges comes a year after President Obama called for a doubling by 2020 of the number of college graduates in the United States, in the hope of preparing the nation for a new era of global economic competition.
A Higher-Education Bubble?
Others, however, see warning signs in the current economic slump, which was driven by an unsustainable surge in housing prices. A similar bubble in higher education could be marked by exploding tuition costs that would drain taxpayers and strangle millions of students with worthless degrees and mountains of debt.
Economic bubbles such as the unsustainable surge in housing prices "typically are built on ignorance and borrowed money," says one prominent pessimist on the matter, Glenn Harlan Reynolds, a professor of law at the University of Tennessee at Knoxville. "And the reason you've got a higher-education bubble is ignorance and borrowed money," Mr. Reynolds said.
Reflecting such fears, Mr. Harkin joined other Democratic lawmakers this week in calling on the Government Accountability Office to conduct a study of the quality of for-profit institutions and their use of federal money.
The lawmakers, including Rep. George Miller of California, chairman of the House education committee, said their concerns included the growing rate of indebtedness among students who attend for-profit colleges.
That points out another parallel with the housing bubble: Much as the government failed to fully consider the effects of encouraging millions of people to buy homes they could not afford, it doesn't have firm data on how many millions of potential students can truly afford a college education.
The concern arises in part because the Education Department collects and compiles reams of student data—so much that colleges report spending thousands of hours of staff time each year trying to comply—and yet the government still cannot say how many students fully pay back all its loans.
It "sounds like a simple, single number," said Robert M. Shireman, the department's deputy under secretary of education. It is, however, "much more complex than that," Mr. Shireman said. The difficulties, he said, include the long-term tracking of borrowers across multiple loan programs and repayment systems.
Others disagree. "I don't think it would be difficult at all" to calculate long-term or even lifetime default rates, said Erin Dillon, an analyst who specializes in higher-education financial aid at Education Sector, a nonprofit policy study group. "It would be a matter of just running the numbers."
However complicated to derive, lifetime loan-default figures loom large over the Obama administration's commitment to make Americans the world's leader by 2020 in their proportion of college graduates. That's because the goal, which would require almost doubling the current level of 20-million students graduating from college in a year, will almost certainly require a vast expansion of the sector most capable of rapid growth: for-profit colleges. And the limited loan-default data now available show students who attended for-profit institutions fare the worst.
In its latest annual report, just last month, the Education Department said that 7.2 percent of all borrowers due to begin repaying their federally subsidized loans in fiscal year 2008 had defaulted—generally meaning not paying for nine months—within two years. That marked an increase from 6.7 percent a year earlier. The rate that year was even higher, 11.9 percent, for borrowers who attended for-profit institutions.
Grim Default Estimates
And default numbers calculated over borrowers' lifetimes may be far worse. The Education Department, in an analysis last November, estimated that more than 15 percent of federally subsidized loans, by dollar value, would enter default at some period. And among two-year for-profit colleges, it said, the estimate is 47 percent.
As large as that sounds, the number's relative significance could be even bigger. For-profit institutions enroll fewer than 10 percent of all college students, and yet they accounted for more than 20 percent of federally subsidized loan money in the 2007-8 academic year, more than double their share a decade earlier, according to Education Department figures. (See related chart.)
For-profit institutions contend that such numbers say far more about the overall difficulty of achieving the Obama administration's goal than about their ability to help attain it. Reaching the doubling goal would mean enrolling and graduating 20-million students who are now considered unwilling to do or incapable of the work, said Peter P. Smith, senior vice president for academic strategies and development at Kaplan Higher Education.
"This isn't just a social vision," Mr. Smith said. "This is tough work."
Others agree but worry about the tradeoff inherent in the advertisement-driven for-profit model, which works to maximize returns to outside shareholders at the same time the vast majority of its money comes from taxpayers. They wonder if that model represents the best method for helping prospective students make the critical and deeply personal assessment of whether the long-term educational benefits of a college education will justify the long-term costs.
And it's not solely a problem of the for-profit sector, Mr. Reynolds said. Colleges of all type have been raising tuition for years as the government offers ever-growing amounts of grant aid and loan money, he said. The price inflation is driven by the fact that a government-backed loan, while offering students only a slight break from market interest rates, "looks cheap because you don't have to make payments for a while," he said.
The Obama administration is nevertheless determined to increase federal-aid levels, hoping to help the millions of students whose primary problem is money rather than academic potential. The government hands out some $25-billion a year in grants and about $85-billion in subsidized loans, and Congress found another $36-billion for the Pell Grant program this year by ending the practice of paying private-loan companies to distribute federally subsidized loans.
That determination to expand the distribution of federal tuition assistance has left Congress and the White House seeking other ways to ensure that students get quality for their money. Just last week, the House education committee held a hearing in which Democratic members joined the Education Department's inspector general in pressing accrediting agencies to more clearly define the "credit hour" measurement used in student-aid allocations. Some colleges have objected, wanting more flexibility in defining their educational missions.
The Education Department last week also proposed tougher rules forbidding colleges from compensating recruiters based on student enrollment, while working on regulatory language that would cut off federal student aid to college programs whose graduates carry high student-loan debt relative to their income. And this week Mr. Harkin is leading the hearing focused on for-profit colleges, with plans to showcase some of the sector's leading critics, including Steven Eisman, a hedge-fund manager who predicted the housing bubble and is now issuing similar warnings about for-profit higher education.
Debt-Avoiding Strategies
Even the proposed regulatory changes may not be enough, according to some analysts, to prevent the Obama administration's pursuit of record graduation rates from turning into record student indebtedness.
Jackson Toby, an emeritus professor of sociology at Rutgers University at New Brunswick, has proposed that eligibility for federal student loans be tied to past academic performance. Low-income students could still get Pell Grants, allowing them to attend low-cost institutions such as community colleges, but they could not get the federally subsidized loans typically necessary to afford four-year institutions or for-profit colleges until they can demonstrate that they can handle that level of work.
"There are some problems that cannot be remediated," he said, "and therefore there are some kids who cannot really make it in college, no matter how much remediation we attempt to do."
Others strongly disagree, warning of dangers to society from any attempts to limit student eligibility based on strategies to predict a student's future success. "It's a terrible problem," Amy E. Slaton, associate professor of history and politics at Drexel University, said of the growing default rates, "but the worst possible answer is to try to predict who's going to default and keep them from even trying."
Kaplan is cautiously testing out one solution. Beginning this past March, Mr. Smith said, the university began a pilot program in which new students can enroll conditionally and then leave after three weeks, without any debt or any transcript, if they find they cannot handle the work.
"It is a substantial hit to revenue," he said of the trial course structure, "but the fact of the matter is it's absolutely the right kind of thing to do." The for-profit University of Phoenix, the nation's largest university system, is advertising a similar trial system.
Through all the disagreements over the difficulty of calculating a student-loan default rate and the challenge of reducing that number, there's much wider agreement across the political spectrum that the government should not be using it as a measure of a college's overall success rate.
Deanne Loonin, a lawyer with the National Consumer Law Center who regularly helps students in default, said the college is just one responsible party. "There are a lot of other factors that go into why people default," often involving personal circumstances of the borrower, Ms. Loonin said.
And the Education Department lacks hard data in many of those areas, in part because many traditional colleges, especially private institutions, have resisted efforts to collect and cross-tabulate student records.
That informational void helps contribute to the poor image of for-profit colleges, which consider themselves leaders in graduating low-income students, said Harris N. Miller, president of the industry's lobby group, the Career College Association.
"Transparency is always good, facts are always good," Mr. Miller said.
Whether it involves defining credit hours or setting accreditation standards, the root of the problem may be that the government is looking for better ways to ensure that its money is spent on worthwhile educational ventures, and yet it doesn't want to challenge the right of each college to define its own mission.
So far that has proven to be a fundamental contradiction in judging the overall value of higher education, said Mr. Merisotis, of the Lumina Foundation. "There's got to be a third way," he said. "We don't have it yet."
Comments
1. signaledu - June 23, 2010 at 01:06 am
Excellent article Paul but two key points are missing I think. The first is to note that drop-out rates as well as term/term persistence rates at for-profit colleges have only improved in recession, not worsened. This suggests that the level of student commitment is increasing (not atypical in a recession). This also means that increases in default rates are really a function of employment rates in the overall economy and are not reflective of the work being done by the schools.
The second critical point is to note that the government's measure of default rates are based on the percentage of students in default, not dollars. Because defaults are highest among students that drop out and drop-outs tend to happen early in a student's academic career, the dollar amounts at stake are far lower.
Finally, it would also be helpful to note that in the Canadian system, proprietary schools are required to cover the government's liability for dropped students. That is a simple solution to the issue of taxpayer exposure that industry would embrace in some form, but is not an option in current law.
-- Trace Urdan, Signal Hill
2. techbender - June 23, 2010 at 07:20 am
Interesting article. Although we're separated by the Pacific Ocean, a lot of the policy ideas (past and present) are similarly echoed over here in New Zealand. We've only got less than a dozen universities of our own, so a lot of the education sector is smaller, for-profit schools aiming at the trade and early school-leaver markets. It will be curious to see how we may shadow US policy in such matters, especially considering the reforms our government is currently running through to try and stop the less scrupulous for-profits draining the country dry.
3. trendisnotdestiny - June 23, 2010 at 08:19 am
Do not be fooled by Tom Harkin. He is currently working on two fronts for the free market: educational trojan horse and the recent gutting of financial reform so as to make insurance companies exempt from regulation....
Most elected official are engineered to consider the longterm use of public funds as constricting because our congress believes in the neoliberal agenda (privatization, de-regulation, cutting social supports and protectionism) all wrapped up in misinformational rhetoric of crisis, competition and individualism...
Are you serious with the "debt avoiding strategies"? We have done a preposterous job of protecting one another during this period of free market rule where our national allegience disintegrates into the realities of world market share. Let's examine the idea that the 'debt avoidance strategies' phrase is cover story. Lets not pretend that we are concerned about the realities of student debt when there is so much evidence for the market profits over people everytime...
There is more information out there people besides Harkin, Lumina, Reynolds and Miller... While Glenn Reynolds points to an important issue, he has missed the reason why there is a bubble in the first place (ask Latin American Economists over the last 20 years: Argentina, Brazil, Educador, Venezuela, Bolivia etc) Neoliberal Economics creates a bifurcation of wealth (trickle-up) where the middle class is gutted and disparies increase under the flawed philsophy of social darwinism. Bubbles occur when the markets are not sustainable just like college tuition, Phd job opportunities, teaching-researching-grant writing functions etc...
4. rogmar - June 23, 2010 at 08:34 am
Research shows that private sector IHE's do a better job of graduating at-risk students than the public and private non-profit sectors. At-risk students and non "first time, full time" students use more financial aid. So the fact that private sector IHE's share of title IV aid is not surprising. They are educating the students who need the aid. That is called meeting a need and meeting it well.
5. unabashedmale - June 23, 2010 at 08:37 am
Good point signaledu. Since these schools have open admissions and they draw from the racially and economically disadvantaged population, the ultimate risk of their employability after college is historically quite high.
Passing the default risk back to these schools will definitely be an incentive to be more selective in admissions, and to do a better job of training.
I like the concept because it takes the default burden off the taxpayer's backs.
6. mbelvadi - June 23, 2010 at 08:59 am
The article seems to conflate without evidence the issue of default and drop out. While it is reasonable to assume that there would be more defaults with students who drop out, it would help inform this discussion to present actual data on what portion of the 11.9% cited (students from for-profits who default) defaulted after actually completing the program they had enrolled in. Since one of the charges often leveled at some for-profits is that they aren't actually providing a good enough education to increase the student's income enough to offset the cost, that kind of data is pretty important to the debate.
And finally it would seem that the worst time to be doing this kind of long-term policy analysis of an entire industry is when the economy is in the middle of near double-digit unemployment, because lots of fully qualified grads will find themselves unable to find jobs and have to default on their loans in this kind of economy, and that's really no fault of the student, the IHE, or the loan program. You have to study this during a period of robust employment data overall.
7. feudi - June 23, 2010 at 09:08 am
Just yesterday, Senator Dodd killed a provision that would require school certification of private education loans. Why? We pretty much know that there is a bubble in the student loan sector due to the massive debt levels of so many students as the cost of higher ed spiraled in the past decade. Now, many of those student borrowers are unemployed or under-employed and simply can't afford to pay these loans off. And they cannot be discharged in bankruptcy thereby guaranteeing their future status as the next class of "toxic assets". For Dodd to add fuel to this fire is uncosncionable and just proves how brain dead this Congress is.
8. jaysanderson - June 23, 2010 at 09:32 am
Higher education's dirty little secret. Good article, Mr. Basken. Probably 15 years past due, but needed.
9. jacob_roope - June 23, 2010 at 09:41 am
Rogmar- what research are you stating supports your arguement that, "private sector IHEs do a better job of graduating at-risk students than the public and private non-profit sectors"?
This is an excellent article! A few thoughts came to my mind while reading through it!
American Higher Education (AHE) is in its' fundamental nature, not truly a system- it is what I like to refer to as a "Human Nexus." A nexus is a loose connection between a group of single entities. Each American institution of higher education (IHE)differs in many different ways. Each institution's mission statement, strategic plan, student body, faculty, staff, administrators, resources, stakeholders, etc. are unique. However, each institution has a loose connection to other IHEs because of the fact that each deals with human capital.
Researchers continue to struggle with identifying metrics needed to assess the quality of education delivered by American IHEs. In my opionion, current methodologies lack the "human element". All to often, we as researchers and Americans strive to identify generalities that can be applied to a given population. This is a fundamental flaw with research and thinking when trying to identify metrics for an industry that specializes in human captial.
My undergraduate degree is in Speech Language Pathology and Audiology. During my anatomy and physiology course I came across a term that has been a major part of my life, anatomical variability. This term refers to the expected differences each human naturally possesses within his/her body. Despite the variations within each individual, most humans are still able to function in a somehwat "normal" fashion. I have a graduate degree in Higher Education Administration and Student Personnel, and like to compare AHE to the human body. The human body has a variety of different systems- each with a specific function and purpose. Despite how very different these systems are from one another, each realizes on the other to survive.
Another point I would like to make is the importance of reflection. As an educated individual, a person is expected to possess certain lenses and tools that he/she utilizes in the environment she/he lives and interacts within on a daily basis. The ability to reflect on one's thoughts, actions, reactions, etc. is an ability that few individuals have, it is also an ability that few educational organizations unfortuantely lack. With the need and desire of more American citizens to be educated, enrollment at campuses throughout the country have seen record enrollments. Unfortuantely, the cost of education has increased as well. Historically, the increase in cost of higher education has grown faster than inflation rates. Why is this so, when educating a nation's citizenry benefits the economy as well as the whole country?
Students and citizens aren't stupid.
American citizens, politicians, and college students are well aware of the increase in costs and will soon demand change to take place. I know certain administrators are afraid that the perception of decreasing the cost of delivering an education to students will create the illusion that the quality has too deteriorated. i feel that this is not the case, but simply a poor excuse to not walk the path less traveled. Now is the time for instutions to begin to reflect within on missions, policies, costs and processes.
Who will be the first brave sole to take that chance?
10. haohtt - June 23, 2010 at 09:50 am
I agree that this is a well-done article. However every article that I have read thus far on "for-profit" higher ed has suffered from a few glaring flaws: 1) The discussions about for-profit education have been focused exclusively on the large publicly traded entities (e.g. Apollo/Phoenix), ignoring the fact that numerous proprietary schools are locally/family owned and have no connection whatsoever with Wall Street and large numbers of stake holders. These institutions do not act like Phoenix, American Intercontinental, etc.; 2) There is never any mention that the reason the for-profits rely more heavily on federal financial aid (funded by tax payers) is that public colleges and universities receive an even larger percent of their operating funds from the government via state and local tax allotments(funded by the same tax payers) than for-profits do; 3) There is little or no mention of graduation rates and employability of graduates from non-profit institutions (shouldn't they all be under the same scrutiny for effectiveness?); 4) While comparisons abound between tuition rates of tax-subsidized public schools vs. for-profits, why no comparision with non-profit private schools (whose profits are labelled "endowments")? Inclusion of these items would result in a more fair and accurate analysis of for-profit vs. non-profit education.
11. cwinton - June 23, 2010 at 09:56 am
Citing success in graduating students is meaningless. Dimploma mills have 100% success.
12. drmhp - June 23, 2010 at 09:59 am
I think the point made by rogmar is an important one. The students at for-profit colleges have to finance a greater portion of their educations with federal loans. It would be great to see data showing loan default rates as a function of the percentage of the students' education that is financed via federal loans.
Second, one of the issues that must be addressed accross higher ed is the use of tuition dollars. The assumed primary outcome of getting a post-secondary education (i.e., learning...gaining knowledge, skills, etc.) is not proportionally increasing with the cost of tuition. The University of Minnesota, for example, will be increasing tuition by over 4% again next year, while cutting faculty and staff jobs. Does the university have evidence showing how this strategy will help their students learn? Will the graduates of 2015 be 4% more prepared to enter the world than the graduates of 2010 (and there will likely be more tuition increases before the class of 2015 graduates). Do faculty who have been with their respective universities over a 10 year period that saw a 30% increase in tuition feel that they are graduating students who are 30% better?
If the trend of linking cost to outcomes that is currently being directed at for-profits begins to shift to traditional higher-ed, who do you think will be more equipped to demonstrate this link? The for-profits, whose tuition funds shareholders or company owners (as it seems to be forgotten that not all for-profits are publicly traded companies), taxes (which also seem to be left out of the conversation when noting how FPs are taking advantage of tax payers...they are tax payers), single-building campuses with a sole purpose of providing a place to deliver instruction, and wages for faculty and staff...or traditional Universities?
13. performance_expert2 - June 23, 2010 at 10:03 am
Two thoughts:
Students used to be able to work and pay for school and housing. Today, the income from work does not pay for these things. In the USA, there is now a system of debt slavery for citizens. This really needs to be front and center. It is one thing to have debt for buying objects or real property. It is another thing to build interest payment to basic fabric of life. The bankers are getting huge welfare paid for them. Look into how this "money" is created by the "Federal Reserve" private bankers. This loaned out money is manufactured with the return key on a computer and then it is loaned at at interest for students to include with their bills for their lifetime. Not to make a pun, but it is institutionalized debt slavery, i.e USA is a banking colony. No other country anywhere in the world does this to its citizens.
2) The cost of healthcare in the US, the effects is manifold, the tendrils effect everything. I believe this is one of the causes of the cost of operating a university going up up up. US exploitation of healthcare monies - 10% of operating costs. The healthcare itself is 7-8% resulting in 17-18% total cost to any university or business.
p_e
14. sharonmurphy - June 23, 2010 at 10:04 am
It might be past time to look at tuition costs and ask why they must be so high. Does a college really need the highest-end residence halls, the niftiest recreation center, the most expensive co-curricular frills, and the many costly athletic programs? While we may enjoy thinking of American higher education as the best in the world, we'd be wiser to observe systems elsewhere that do not provide "all the comforts of home" - and often far more - for our students and focus on the basics. College costs could go down, full-time students wouldn't have to work 40 hours a week - skipping class or sleeping there or expecting professors to lessen demands - and higher education might again BE higher. Or it might be time, as is so often the case in academe, to establish another study commission and keep luring in ill-prepared and under-funded students to meet admission goals and fatten the budget books.
15. notusip - June 23, 2010 at 10:29 am
The number of family-owned proprietary schools is rapidly decreasing as they are purchased by one of the national corporations. Mom-and-pop school owners have told me that they get phone calls every week with a purchase offerl. Two years ago, 40% of the for-profit schools were owned by a public company; I would guess that it's now closer to 60%.
And why are the mom-and-pop schools such hot property? Because of the revenue they generate.
16. willynilly - June 23, 2010 at 10:35 am
While I am pleased that FINALLY the "for-profit" scheme will be exposed; I am very annoyed that it has taken so long to do so. In this inexcusible void, countless amounts of money have been mis-spent and useless degrees and credentials have been issued in order to give a look of legitimacy to this apparent fraud. When all is said and done, those regional accrediting bodies that carelesly provided accreditation to these businesses should be disciplined, the principals in those pseudo-educational business operations, who knowlingly continued the fraud, should get jail time and be required to make full restitution of the money duped from both the government and the "student victims". But what every american voter would like to see is a full disclosure of the annual amounts of money contributed by these schools to members of the US Senate and House of Representatives, in exchange for the legislators looking the other way, and for occasionally making favorable public comments about the shyster sector of post-secondary education.
17. 11176037 - June 23, 2010 at 10:47 am
Maybe this hearing looming for Thursday explains why the webinar scheduled for today on accreditation and hosted by the Chronicle AND the U of Phoenix was suddenly canceled without explanation. If so, the cancellation may have told me more about the quality control and standards at for-profits than the webinar would have.
18. briget123 - June 23, 2010 at 11:06 am
Having worked in 3 for profit schools, first hand information allows me to agree with this inclination that the government has. Students are flocking to these money making machines because the entrance requirements are extremely low and the standards are very poor. I have seen students graduate, more than often, without the ability to write a complete sentence. I have seen this in 4 yr, 2 yr, and certificate programs. I have concluded that it is an ingenious way to rob the poor and prey on the lack of self-efficacy and mental imprisonment of our disadvantaged students; and their families.
Yet, there are a few who make it out and have excelled in their fields; few. They make it easier to feel like I make a difference.
I am happy at this news and I hope that somehow the machine will be stopped; or at least slowed.
19. 22186534 - June 23, 2010 at 11:13 am
For profits are getting raked over the coals here, but this is happening at CC's, 4-yr publics and privates. Income levels of the students who attend each of these types of schools plays a major role in the default rates. There are unscrupulous practices at all types, but if you can't find jobs there will be loan defaults regardless of the institution.
20. intered - June 23, 2010 at 11:21 am
Ask Your Representatives for Thorough & Impartial GAO Audit
Those who are impartial yet concerned with the future of higher education might contact their elected representatives and urge them as follows: "We request that the GAO examine all three corporate charters -- public, independent, for-profit -- with respect to the following issues:
- Credit awards in relation to work product and related measures
- Promises, made and broken, to prospective students and students
- Taxpayer costs, direct and full allocations
- Graduation rates, stated and actual
- Graduation times, stated and actual
- Opportunity costs associated with graduation delays
- Efficiency to taxpayer (credits and degrees per taxpayer dollar)
- Efficiency to students (credits and degrees per student dollar)
Open, impartial minds will want answers to all of these questions. The current agenda is a railroad job the true purpose of which has yet to be discovered and, when discovered, will disgust us all.
- Robert W Tucker
21. prof_truthteller - June 23, 2010 at 11:37 am
Education should not be a for profit enterprise at all, ever. IHEs should ALL be non-profit. Educating citizens is a social good that provides the foundation for an enlightened society. Ignorant, poorly educated citizens are simply not capable of creating a stable and just society. It's much more than jobs. The state needs a critical mass of educated citizens. Where is that tipping point and when will we hit it and start to slide? Some may say we hit it ten years ago.
When a social good is put it out on the open market, it first becomes lesser in value, and then it becomes higher in price. Eventually, no one can afford it or wants it. Our future PhDs will all be earned in Malaysia.
Others have pointed out, and I have posted previously to similar articles, that this has become a scheme to transfer money from the middle class and the poor over to the rich and the corporate entities, much like the credit card, investment, and mortgage schemes, or any other bubble. What is different, and most chilling about this bubble, is the backing of the federal government. The "too big to fail" guarantee is built right in! No need for special legislation! Who would NOT want in on this investment?
22. phxacademics - June 23, 2010 at 12:17 pm
There are a number of issues that seem to be regualarly ignored in articles dealing with for-profit or market-driven institutions. First, if you compare the tuition at many non-profit private schools and out-of-state tuition at many public institutions with the tuition at for-profits, you will find that the for-profit institutions have comparable or lower tuition rates, particularly when you include all the fees that non-profit and public schools charge that are not reflected in the base tuition. Secondly, trying to factor in debt accummulation with expected income seems to be an extremely dangerous approach for all of education. Is the tuition and overall cost of obtaining a degree in English, art history, history, speech, art or music somehow less costly than receiving a degree in nursing, engineering, accounting or any number of fields that have much higher income expectations than the study of traditional disciplines. Not to mention do we really want to further discourage students from entering the fields of elementary and secondary education where starting salaries can be easily below $40,000 per year. I think we need to be careful what we ask for because we may get it. Simple, quick fixes to complex issues rarely net positive long-term results.
23. intered - June 23, 2010 at 12:25 pm
@prof_truthteller,
Reasonable people will hold various opinions with respect to some of your assertions as they apply to 17 year-old students.
That said, I ask you to accommodate the fact that nearly half of the nation's college are adults, most of whom work, vote, have families, and are accustomed to, and have the unrestricted right to, make their own decisions with respect to what they want to study, why they want to study it, and what they want to get out of the educational experience. The average age of students attending applied programs (the majority of programs in US higher education are in applied disciplines) is in the area of 30. How does what you say apply to a 28 year old first-time supervisor who works in a small organization and who is returning to school to learn more about budgeting or management or accounting or project management, etc.? This student is no longer an outlier in our classrooms. He is typical of the adults student who attend our colleges and universities. If this student chooses a for-profit institution, what business do you or I have judging his choice?
Please don't judge for-profit education by the trumped up outliers you see on Frontline. I'm certain you teach your student to appraise issue more rationally.
Separately, you have invoked the following prescriptive principle in your informal argument:
"Institutions whose business is the production of 'social good' should be structured as not-for-profit entities."
Are you certain that you want to stick with this principle? It has led you to some pretty unsound generalizations and it will quickly lead you to even more. Don't we teach college professors to reason critically anymore?
- Robert W Tucker
24. haohtt - June 23, 2010 at 01:01 pm
I see many headlines and discussion posts labelling degrees from for-profit colleges and universities as "worthless". Where is the data showing the lack of utility of these degrees? At our local for-profit, the placement rate of students into jobs in their degree fields is nearly 100%. Our state university cannot even come up with employment figures for their business students, let alone their art history of classical literature graduates.
25. saasaa - June 23, 2010 at 01:49 pm
But not all for-profits are just about the money. I have been in the Higher Education system for 27 years and have worked for a variety of colleges. Some of the for-profits, in my opinion, need to be stopped, but there are others that are very good schools that serve a niche market who do not employ the same tactics as the corporate schools. It is sad that all of the schools are lumped together. Too bad they cannot be looked at or separated by graduation/completion rate, placement rate, default rate or other such hard data that can separate the wheat from the chaff.
In the discussion of income vs. loan payments. There are too many questions to be answered before that can ever be considered. Why just for-profits? Why are you not looking at the students wo go to schools where they pay 200K for a philosophy degree.....'splain to me lucy how that studnet is going to obtain gainful employment to pay those loans back.
26. 12100026 - June 23, 2010 at 02:18 pm
re: # 23
Regarding your comment about Frontline, since when has the University of Phoenix become an "outlier" of the for-profit sector. If the assertions were "trumped up" don't you imagine that Phoenix et al would be taking Frontline to court rather than avoiding giving interviews at all? Such a ridiculous statement on your part calls into question everything else that you say and perhaps your real motives for saying it.
As for adult students' choices of where they go to school, I am all for choice, I just think that the students ought to be provided with at least as much information about educational institutions as the nutritional information that we place on food items.
27. softshellcrab - June 23, 2010 at 02:19 pm
It's about time somebody started to question the silly house of cards that we call higher education. The for-profit schools are almost universally simply money-mills, selling degrees with often online programs and no quality or caring. It is all fake education, just selling a degree. Phoenix, Devry, none of these are real schools. At my state university, we do not accept any higher level courses taken at Phoenix, Devry etc. or anything the student took online. Because we know they just pass the students through to get their money. And so much of these are online education, also worthless and a mere fake. Call it cheap, call convenient, but don't call it real education.
28. jgallagheraiaonline - June 23, 2010 at 02:48 pm
How do endowments at not-for-profit IHEs factor into the picture? Aren't they part of the reason why the n-f-p model would potentially have lower tuition costs than for-profits?
Isn't part of the financial proposition for students at n-f-profits based on the expectation that some (presumably those who do well financially after graduation) will donate money back to the n-f-profit IHE (think of it as tuition in arrears or perhaps a tuition subsidy for current students)?
Also, it seems to me that loans should be made based on the ability of the person responsible for the loan to pay it back. The magnitude of the loan should be commensurate with the ability to repay it, which in turn should be tied to future earning potential as well as wealth, collateral and whether someone is willing to co-sign for the loan. Interest rates should be set to reflect the risk of a particular loan or a grouping of similar loans if individual underwriting is not practical or desired for some reason.
So, a college degree could be viewed as a proxy for collateral, and the market for graduates with a certain type of degree from a particular IHE would set the price for the collateral. It makes sense then that the issuer of the loan would limit the magnitude of the loan based on the value of the collateral (a certain type of college degree from a particular IHE). Just as a bank wouldn't (or shouldn't anyway) provide a $500,000 mortgage on a house worth $200,000, the government shouldn't issue student loans that are out of proportion to the collateral (the expected degree) on which they're based.
29. spekkio - June 23, 2010 at 05:06 pm
I think it's wonderful that Congress is getting to work on these issues. That said, we also need to get more consideration for former student victims - people buried in student loan debt - not just current and future students. Students are graduating with so much debt that they may die before their debt is paid. In the meantime, that outstanding debt hurts their credit, their employment prospects, etc.
Please take a look at my friend C. Cryn Johannsen's blog about this particular issue:
http://alleducationmatters.blogspot.com/2010/05/michael-eisman-blasts-for-profits.html
30. rlt1954 - June 23, 2010 at 06:02 pm
Frankly, I have found the comments more interesting than the article. They run the gamut from "for profits" being worthless to complaints about the entire higher education model. The most disturbing replies to me are the ones where supposedly learned people react vehemently to all "for profits" without the least bit of critical thinking. From my thirty plus years in higher education, I can attest that there are excellent online schools, such as Capella University, and excellent “traditional” institutions such as N.C. State. The opposite is true as well.
The shame is that emotional reactions are not the answer; however, that will be exactly what happens tomorrow. Reform is needed universally, and to try to portray all “for profits” as the same is not advancing an honest debate. The better question that we should be asking is, as taxpayers, are we loaning money to individuals, regardless of the school they attend, too much money in relation to his or her ability to repay the loan? To me it seems that the rest of the debate becomes too emotional to be of valid use.
31. 22087840 - June 23, 2010 at 07:44 pm
<Comment removed by moderator>
32. cragie - June 24, 2010 at 12:32 am
Trace Urdan's idea is interesting ["in the Canadian system, proprietary schools are required to cover the government's liability for dropped students. That is a simple solution to the issue of taxpayer exposure that industry would embrace in some form, but is not an option in current law"]
Ironically the American system is opposite in that postsecondary institutions (not just the proprietary subcategory) are rewarded for dropped students. Under a series of formulas, the so-called "return of Title IV funds," a school can keep up to 50% of "unearned" aid after the student drops out, while returning the rest. Note that, in extremely cheap institutions where the student lives off-campus, the student most likely would be the one keeping/returning some of the aid. In most institutions, however, the aid goes to offset institutional tuition and other charges, so the student is out of the mix. Schools seem to view this retention of unearned aid as a backdoor "administrative cost allowance" to pay them for their efforts in recruiting and enrolling the student, and all the processes and staffing related to that. Schools have argued that tougher return-of-aid legislation and regulation "would only hurt the poor," a seemingly commonplace argument as the years go by. As economists would say, more research is needed to determine whether the "incidence" of federal financial aid is to the student or to the school, or weighted across both in some measurable way.
33. intered - June 24, 2010 at 09:43 am
@cragie's observation adds a useful dimension of analysis to this issue. Thanks!
34. reformhigheredu - June 24, 2010 at 11:45 am
There are also many non-profit institutions that provide poor quality education and have fraudulently used federal money. Accreditors such as Middle States need to be scrutinized and investigated. When site visitors visited the institution where I work, after they passed the university with flying colors, two of the site visitors expressed their desire to apply for work at the university (one may have actually applied). Also, another site visitor from another accreditation agency openly discussed his desire to work at the university during a summation of their visit on that same day. This type of behavior is absolutely unacceptable and should be illegal. It reeks of corruption. Site visitors are supposed to be non-biased and should not be allowed to make such comments during site visits. The university operates as a for-profit, where 99% of students (who are extremely deficient in oral and written communication) pass with all A's and have a 4.0 GPA. Many underachieving students accumulate a high debt but continue to get a second or third degree (borrowing more loans to pay for luxury items such as cars, jewelry, etc. rather than a quality education)at the same institution in order to avoid paying off their loans. Higher education, both for-profit and non-profit needs to be reformed.
35. ellenhunt - June 24, 2010 at 03:51 pm
@Softshellcrab - I can't agree with you for the simple reason that the graduation rate over 6 years for a 4 year degree at University of Phoenix is 4%. (OEDB)
I have experience in both systems and with students from both systems. The results vary tremendously. Some schools and teachers in for-profit are very good and the students are excellent. Others are not and the results can be as described by others.
My position is that ALL university students at ALL universities, accredited or not should be required to take the GRE exam after they graduate in order to receive a diploma. (The outcome of the GRE would have no bearing on the student's diploma. It would be used to rate the school.) Those results should be collected in a national database.
Requiring GREs to be taken by all graduated students prior to receiving their diploma should be combined with a random sampling from all major institutions consisting of oral and written examination in the student's major. Students would be chosen by lottery and the students would be informed that the outcome of the exam would have no bearing on their graduation, that it was only a requirement to receive the diploma. Only this way will we be able to track the effectiveness of for-profit universities (i.e. on-line/non-residential)versus bricks and mortar universities of various kinds.
36. ellenhunt - June 24, 2010 at 03:53 pm
PS - The oral and written examinations would be administered by committees of 3 chosen by lot from outside the institution.
37. intered - June 24, 2010 at 04:41 pm
@ellenhunt,
You have been told the truth about UOP graduation rates many times before (I have seen it in response to your posts). Why you persist, one can only guess.
The UOP graduation rate is not 4%. That figure, as the Department readily admits, is an artifact of the old-fashioned way IPEDS insists on counting data. They make an adult-centered programs designed to for degree-completion or second degrees, count the graduation rate of a cohort defined from of first-time entering freshmen; i.e., students who generally do not qualify for such programs. For UOP and most other adult-centered programs, these students constitute special admissions.
In the 4% case you insist on alluding to, the "cohort" was a handful of the only outlier students who met the criteria out of the more than 400,000 students who were attending at that time.
There are plenty of good and not-so-good things to say about all schools but you demean your profession when you insist on spreading technical truths that you know perfectly well do not reflect reality. In reality, the graduation rates of such programs are about the same as when those same kinds of students attend any university. Experts know that graduation rates reflect student characteristics more than any other factor.
BTW: Perhaps you can tell us the correlation coefficients between GRE scores and learning outcomes and personal and professional success. I know them but your suggestions convey that you do not. GRE scores correlate most highly with IQ and social class. What you are suggesting is the the underclass can go to hell for all you care.
38. intered - June 24, 2010 at 04:45 pm
Correction: UOP and some other adult-centered programs now have zero credit admissions programs but the majority of students have already earned at least some credit, most have eared a year or more. Even one credit disqualifies them from the "first time/full time" graduation rate calculation rule. IPEDS is modernizing but it takes time to ensure continuity of data.
39. arrive2__net - June 24, 2010 at 05:28 pm
Article: "Through all the disagreements over the difficulty of calculating a student-loan default rate and the challenge of reducing that number, there's much wider agreement across the political spectrum that the government should not be using it as a measure of a college's overall success rate."
How will the government resolve excessively high rates of student default, without considering rate of student defaults. Perhaps the availability of government loans to a college's students should not be based on the "college's overall success rate", but rather based on the student's having some reasonable prospect of repaying, so whether the default rate is a measure of some vague, undefined "overall success rate" would be irrelevant. Perhaps where the goal of an education involves becoming job-qualified and gainfully employed (enough to pay student loans), there should be one Federal student loan program that CAN consider a college's loan default rate, and at colleges where employability and repayment are considered irrelevant there should be another Federal student loan program. (Which program would attract more funding?)
Bernard Schuster
Arrive2.net
40. prof_truthteller - June 25, 2010 at 01:16 pm
@intered (23)- Are you implying that basic citizenship skills are NOT useful or necessary for your hypothetical 28 year old middle manager? Seems to me that would be equally important at any age. I disagree that my assertions only apply to 17 year olds.
What I am saying, is that the future survival of organized, civilized society depends on smart, well educated, creative, ambitious human beings of every age. One sure way to ensure that is to provide a well rounded education to as many citizens as possible. That is what I mean by "social good" and I fail to see how a for-profit enterprise can provide any social good without becoming prone to unethical practices. I am not denying their right to offer *training* on specific work skills. Your 28 year old manager with no degree (actually my daughter is one!) may benefit from classes that improve her accounting skills, and be willing to pay for quality classes, which in turn may improve her work performance and thus, maybe, her pay.
But that is not the problem here. The problem is unethical, aggressive marketing to gullible and naive consumers, outrageous false claims preying on people's fears and dreams, callous disregard for their subsequent losses and debts, and an investment scheme that skims finanacial aid money (aka my tax money) from the students and into the stockholder's pockets, and of course, the CEO pay.
Once you 'buy' this 'product' if you find it is broken, you can't return it, you are still forced to pay for it and the company that sold it to you laughs all the way to the bank and hires lobbyists to ensure that the gravy train will continue. This abuse is indefensible.
Of course, intered, as a shill for the industry, you will try to defend it. I think you troll these forums just to hone your own marketing skills. You get a chance to try to refute arguments from a range of people. Props to you for your craftiness.
41. intered - June 25, 2010 at 02:15 pm
@prof_truthteller,
I am not implying or suggesting that basic citizenship skills are anything but necessary and useful to the 28 year old manager. I am stating that it is both arrogant and empirically unfounded to think that a professor is any better citizen than a manager. Since skills and perspectives, I do embrace the idea that each has something to teach the other. That said, there is no empirical basis for believe that a successful working adult needs the same socialization skills that might be benefit to a 17 year old. One need only peruse these blogs to find abundant examples of professors who appear to lack basic social and citizenship skills.
Your comment: "What I am saying, is that the future survival of organized, civilized society depends on smart, well educated, creative, ambitious human beings of every age. One sure way to ensure that is to provide a well rounded education to as many citizens as possible. "
My response: I agree completely. Having spend 20 years each in the private sector and professoriate, I think there is little question that this education is generally best acquired outside the academy. Frankly, one of the reasons I migrated away from the professoriate, though I love to teach, was that professors are among the most boring, self-centered group of people I know. Most irritating, is that to many of them don't know what they don't know and, thus, appear foolish to the rest of the world. The 'training' vs. 'education' distinction you tossed out is one of those empirically counter-factual irritations. Cognitive scientists will tell you that proficiencies progress from specific to general; i.e., our abilities to generalize grow out of sequentially mastering non-generalized cases of progressive complexity, etc. Let me know if the implication of this isn't clear to you.
I agree with you with respect to the excesses I see in aggressive sales with inadequate attention paid to the 'ability to benefit' assessment. It need to be reeled in and the for-profits are by far the worst, although not the only, offenders.
Ah yes, as I might have expected, you close with an ad hominem. In these posts at least, I see a remarkable inability on the part of some to stay on topic. I presume you took logic somewhere along the way. Do you teach your students about ad hominem attacks? (While it is irrelevant because no one buys my judgment and it is just as likely as not to run counter to my personal feelings on an issue, out clients are mostly NFP independent colleges with a few publics that we feel we can help.) prof_truthteller, some people simply don't realize when they are out of their water.
42. prof_truthteller - June 25, 2010 at 04:07 pm
@intered, I never made any claim that a professor is a better citizen than a manager. Nor did I claim that "successful working adult needs the same socialization skills that might be benefit to a 17 year old" so please re-read what I actually wrote.
And, oooh, aren't we all pissy about professors? So sorry if you had a bad personal experience, but please, since you keep crowing about data, show me the data that proves that the majority of professors are boring, self-centered, and appear foolish. Look in the mirror, too, while you are collecting that data.
I am familiar with educational theories. I think there is a difference between training and education, and your assertion that it's irritating does not convince me otherwise. The point I am trying to make regarding that difference, is in the context of for profit vs. non profit or public colleges specifically.
Most if not all for profits market their "educational product" on the basis of jobs or careers that can be obtained. I've read some of your other postings on this and agree that any college, public or private, that claims to prepare students for jobs or careers, should show us the data and prove that is in fact what they do.
As for my ad hominem, it's like salt on meat. And I've read yours as well. I am guessing, from your overly defensive response, that you are a bit touchy on that topic as well. Some truth to it? But you don't deny that you are a shill, nor do you defend yourself if you are.
43. prof_truthteller - June 26, 2010 at 05:00 pm
24/7 Wall St. lists Apollo Group among top fifty least trustworthy companies in America: http://bit.ly/bh7qM1