• April 16, 2014

Why Do You Think They're Called For-Profit Colleges?

Why Do You Think They're Called For-Profit Colleges? 1

Michael Morgenstern for The Chronicle

Enlarge Image
close Why Do You Think They're Called For-Profit Colleges? 1

Michael Morgenstern for The Chronicle

Michael Clifford believes that education is the only path to world peace. He never went to college, but sometimes he calls himself "Doctor." Jerry Falwell is one of his heroes. Clifford has made millions of dollars from government programs but doesn't seem to see the windfall that way. Improbably, he has come to symbolize the contradictions at the heart of the growing national debate over for-profit higher education.

Until recently, for-profits were mostly mom-and-pop trade schools. Twenty years ago, a series of high-profile Congressional hearings, led by Senator Sam Nunn, revealed widespread fraud in the industry, and the resulting reforms almost wiped the schools out. But they hung on and returned with a vengeance in the form of publicly traded giants like the University of Phoenix.

Entrepreneurs like Clifford, meanwhile, have been snapping up dying nonprofit colleges and quickly turning them into money-making machines.

Most of that money comes from the federal government, in the form of Pell Grants and subsidized student loans. Phoenix alone is on pace to reap $1-billion from Pell Grants this year, along with $4-billion from federal loans. A quarter of all federal aid goes to for-profits, while they enroll only 10 percent of students.

Unfortunately, a large and growing number of graduates of for-profit colleges are having trouble paying those loans back. Horror stories of aggressive recruiters' inducing students to take out huge loans for nearly worthless degrees are filling the news. The Obama administration, flush with victory after vanquishing the student-loan industry this year, has proposed cutting off federal aid to for-profits that saddle students with unmanageable debt. Congress has rolled out the TV cameras for a new round of hearings that are putting for-profits on the hot seat. One observer called the event "the Nunn hearings on steroids." 

The new scrutiny of for-profits is welcome. Without oversight, the combination of government subsidies and financially unsophisticated consumers guarantees outright fraud or programs that, while technically legitimate, are so substandard that the distinction of legitimacy has no meaning. For-profit owners and advocates have a hard time admitting that.

I spoke with Michael Clifford recently as he was driving down the California coast to meet with a higher-education charity he runs. He's an interesting man—sincere, optimistic, a true believer in higher education and his role as a force for good. A musician and born-again Christian, he learned at the knee of the University of Phoenix's founder, John Sperling. In 2004, Clifford led the sale of a destitute Baptist institution called Grand Canyon University to investors. Six years later, enrollment has increased substantially, much of it online. The ownership company started selling shares to the public in 2008 and is worth nearly $1-billion today, making Clifford a wealthy man. He has since repeated the formula elsewhere, partnering with notables like General Electric's former chief executive, Jack Welch. Some of the colleges that Clifford has purchased have given him honorary degrees (thus "Doctor" Michael Clifford).

Clifford will concede, in the abstract, to abuses in the for-profit industry. But he rejects the Obama administration's proposal to cut off federal aid to for-profits at which student-debt payments after graduation exceed a certain percentage of the graduates' income. In fact, he denies that colleges have any responsibility whatsoever for how much students borrow and whether they can pay it back. He won't even acknowledge that student borrowing is related to how much colleges charge.

That refusal is the industry line, and it is crazy nonsense. As a rule, for-profits charge much more than public colleges and universities. Many of their students come from moderate- and low-income backgrounds. You don't need a college degree to know that large debt plus small income equals high risk of default. The for-profit Corinthian Colleges (as of mid-July, market cap: $923-million) estimated in official documents filed with the Securities and Exchange Commission that more than half the loans it makes to its own students will go bad. Corinthian still makes a profit, because it gets most of its money from loans guaranteed by Uncle Sam.

Other industry officials, like the for-profit lobbyist Harris Miller, would have you believe that government money that technically passes through the hands of students on its way from the public treasury to the for-profit bottom line isn't a government subsidy at all. In that regard, for-profits lately have been trying to rebrand themselves as "market based" higher education. To understand how wrong this is, look no further than the "90/10 rule," a federal rule that bars for-profits from receiving more than 90 percent of their revenue from federal aid. The fact that the rule exists at all, and that Miller is working to water it down (it used to be the 85/15 rule), shows that for-profits operate in nothing like a subsidy-free market.

The federal government has every right to regulate the billions of taxpayer dollars it is pouring into the pockets of for-profit shareholders. The sooner abusive colleges are prevented from loading students with crushing debt in exchange for low-value degrees, the better.

But that doesn't mean for-profit higher education is inherently bad. The reputable parts of the industry are at the forefront of much technological and organizational innovation. For-profits exist in large part to fix educational market failures left by traditional institutions, and they profit by serving students that public and private nonprofit institutions too often ignore. While old-line research universities were gilding their walled-off academic city-states, the University of Phoenix was building no-frills campuses near freeway exits so working students could take classes in the evening. Who was more focused on the public interest? Some of the colleges Clifford bought have legacies that stretch back decades. Who else was willing to save them? Not the government, or the church, or the more fortunate colleges with their wealthy alumni and endowments that reach the sky.

The for-profit Kaplan University recently struck a deal with the California community-college system to provide courses that the bankrupt public colleges cannot. The president of the system's faculty senate objected: The deal was not "favorable to faculty," she said. Whose fault is that? Kaplan, or the feckless voters and incompetent politicians who have driven California to ruin?

Wal-Mart recently announced a deal with the for-profit American Public University to teach the giant retailer's employees. What ambitious president or provost is planning to make her reputation educating $9-an-hour cashiers?

Traditional institutions tend to respond to such ventures by indicting the quality of for-profit degrees. The trouble is, they have very little evidence beyond the real issue of default rates to prove it. That's because traditional institutions have long resisted subjecting themselves to any objective measures of academic quality. They've pointed instead to regional accreditation, which conveniently allows colleges to decide for themselves whether they're doing a good job.

But many for-profit institutions have regional accreditation, too. That's what people like Clifford are buying when they invest in troubled colleges. Accreditation has become like a taxicab medallion, available for bidding on the open market. As a result, long-established public and private nonprofit colleges are left with no standards with which to make the case against their for-profit competitors. At one recent Congressional hearing, the Senate education committee's chairman, Tom Harkin, said of the for-profits, "We don't know how many students graduate, how many get jobs, how schools that are not publicly traded spend their [federal] dollars, and how many for-profit students default over the long term." All true—and just as true when the words "for profit" are removed. There's no doubt that the worst for-profits are ruthlessly exploiting the commodified college degree. But they didn't commodify it in the first place.

For-profits fill a void left by traditional institutions that once believed their world was constant. Fast-developing methods of teaching students over the Internet have given the velocity of change a turbo boost. In such a volatile situation, all kinds of unexpected people make their way into the picture. And once they get there, they tend to stick around. Traditional institutions hoping that Congress will rid them of for-profit competition will very likely be disappointed.

Kevin Carey is policy director of Education Sector, an independent think tank in Washington.


1. cragie - July 25, 2010 at 04:55 pm

The last paragraph is a telling one. Unfortunately, the supposedly-reduced costs of on-line education vs. face-to-face education, if they even exist, have never been passed on to students. On-line education is still much more expensive to the student than face-to-face education. Traditional colleges have often used on-line education as a "profit center" rather than a "savings center." As, as for the for-profit schools, as the author says, "Why Do You Think They're Called For-Profit Colleges?"

It is also possible that on-line education, due to the investment involved, is simply far more expensive than we had all realized 15 years ago when everyone was saying this would provide huge cost reductions to higher education. The other possibility is that, after all these years, we are still on the "investment" phase of the cost curve, and, eventually, all those trial-and-error investments will pay off, resulting in higher education that is "too cheap to meter."

2. gdrobinsong - July 25, 2010 at 08:14 pm

By market-based is meant that the demand for higher education is greater than the supply and For Profits fill part of this gap. Moreover a DOE report found that online institutions, of which many non-profits are, is as good in quality as face-to-face education. There have been abuses and they should be rooted out and punished as appropriate; however, For- Profits are leading the way in educational innovation. Finally on the issue of cost. The author of the article did not provide data to show the degree to which For-Profits are more expensive but my programs are in the mid-point of cost and certainly cheaper than some public and private non-profit institutions.

One only has to sit in a commencement and see the radiance of individuals who could not have gotten a degree without the access that For-Profits provide.

For-Profits fill a needed gap in higher education and should be acknowledged for this public service.

3. wombat319 - July 25, 2010 at 08:39 pm

I received my MBA at a for-profit college, and can tell you that not only was it worth every penny, but it was the best education I've received. I went to the "liberal universities" that are doing nothing but indoctrinating students in a "liberal think-tank." The fact that Obama wants to take on these institutions tells me one thing: He wants MORE CONTROL over our children and grandchildren's minds.

What I experienced at a for-profit institution was a TRUE learning environment where differing opinions were scoffed at by professors and "group think" was not encouraged like it was in the liberal university I attended before the one my MBA came from. It is truly sad that the liberal agenda has taken over what should be an open, honest learning environment where people of all types, races and religions can learn together without having to "tow the party line" like a bunch of Hitler brownshirts!

4. wombat319 - July 25, 2010 at 08:39 pm

That should say were NOT scoffed at!

5. macwildstar - July 25, 2010 at 08:49 pm

"Twenty years ago, a series of high-profile Congressional hearings, led by Senator Sam Nunn, revealed widespread fraud in the industry, and the resulting reforms almost wiped the schools out."
True, and Sam Nunn also saw the victims those schools left behind and yet did NOTHING to help them. They suffer to this day with a debt they cannot pay (student loans for the schools) because they were sold worthless educations by those so called schools who were really just "student loan farming".

How about Congress offer some debt relief to those students?!!
The ones they seem to have acknowledged as being victims, then completely ignored their plight.

6. cragie - July 25, 2010 at 09:03 pm

Robin, putting quality, a nebulous concept, aside, the College Board has released a number of reports showing that when you compare apples-to-apples, students at for-profit institutions emerge with much higher debt than students at nonprofit and public institutions. This, again, is apples-to-apples, associates degree vs. associates degree, bachelors degree vs. bachelors degree, and certificate vs. certificate. Innovation is great, but it unfortunately has led to a lot of "alternative" academic calendars that mislead students about the true costs to them of completing an analogous academic program. Students who are getting recruited should receive a printout of an "academic APR" -- that is, a document that will enable them to compare programs across different institutions.

7. signaledu - July 26, 2010 at 12:55 am

Critics like Mr. Carey, whose organization, biased as it is, is still more fair-minded than most, develops a healthy head of steam when considering the 90/10 rule and the percentage of Title IV that passes through for-profit schools. Yet seldom is any thought advanced as to what that really means.

Schools are obliged to allow any student that applies the maximum Title IV benefits to which they are entitled. In fact, the Department can fine those schools that fail to make loans and aid available. The fact that 90% comes from Title IV sources is a function of the low income level of the student and the low tuition price. Those prices could be lower still but for the 90/10 rule. You can be sure that Harvard doesnt have a 90/10 problem because its tuition is too high to be paid 90% from government sources and its student population too affluent. You can be sure the UC Berkeley doesn't have a 90/10 problem because state taxpayers foot the bill and student have no need to borrow the maximum in government aid.

Critics like Mr. Carey sneer at for-profit schools taking for granted that the quality must be inferior. And yet there is no objective evidence for this. There is in fact no evidence to suggest that defaults vary based on some measure of quality and yet the government is in the process of rewriting Title IV law based on the premise that if schools improve their instruction that defaults would come down.

At the heart of this debate is an ideological battle rooted in the halls of higher education about the merits of capitalism. You don't hear outrage expressed at the Federal "subsidies" at state and community colleges or not-for-profit schools where they teach and -- what's the word? oh yes -- administer. Why? Because those institutions are not run "for-profit."

8. lomalinda - July 26, 2010 at 03:05 am

Dear wombat319, all I have to say is wow just wow.
I see you hit all the key words: “liberal universities”, “indoctrinating students”, “liberal agenda” and my favorite “Hitler brownshirts”. I can see now that your for-profit education was really superior. I mean, how can anyone challenge such as an articulate and well thought out response.
Please I am dying to know where did you get your unbiased degree from.

9. charlesgross - July 26, 2010 at 07:39 am

While the term "for-profits" is used for this sector of education we have not come up with an accurate term to describe the public sector. I believe that when attempts are made to publish information on use and control of endowments for students a great deal of resistanse is met by the traditional schools. How much money goes back to the student to assist them in their debt from endowments? Who controls endowments? Why is tenure tied to publishing (or perishing). Let's not forget the use of professors to write textbooks and the high cost our students MUST pay for them...what options do students have to use other resources other than the ones their professors mandate...that they wrote or the college gets "a piece of". Can we assume that the traditional sector looses money and feels OK with it?
Experienced in BOTH sectors

10. wombat319 - July 26, 2010 at 07:55 am

Dearest Loma Linda: As an FYI, NONE of my comments and opinions were pumped into me by ANY school I attended (Univ. of Wisconsin, Univ. of Phoenix, and UCONN). You see, unlike the opinions being pumped into our students at liberal-indoctrination universities, I did my own research and fought back--sometimes being threatened with a lower grade for not "going along to get along." Take, for example, the fallacy of "global warming" (which, of course, they needed to rename into "climate change" since the warming is apparently over & now we have cooling--a cyclical event caused by THE SUN, but nevertheless one which Al Gore and his ilk have decided to make billions on--at our expense). However, since you have not even bothered to challenge even what you consider an "inarticulate response," I guess you're another product of same. After all, the students I've met from U's such as yours are basically lazy--giving me the excuse during group projects that they are "in it for the learning--not the grade." In other words, let the old lady do all the work, while they ride on MY A's. Unfortunately, that never worked for the 20 generation I was burdened with, because I would inform the professors that they basically did NOTHING toward the project, and they would get their "learning but not the grade." LOL. From my perspective, the GRADE is supposed to REFLECT WHAT ONE HAS LEARNED! I've been forced to work in groups that involved young adults in their 20's, and I have never met such a bunch of excuse-makers, crybabies, lazy butts and whiners in my life. The young adults (20's again) who cannot get jobs in this environment in some cases have turned down jobs they feel are "beneath them," when (trust me on this) those jobs would have given them the MUCH needed experience ALL of them need! Whatever happened to working your way up? No, today's young people want to start at the top because they've been TOLD that they are the best...that they are the smartest...and that everyone older is stupid and "behind the times." It's OK--we were told the same thing in OUR liberally-biased schools when we were 18, 20, 22...and some day you'll hit 50, 60, 70 and realize how truly ignorant you were, and how you've been fooled. And you, too, will be angry about it.

As for Doctor Clifford, I do know him and have worked with him on various projects. He has the highest integrity of any other person I can name. He has a heart bigger than the Grand Canyon, and only the best intentions for those students. I did not attend one of HIS schools, but the for-profit school I did attend, yes, I am still paying the loans on. And I will not default. Not all students are "saddled with out of control loans" like Kevin Carey seems to think. There are thousands of students and former students out there who take on debt RESPONSIBLY, only taking on what we can repay. We are those who actually have always had a BUDGET. Those of us who don't come begging to the government to bail us out. And those of us who don't ask others making more to give us their hard-earned dollars because WE failed to use the now-educated brain in our heads that God gave us. Rather than point to the "evil for-profit colleges," one must, I surmise, point to oneself for simply being irresponsible.

11. mikpap - July 26, 2010 at 09:09 am

I have degrees from a for-profit and two traditional universities. My expereiences were essentially the same and, in general, good. The sins that keep being mentioned are actually the sins of higher education, not for-profits alone.

12. dank48 - July 26, 2010 at 09:18 am

Uh, Wombat, with an MBA (and never mind what those initials really stand for), you really ought to know that it's "toe the line," as in taking one's place in a straight-line formation. It's not about pulling a rope. A party line used to have something to do with rural phone service but alternatively is the official dogma of some party or other organization. It's not something you can toe or, for that matter, tow.

Of course, I've only got a BA, so what do I know?

13. rogmar - July 26, 2010 at 09:18 am

Profits are made to be put back into an enterprise. Without profits, the enterprise goes under and, in the case of IHE's, multi-thousands of employees are added to the unemployment roster and more students than that are out on the street. Instead of grousing and trying to put market-based IHE's out of business, help find more ways to use their creativity, innovation and business model to prepare more people to meet the challenges of ever-changing workforce demands. Profit is not a bad word . . . otherwise all major college athletic programs would have to be shut down. Lots of millionaires are being made at traditional IHE's. Two good steps forward for the government would be to (1) work with market-based IHE's on an alternative to 90/10, for example, a quality measure, and (2) to immediately pass legislation to limit borrowing. I'm constantly amazed at why the "degreed-elite" can't see the solution.

14. rogmar - July 26, 2010 at 09:25 am

. . . and by the way, title IV money goes to students who choose where to use it. Insulting the students who choose market-based IHE's over your "sacred cow" government schools by describing those students as unsophisticated and easily led is tragic.

15. optimysticynic - July 26, 2010 at 09:48 am

As long as many of the online for-profit schools grant students credit not for taking the class, but for writing a "personal narrative" that addresses the class content, and,instead of using textbooks whose rigor/content can be verified by being in the public domain, uses online readings of minimal length and complexity ("what are the three purposes of X? They are 1, 2, 3..."), and tests students by then asking "What are the three purposes of X?", these schools are modeling themselves after the very WORST of our own pedagogical practices. Of course we will not respect them; we don't respect this kind of teaching when we do it, either.

16. guanxi88 - July 26, 2010 at 10:14 am

So, the consensus opinion is that public insitutions - their coffers flush with taxpayer dollars - are more responsible in their use of Title IV aid than for-profits? I mean, that is it, right? Throw a couple thou per student per year outta the nighbors' pockets into the mix, and the students needn't fund the entire thing outta loans and such; is that it?

Hell, I defy any one of these non-profits or publics to even attempt to live up to the regulations imposed on for profits who want their students to use Title IV; the bulk of them would go down in flames, and rightly so.

And as for "gainful employment" - I'd be pleased to suggest that a degree in, let us say, electronic assembly and fabrication might prove of slightly greater value than, let us say, a degree in feminist interpretive dance theory. I'd LOVE to see the gainful employment rates for most liberal arts degrees.

In a just society, we'd use a single set of standards. Sadly, though, the therapeutic managerial state has elected to choke off the free market option, in higher education as in health care.

17. warrennorred - July 26, 2010 at 10:40 am

This article is laughable. Non-profits flush with federal dollars are responsible for the decline in education all around. It is ivory tower morons in socialist systems that gave us open classrooms and whole language theories that destroyed our k-12 systems.

We aren't going to fix education until ordinary people have some reason to at least attempt a cost-benefit analysis for their education's cost. As others stated, there is a huge difference between the mental difficulty, job satisfaction, ease of going in and out of the industry, difficulty of acquiring the degree itself, and work load of various degrees. Only a free market can really address these differences, but the federal government and the educational industry wants to hide those differences by giving everyone the same amount of money to blow in whatever foolish degree plan anyone wants.

18. richardtaborgreene - July 26, 2010 at 11:12 am

I recently moved from a rural town in Asia to Asia's most cosmopolitan city. The first thing we noticed was the massages my wife got were a LOT better. The second thing we noticed was people reading novels in the train not comic books. The third thing we noticed was brochures, signs, discounts, and store displays a lot more customer oriented with a lot clearer information.

We gradually got the idea that competition improves lots of things. In our cosmopolis all those above areas are competition intense---you have to offer people things they like better than the other guy. Now this cosmopolis has been cosmopolitan for 70 years or more---they are not a newcomer to the scene. Thee has been time to weed out excesses of competition for decades.

For profits are painfully revealing snobberies and ponderous dated-nesses in non-profit universities. They are taking the teaching mission and running with it (mostly fueled by federal money). They are "playing the system" pressing optimizing within the rules and sometimes across rule borders. They press by getting the poor into college. They press by teaching exactly what industry now wants. They press by putting practitioners as professors for people wanting that next best job, not deep educatedness.

Of course they are NOT doing what Harvard intends or does. They are NOT out to serve that population of people. Of course there is a huge cost when you are on-line educated or for-profit educated, compared to when you are world top ten research university educated.

Yet the interaction is revealing and the pressures from it clarify our systems and its flaws. To have power at the bottom rungs of our snobberies and at the top, competing for the middle--hopefully in our next years---will force perhaps a little improvement both at the bottom and at the top.

19. rkdrury - July 26, 2010 at 11:15 am

wombat319--so much for evidence-based persuasive writing, as you seemed to jump to all sorts of conclusions about lomalinda that no reasonable person could have gleaned from lomalinda's comment. Your language is abusive and derivative, at best, and addressed to some strawman caricature you've substituted for any actual opponent. And for whom are you writing? Did you expect to persuade lomalinda with this tirade?

20. haohtt - July 26, 2010 at 11:15 am

Ah, where to begin? 1) There is NO empirical evidence showing that a degree from a "for-profit" university is lower in quality and utility than that from a public community college or unviersity; 2) Students at public colleges or universities may have lower average federal student loan debt, but the TOTAL amount of taxpayer funding going to a public college/university student is quite a bit higher than that going to a "for-profit" student. The difference is that the billions in state/local taxpayer funds are just given away to public colleges & universities. They do not have to pay it back. Why do Mr. Carey nor his colleagues never mention that? 3) Anyone involved in online programs knows that they do not make money because they are cheaper to run, but because they provide educational opportunities to students who would otherwise not attend the insitituion. "optimysticynic" is obviously unaware of how prevalent his scenario is in the "non-profit" sector. Oh, how nice it must be to view higher education with ivy-colored glasses.

21. haohtt - July 26, 2010 at 11:15 am

"institution"--sorry for the typo

22. estudiante - July 26, 2010 at 11:27 am

I take on-line classes at American Military University and asm nearing completion of a 36 Credit MA in American History with a concentration on the American Revolution. I tried to apply to several brick and mortar colleges and even though I have a BA (Pace, 1968) and an MPA (CUNY, Baruch, 1988) they required that submit transcipts from these colleges as well as for some courses that I took in early 1960s as a non-matricualted student at Brooklyn College. I did all that and was accepted by one of the brick and mortars as a non-matriculated student. Apparently my grades at Pace while working full time and having family responsibilties were not up to snuff. However, I did have a 3.7 GPA at Baruch,served honorably in the National Guard as an enlisted man and officer, was a retired federal civil service manager and later served as a local elected official in my community. A couple of the BM's also required that I re take the GRE as mine was more than 10 years old. Also on their list of entrance must haves were interviews and essays on why I wanted to go to their institution.

Anyway, I applied to AMU and was accepted, sans a lot of BS. The cost of tuition there is just under $300 per credit-hour I take one ot two courses per semester and pay for them on the monthly installment planthey offer at no interest. Also, the fact that I don't have to commute saves me additional money and of course helps environment. The undergraduates get most of their required books free. AMU has an extensive on-line library and subsription to the various scholarly journals. In terms of quality all of my professors have the PhD credential and recieved them from some of the most prestigious US Universities and have been published in the various university presses. Some of them have been fully engaged in the online teaching process and you can tell by their detailed reponses to submittted papers that they really want quality work from you. A couple of them are lazy and are just going through the motions. Be that as it may be, in the final analysis the quality of an undergraduate or graduate student's degree depends on that which he or she puts into it and not on whether on goes to a BM or an ethernet campus. As I understand it there have been several studies that show campus-bound students are studying less than ever and are taking longer and to graduate. Perhaps all of the socializing, parties,sports and other extracurricular activites and facebbooking and tweeting are causing the problems.

Now I cannot speak to the issue of the rate of indebtedness and of loan repayment failures but as state above the tuition is quite reasonable. And since it appaers that AMU-ers are military folks and number of them participate in the various tuition reimbursement programs that the military services have.

In summary I have attended several BM schools on the undergraduate and graduate levels and currently now an on-line one. There is a marked contrast between them. How material is delivered is of course the principle difference. Wheter the outcome -- what and how much one learns has yet to be determined. My personal experience is that I am learning more on-line than i did when I was on-campus. The class inter-actions with fellow are better because the professors require that statements or answers to questions be documented/supported and not be simple opinions.

On-line for profits entrance requirements are sensible while those of BM schools are overly bureaucratic and not necesarily good indicative of student performance. They are just barriers designed to keep prospective students out. The problem with poor or excellent student performance is more related to the level of student maturity and personal circumstances than it is to their previous grades. The issue of a quality college degrees should not rest solely on whether they were issued soley by an on-line school. The fact is that no school can actually guarantee that the educaton they provide will lead to employment or that employers can have a high-level expectations of performance from their graduates.

23. jack_cade - July 26, 2010 at 11:55 am

Wombat's mind formed out of the nothingness of the universe and as such it is his own, uniquely formed taking nothing from no one.
Except that his reasoning is terrible as the anecdotal personal experience is taken as established fact.
Wombat do not reply cause I don't care and won't read your comments.
However, you've waded into the taller weeds here and you are not making your case. Those of us who are professional scholars from top schools are bemused and slightly embarrassed (for you) by your arguments.
Clearly, your education was wanting if you think "LOL" was an acceptable thing to write and you un-reflexively deploy personal experiences (fictions torn form the pages of your real life) as facts upon which you claim to have come to a solid conclusion and can say you know the "truth" about, well, anything.
Your very immature writing (if not thinking) style sets you apart here, best to walk away.

24. prof_truthteller - July 26, 2010 at 12:16 pm

There are times when personal anecdote is helpful, informative, enlightening. The personal history of "estudiant" was that for me. It helped me to see, even more clearly, that public colleges and for-profit colleges have really very different missions and very different roles to fill in society. It made me think about these roles. I think we need to remember to look at issues from both "big picture" perspectives as well as the personal and individual perspectives, with a non-judgemental, unbiased stance.

25. milesjackson - July 26, 2010 at 12:19 pm

It's amusing to me that the acolytes of "market-based" education see no contradiction between advocating for the glorious advantages of free market competition while they're lobbying to maintain access to federal subsidies like government-backed student loans. If for-profit schools are so great, why do they need any federal support? You want to run a business for a profit? Wonderful, but don't expect me as a taxpayer to subsidize the cost of your business (and students defaulting on loans is a cost of your business if you're running a for-profit school).

26. dereklambert - July 26, 2010 at 12:23 pm

PNS Frontline did a piece on for-profits. It was my first real introduction into for-profits and I was horrified. Since then, I have met people who worked in that 'industry' and met people who have been scammed by schools like University of Phoenix. The more I learn about them, the more I believe they are a cancer on our educational system.

I see a lot of conservative tones to the people who are supporting these for-profit school. Loan default rates are through the roof at many of these schools. How is that consistant with your idology?

Wal-Mart University, here we come!

27. guanxi88 - July 26, 2010 at 12:31 pm


There's no state subsidy of the for-profit insitutions whose students use Title IV; to suggest so is like saying that any mortgage NOT used to purchase a HUD home is a subsidy of "private" housing, comrade.

28. mheffleychron - July 26, 2010 at 12:36 pm

Estudiante's post (#22) touches on something important to note in this discussion: the job market-shaped quality of the faculty teaching in for-profits. As regular readers of the Chronicle know, many more qualified academics are unable to find a decent teaching job, or are scraping and stressing by as adjuncts, than are working comfortably and lucratively-enough in their fields. While the range of faculty in the onlines has thin patches, qualification-wise, there are also many who have the creds and more, and who produce the concomitant performances and results, for the courses they teach. They can't get jobs in the nonprofit sector, often because it functions more as mediocracy than a meritocracy in its hiring practices. The onlines attract, reward, and respect such people, while the nonprofits with the greater social prestige offer mostly rat-race atmosphere and conditions when you scratch their surfaces.

29. afnaar - July 26, 2010 at 01:17 pm

My, my, such passion! I'm not sure there is a subject today that instills so much controversy, debate, and outright criticism (sometimes downright nasty) as the 'battle' between for-profit and brick & mortar colleges. The main issue appears to be more of a personal choice for educational attainment, and the primary motive FOR that education. So why the bickering? The private for-profit colleges, like any true business, will be scrutinized for their business practices. The true, enduring educational institutions will adapt to changing times because of something that goes much deeper than the dollar bill. There have been DEEP pay cuts in many public colleges, but the faculty stays. Could that be said of 'for profits', if the price isn't right?

30. guanxi88 - July 26, 2010 at 01:28 pm

@ afnaar

"There have been DEEP pay cuts in many public colleges, but the faculty stays. Could that be said of 'for profits', if the price isn't right?"

Conversely, could one expect those staying at the public colleges to be able to attain employment elsewhere? Those who have lingered so long in taxpayer-supported Arcady are not uniformly noted for their adaptability outside the cloister.

31. guanxi88 - July 26, 2010 at 01:29 pm

@ Afnaar et al.

And as for the passion - yes, there's a hell of a lot of passion on this topic, as there appears to be an effort to use a hammer bought with my tax dollars to smash my rice bowl. You can understand how that might lead to a bit of hard feelings, I'm sure.

32. ellenhunt - July 26, 2010 at 01:45 pm

Any article that mentions University of Phoenix, and does not state that their 6 year graduation rate with a 4 year degree is 4%, is not a credible article. Yes, this article is critical of for-profits, but it say that there isn't much concrete to point at. This is rubbish. The for-profit education industry's flagships are corrupt pigs oinking at the taxpayer's trough.

The federal government needs to lay down standards that will generate data to compare universities. Those standards should require all graduating students to take the GRE (without effect on their degree) in order to receive it. Those standards should require all colleges to measure the income of graduates at 5 and 10 years post graduation through valid statistical methods. Those standards should track grade inflation so that every university, and every degree can be compared properly using correction factors to eliminate the need of colleges to inflate grades in order to be fair to their students vis-a-vis other colleges.

We may find some surprises, and that's good. But we must have metrics, better ones than we have now.

33. holthackney - July 26, 2010 at 02:32 pm

From Michael K. Clifford:

Kevin, Kevin, Oh Kevin...

Before we attempt to address your near-truths, let me say I don't recall any time during our private calls that you were going to use them against me. But since I have nothing to hide it is no big deal between us...call any time...turn on a recording device next time if you so desire...it helps with memory and keeping facts straight...

After discussing your above attempt with some pals, here is our collective initial thoughts/comments for anyone who cares:

It is because I respect you, Kevin Carey and his portfolio of work over the past couple of years that I'm completely baffled by this most recent column. Instead of your typical differentiated analysis, Mr. Carey has opted to parrot the thoughts of others when commenting on private sector funded schools.

Kevin, you are too-too good to get lazy...check your facts!!!

There are many problems in his post, but perhaps the most egregious flaw in his rant remains the absence of commenting on the efficacy of these institutions in EDUCATING students. Call my thought-group crazy, but we thought the point of higher education was to E-D-U-C-A-T-E. How do institutions funded by the private sector compare to others in the various quantitative metrics the government uses to define excellence and inferior programs in terms of educating students? Mr. Carey, a default rate is a financial metric, not an academic one. The reality is that you nor I nor Senator Harkin nor Secretary Duncan have any idea as to how effective these institutions are in increasing cognitive skills or enhancing knowledge to be used in the workplace.

Instead of adding to the issue with his usual wit, Mr. Carey assumes (as unfortunately too many people do) that higher education should be measured by inputs rather than outputs. Mr. Carey teaches at Johns Hopkins, one of our country's finest institutions. But Johns Hopkins isn't burdened by a focus on serving nontraditional students at night, lower to middle income working adults who likely tried higher education and failed at it. A segment of the population likely to default on loans. Mr. Carey seems to believe, as others do, that the fault remains with the institution rather than the constituency that it serves. Is Johns Hopkins a "better" institution than most private sector schools because it trains the best and the brightest that our country has to offer, rather than low income, often minorities, who either failed the first time around or didn't even have a chance at all post high-school? I think, the last time I checked, that Hopkins was primarily upper middle class unemployed 18 to 24 white females?

Kevin, when you teach - how do you know your students have learned what you taught? Might I have a team audit your outcomes and assessments the next class you teach? And at what expense - including all the donations and government subsidies?

On a final note because the beach calls today, Mr. Carey attempts to humanize the industry by pointing fingers at Michael Clifford, in the very same way that Frontline did not so long ago (oh, wasn't the funding for Frontline the same paymasters as Kevin's?).

Interestingly, Mr. Carey mentions Corinthian Colleges as a bad apple that "estimates that more than half the loans it makes to its own students will go bad." Funny, but Mr. Clifford doesn't own Corinthian Colleges. Mr. Clifford did take private Phoenix-based Grand Canyon University, an institution that has a lower 2007 cohort default rate (1.4%) than Arizona State University (3.4%) at half the cost. Mr. Carey doesn't mention that "Doctor" Clifford [full disclosure, a friend], as part of his BUSINESS strategy, differentiates his institutions by charging AFFORDABLE tuition rates relative to other schools including private sector schools like the University of Phoenix.

Kevin, remember I told you I try to incorporate our Four Gospels of Higher Education into every school we have any influence over whether a for profit we invest in or non profit to which we donate....they are:

1. Full & Equal Access - Giving every student who is willing to make the required effort the opportunity to acquire a quality college education.

2. Affordable - Lowering tuition and fees so the focus is on getting an education, not financing an education.

3. Timely & Relevant - Facilitating faster completion with lower debt and equipping graduates with relevant, real-world skills.

4. Purposeful & Ethical - Equipping graduates with a strong ethical moral compass with a willingness to help others. We are in business to help people live better lives via education globally.

To be fair to Mr. Carey, everybody makes mistakes from time to time...I have made more than most...Kevin Carey is still all in all a very smart man.

Michael K. Clifford

34. estudiante - July 26, 2010 at 02:45 pm

All for and non-profit colleges and universities should be required to prove their advertising claims It ssems that if you buy a toaster that does not perform as advertized the federal government can take action. However, if you pay for your education, even with federal dollars and you feel or actually are cheated, you have no recourse. Under the Lanham Act of 1946 (15 U.S.C.A. § 1051 et seq), three main acts constitute false advertising: failure to disclose, flawed and insignificant research, and product disparagement. Under the failure to disclose section ancorporation whether public or not,

Failure to Disclose It is considered false to advertise something that is "untrue as a result of the failure to disclose a material fact." Therefore, false advertising can come from both misstatements and partially correct statements that are misleading because they do not disclose something the consumer should know -- graduation rates and students who find employment relatively soon as a direct result of attendance and graduation at a particular school.

Under the Flawed and Insignificant Research premise advertisements based on flawed and insignificant research are defined under section 43(a) of the Lanham Act as "representations found to be unsupported by accepted authority or research or which are contradicted by prevailing authority or research."

So, My question for Ellen Hunt is --- has anyone ever tried to sue a university for alleged violations of the Lanham Act? Inquiring Non-Legis-Mentes want to know.

35. rodbell - July 26, 2010 at 02:51 pm

I haven't seen one salient point clearly stated (apologies if I missed it), namely: People aren't paying for "education;" they're paying for degrees. The degrees are the coin of the realm that fetch higher salaries in bureaucracies, and lead job interviews in the workplace. The degree is a barrier to entry in some professions (notably, teaching), and it's a formal or informal criterion for winnowing down almost any job applicant pool.

For-profits sell degrees. The market--and, ultimately, *only* the market, even though mediated by layers of governmental, economic, and other institutionalized mechanisms--determines what those degrees signify and their prices. How hard is it to earn a degree? Partly, that depends on what it's worth in the job market (broadly defined); it's hard to get kids to work hard in high school if the degree doesn't make much difference at the margins. Same for college--"is it worth it?", as many are asking. (But if it's too easy to earn a degree, it's price will eventually fall accordingly.)

Was it around the late 60s or early 70s that higher education came to embody, in real life, Garrison Keillor's wryly ironic description of a town where "all the children are above average"? At the time, that was one explanation--I was searching for something that made sense--I offered my political science classes for the sudden collapse of institutional authority at our universities. Not so long ago, I told them, a person bought a ticket to the middle class, the "upper half," with a college degree. Even if you failed, you fell back into the "some college" category, the "lower upper half," you might say. But, I asked my classes, why should a student bust ass to fall into the lower half? (You were already there for free and with no effort!) So what can the university or college offer you in exchange for hard work?

After the prolonged affray that was "the 60s" had settled into otiose political correctness and boring lessons about--well, I'm not sure what, but I notice that a lot of guys have checked out or choose to skip it--the competition for student enrollments became more intense. The reputations of "hard" or "confusing" professors darkened; more and more, a good professor was one whose classes overflowed with enthusiastic students and few, if any, naysayers.

It seems, then, that "the market" began to drive down the value of the degree, analogous to currency inflation. We have many more degrees than we used to, but they "buy" less, just like our currencies. In this context, the role and prospects for for-profit education are unclear. Yes, they currently have an incentive to add as little value as possible to the degrees they sell, as long as people (and governments) still pay for them. But the bottom will fall out of a degree market that does not pay off its investors. If these degrees don't translate into better jobs--enough better to make it worth while--then the value of the degrees will tank.

Will it be a general market collapse, or can it be confined to the for-profits? My thinking is, University of Phoenix would not have been able to sell so many degrees if the degrees from traditional colleges and universities demonstrably added job-market value to their graduates. But UOP could just play rope-a-dope against its critics, offering to meet whatever criteria a governmental accreditation agency wanted to require. (They were even willing to call the "butts-in-the-seats" card if that's the way their critics wanted to play.)

Can the "good" schools defend their prices in a skeptical market? Or will some for-profit outfit figure out how to produce a) students who are demonstrably as well-educated, for a fraction of the cost, or even b) students who are worth far more on the job market, and who gain their added market value due to the added value provided by their degrees? --Stay tuned (for about a decade).

36. guanxi88 - July 26, 2010 at 02:52 pm

@34 estudiante

"So, My question for Ellen Hunt is --- has anyone ever tried to sue a university for alleged violations of the Lanham Act? Inquiring Non-Legis-Mentes want to know."

I'd be most amused to witness testimony and read the briefs filed on behalf of transgressive "academic disciplines" and such-like, should folk take to suing their universities for worthless degrees. It could prove quite the amusing reading, if nothing else, to learn of the value of such neurotic nonsense gussied up in ersatz Heideggerian jargon, with a soupcon of French deconstructionism thrown in, to make the thing look impressive.

37. ellenhunt - July 26, 2010 at 03:18 pm

@estudiante I don't know, but I doubt it. I would support it, along with the legislation I recommended.

And a nod to guanxi88. Yes, but are those worthless? Since some of those go on to become investment bankers and such, I have to wonder if science degrees would come out underneath.

higher education in general has a serious, growing problem. The problem is rooted in grade inflation, and its content is the erzatz degree - from anwyhere. Having been forced to police students for cheating in class (med school no less), and seeing what comes out of 4 year degree programs, I am really quite worried. BS seems to be the order of the day in colleges just as on TV.

38. skittler - July 26, 2010 at 03:20 pm

I don't really have an opinion on wheter a degree from U of P is worth more than a degree than CSU, but it seems that it can be argued from here to Sunday -- oh, and please excuse my less than academic prose.

Education is expensive, no matter your degree. Is it worth it? Who knows? How do you measure such data anyway? Follow graduates around and determine how much they make across their career(s).

Excuse this bit of anecdotal evidence, but my 25-year-old daughter-in-law just graduated a year ago from UC Berkeley with a sociology degree (BA) and $100,000 of debt. She's currently working at a private school as a counselor making less than $1500 per mo. How she's ever going to pay this off, I don't know.

Was it worth it? That's not for me to decide.

39. guanxi88 - July 26, 2010 at 03:34 pm

@ skittler

Well, the good news, though, is that your daughter wasn't exploited by the rapacious greed of the for-profit educational sector, and therefore, her debt burdens do not rise to the level of a national concern.

Remember - if some folk get the worst of the deal from a for-profit enterprise, then it's a national crisis and demands federal action; if some folk get the worst of a deal from a public institution or a not-for-profit, well, that's just the way the cookie crumbles.

40. guanxi88 - July 26, 2010 at 03:37 pm

@ ellenhunt 37

I don't dispute that even the most phoney-baloney post-modern degree program offered by the fringest of self-proclaimed academics has some merit. The question is, though, since "gainful employment" has become the rock upon which private for profit education is to be broken, how might public and not-for-profits fare, were the principle of equity applied and they compelled to demonstrate the supposed "value" of their own programs of study.

A bald-faced attempt to nationalize education; nothing more, nothing less.

41. skittler - July 26, 2010 at 03:42 pm


I'll keep my kids in milk for their cookies (smile).

42. guanxi88 - July 26, 2010 at 03:55 pm

@ skittler 41

And you managed to get me to crack a grin on this most grim of days and topics.

43. ellenhunt - July 26, 2010 at 04:07 pm

@ guanxi88 - In the old days (Roman times) the teaching of liberal arts was prohibited to anyone but a citizen. Slaves could be engineers, military, and be educated. But they were not allowed liberal arts educations because those taught the arts of persuasion, and were thus considered to be too politically dangerous to teach the hoi-polloi. :-)

More practically, I suspect that there would be some overlap. There would be something like a bell curve, and how far apart the peaks where, and how tight they were would be interesting to see.

The argument, really, is about distance versus traditional education. The University of South Africa has done very well with distance education for a very long time, forced into it by the structure of their agrarian society. Their system produces excellent engineers, physicists, etcetera. I am certainly not one who thinks education should be limited to bricks and mortar. I know that it can be very good, and even better outside it.

But to deliver such an education in a distance-learning environment requires serious application, proctored exams, etcetera.

Again - what we need is national requirements that have GRE testing in the field and general GRE after being passed on for graduation, and prior to graduation. We need to track all universities in the same way that receive federal money. Doing that will stop the bleeding and reverse the horrible course we are on.

44. dld310 - July 26, 2010 at 04:44 pm

Just a reminder to all... Not all "for-profits" are "online colleges". Just because a school is online does not necessarily make it "for-profit"..and the two terms should not be used inter-changeably.

45. haohtt - July 26, 2010 at 05:06 pm

and not all "for-profits" are subsidiaries of large publicly traded corporations like Apollo/U. of Phoenix. Many are smaller private proprietary colleges and universities that do not pay their admissions officers a sliding scale, violate their own admissions standards for qualified students and have no connection to Wall Street at all.

46. softshellcrab - July 26, 2010 at 06:08 pm

I keep saying the same thing on these posts. For-profit schools, especially online classes from for-profit schools, are a joke. Having taught for both for-profit schools and a state supported university, every experience I have had with for-profit schools has been that they simnply are money machines that don't want people failed out. They have no standards and are just selling a degree. The state supported school, and average school or not much above average, truly cared about its grading standards and was quick to let students fail out of the program if they could not handle the major. Every for-profit school I have taught for has been set up to sell a degree.

47. wombat319 - July 26, 2010 at 09:02 pm

@jack_cade - Personally, I find it amusing that you're pompous enough to call yourself a "professional scholar" from a "top school!" What's more, the condescending remark that you are
"bemused and slightly embarrassed" for me just goes to prove that you truly do believe your worth is far greater of anyone that doesn't agree with you (this is commonly called narcissism)! Why so condescending, racist and superior Jack? Could it be that your entire reason for being is centered around your self-centeredness? Oh my...my colleagues and I are SO embarrassed for you! (LOL.

48. wombat319 - July 26, 2010 at 09:14 pm

Michael: With friends like the author of this trashy bit of tripe, who needs enemies? This guy's friendship is only equalled by that friendship given to Monica Lewinski by Linda Tripp!

49. medieval_spectacle - July 26, 2010 at 09:16 pm

@wombat: not to be combative, but seriously--don't talk about "liberal group think" and then spout off conservative group-think indoctrination BS. If you'd been in one of my comp classes at the for-profit where I teach, that kind of thing would have gotten your essay bonked with the "give me unbiased, specific evidence" stick. I love that stick. It's very useful, no matter which side the bias is coming from.

Moving on . . . as estudiante notes in #22, at least some of the for-profits have qualified instructors who give a cr@p--I can't speak for all of them, clearly, but there are definitely for-profits out there that have high-quality faculty. And interestingly, a lot of us high-quality instructors, if I can call myself such, are heading to online for-profits because at least there, we don't have any illusions about our roles: yes, we're only yearly, at-will contracts, but that's better than being offered a tenure-track position that will be impossible to keep given the insane requirements many schools have for tenure. If I keep up on my (admittedly too-large) teaching numbers, do well on my quarterly reviews, and participate a bit in my discipline (conference papers are enough), it's very likely that I'll keep getting my contract renewed. And at my for-profit, I've not run into some of the complaints I've seen from instructors at traditional universities: when a student has plagiarized and I have proof, I'm allowed to actually punish them with grade docking or even class failure. I'm not expected to coddle and treat egregious and deliberate deceptions as "learning experiences."

Best of all, my life is much less at the mercy of the academic job market. I can live wherever I want and still have a full-time teaching job. And while, yes, I do get some students who are woefully unprepared, I've had some real gems come through my classes and am thrilled to help them continue their educations. Yes, there are some for-profits out there that are expensive diploma mills, but there are others that are really solid institutions that allow non-traditional students to get an education.

50. fiscalsense - July 26, 2010 at 10:04 pm

For Profit or Non-profit, the problem is overborrowing allowed by loose regulation and lending standards. Higher tuition is not the issue (sure it's a problem, but it's not the cause). The issue is the abusive borrowing far ABOVE tuition cost. Some students borrow $40K or less for a $40K degree, but too many borrow $100K or more for the same $40K degree because it is allowed when a school includes such items as "room and board" in their budget, even for working nighttime and online students whose outside expenses have nothing to do with their enrollment (i.e. allowing a student to borrow $10K per term when the cost is only $4K). Virtually every non-Ivy League student with a high debt load falls in this category. Find a student with high student loan debts and you will typically find they received at least half of their loans as refunds (take a look at their account records if they'll let you). To make the this situation worse, the Department of Education is going to let the irresponsible borrower off the hook by entering into an Income Based or Income Contingent Repayment Plan, where they only have to pay a fraction of what they actually owe. Where's the incentive for responsible borrowing or financial advising when you can take the max then pay the least? You might as well buy a house with the refunds.

51. butteredtoastcat - July 26, 2010 at 11:55 pm

The problem is with the word PROFIT.

These schools aren't making profits.

They are sucking off the government tit in the form of student loans.

They are really leeches, not profit generators.

"For-profits" are a money transfer from the taxpayers to private shareholders, with the students holding the bag of debt when the music stops.

We should not call them "For-Profits". We should call them what they are: "Tit-Suckers."

52. droslovinia - July 27, 2010 at 09:03 am

Reading the dialog between Clifford and Carey is fascinating and informative. Reading the politicized tripe that "wombat" has tried to inject into the debate, and seeing people suckered into playing along, is not.

Since I'm somewhat ignorant of this, has anyone stopped to compare the demographics of people who, by and large, attend "for profit" schools as compared to those who attend other colleges? Could it be that it's not the nature of the school, so much as the nature of the folks who attend the school? I don't need to stereotype here, but is it possible that a number of people who attend the "for profits" are not well served by a financial system that is made for the kind of folk who attend the "non profits?" Every system is bound to be abused, but much as a "for profit" might be the cutting edge of innovation in an otherwise stagnant system of higher education, should there not also be a more cutting edge system of student funding?

53. gplm2000 - July 27, 2010 at 09:39 am

ARTICLE: "For-profits exist in large part to fix educational market failures left by traditional institutions, and they profit by serving students that public and private nonprofit institutions too often ignore." Malarkey. They exist for one reason: Profit. Enterprising people have found a great way to make a profit off the federal govt. by offering a college education to those who do not qualify for the established on-ground schools.

At the same time "online" is an enticement for working adults to get a "higher" education, yet many are from the same unqualified status group. The majority of students do not have the reading and writing skills necessary to succeed at a regular four-year college. Online for-profit schools enable them to get some type of degree by just participating for the most part. Remember these students are customers who spend money. Open-admissions and federal funding are basis of the for-profit college industry.

54. rodbell - July 27, 2010 at 04:19 pm

@ gplm2000 - "Malarkey. They exist for one reason: Profit."

The vast majority of effective organizations (ones that can accomplish intended outcomes) are profit-making; they only exist by virtue of making profits. The other organizations (governmental, mainly) require profits indirectly, since their revenue sources are drawn from the functioning economy.

Some business people are interested only in money and care little else about what they produce. Others may be quite altruistic in their motives, working at General Medical because they believe its products will save lives. But here's the thing: Profitable activities do, indeed, fill some sort of "need," i.e., market demand. As you say, enterprising people find ways to make profits. You even seem to contradict yourself when you acknowledge that they make a proft "by offering a college education to those who do not qualify for the established on-ground schools." How is that so different from the "malarky" that states, "they profit by serving students ...that public and private nonprofit institutions too often ignore"? See my remarks, above, at #35.

55. jesor - July 27, 2010 at 04:21 pm

In defense of the public institutions, it is impossible to provide the same level of innovation when one type of institution (public) is subject to capital limitations and price controls (i.e. legislative funding and tuition limits, while another set is able to raise virtually unlimited amounts of capital through an IPO or stock offering and thus expand capacity. This differential is compounded by the fact that the customers of the "market based" institutions are fully subsidized by the federal government. It's the same gig for other industries too. Just ask the CEO of Monsanto how long they'd maintain their profit margin if the government stopped subsidizing farmers and guaranteeing their loans. The only difference is if Monsanto's seed failed at the same rate that the student loans from these schools did, then they'd be out of business anyways.

56. haohtt - July 27, 2010 at 10:59 pm


Do you seriously believe that students in private sector colleges and universities are subsidized at a higher level than those at public institutions? Well, I have worked for both public community colleges and universities and have dealt with budgets for both. The amount of local and state taxpayer funded subsidies received by a public community college student is twice that received by "market-based" student (and the public college student receives federal financial aid on top of that!) The public community colleges have a default rate of 31%, while "for-profits" have a defualt rate of 39% But the for-profit student population is much lower, so community college defaults amount to a higher total cost to the taxpayer.

57. arrive2__net - July 28, 2010 at 03:06 am

If the Congress and the Dept of Ed can get the rules right, everyone stands to benefit. Those institutions that have allegedly exploited the rules, have exploited rules made by the Federal government. If they can be fix the rules, the rules can make the problem go away (at least until they have to be fixed again later).

I think the article makes a point that the for-profit sector is there to fill a need, but that need is only adequately filled if there are effective checks and balances in place to assure the sector is doing its job adequately. The "bad actors" in the sector damage the reputation and viability of the entire sector. Good, adequate for-profit schools can provide alternative opportunities for students, and alternative employment for qualified professors and administrators. Clearly there is demand for a larger higher education sector in the US economy.

Bernard Schuster

58. maggiecase - July 28, 2010 at 11:25 am

"Wal-Mart recently announced a deal with the for-profit American Public University to teach the giant retailer's employees. What ambitious president or provost is planning to make her reputation educating $9-an-hour cashiers?"
What an insulting and elitist comment. Where are all those "public servants" wanting to step forward to help those 9$/hour cashiers improve their lot in life?

59. reformhigheredu - July 28, 2010 at 02:39 pm

"That's because traditional institutions have long resisted subjecting themselves to any objective measures of academic quality. They've pointed instead to regional accreditation, which conveniently allows colleges to decide for themselves whether they're doing a good job." This is a true statement that needs to be examined by the government. The DOE doesn't have the nerve (to put it mildly) to intervene and demand changes from lame accreditors, such as Middle States. I would like the government to also scrutinize private, non-profit colleges/universities. #5o, fiscalsense, I agree with your comments (you hit the nail right on the head). At the non-profit where I work, grade inflation of underprepared, underachieving students is the norm. Students overborrow and scoff at the idea of ever paying off their loans. It is a legal diploma mill. Unfortunately, many schools, such as where I work, are cropping up (like an outbreak of a virus).

60. soprano - July 28, 2010 at 10:30 pm

droslovinia -
Could it be that it's not the nature of the school, so much as the nature of the folks who attend the school? I don't need to stereotype here, but is it possible that a number of people who attend the "for profits" are not well served by a financial system that is made for the kind of folk who attend the "non profits?"
I don't have demographic statistics, but I would say from personal experience that the answer to that question might be yes. I've gone to non-profit universities for undergrad and grad school. Each time, I've had to really uproot my life in order to do so. When I was younger and was more flexible, it wasn't an issue. But I attended grad school in my 30s. It decimated me financially because it meant moving across the country, working part time (since classes were in the evening but all of the research experience that I wanted to get was only offered in the day). Then university politics reared its ugly head and my program changed focus several times ... and departments. Now I'm graduating with an art degree. I've never even taken Drawing 101.

While departmental politics can exist anywhere, I would not have suffered as much financial loss if I had the option to stay in the area where I lived, go to school part-time, and continue to work in my very well-paying job. I would think that many adults, particularly those who have a family to support, might think similarly.

I'm thinking about school again, and am considering for-profits for that reason; I can live my life and still go to school. However, the due to the reputation of most online schools, I'd prefer a solid non-profit institution that has a good online degree program.

61. gree6846 - July 29, 2010 at 03:18 am

The degrees people leave with from for-profit schools are not inferior, just because the school makes money. A large majority of those schools are trade schools offering the students job skills to pull them out of minimum wage jobs. An Associates degree in PT, RT, X-ray, nursing, etc get those people into good jobs, that make good money. I would have to say that spending the money on a degree knowing I can get a job, is more worth while then a degree that gives me nothing but a piece of paper to hang on my wall and say "I went to such and such university and now have a degree that means nothing".
I have read this darn paper for a few years now, my husband get the Chronicle, and I have read more belly aching from educators and students alike having degrees that mean nothing once they are done with school.
I am 100% behind learning for learnings sake. But most people go to school to get a good/better job. And for profits fill that gap.

62. gplm2000 - July 29, 2010 at 10:16 am

Hey Jesor, sorry to pop-your-bubble in favor of for-profit colleges. My facilitating (teaching)experience at two of them over several years shows me the shallowness of the management and course instruction. Curriculum is tightly controlled by a staff that has no background in teaching, let alone understands the topic. Adjunct faculty is over-recruited and has no input or control over the curriculum or grade measurement rubrics. The "teaching" environment is one of "do what I tell you to do and no backtalk". This is not conducive to a learning environment. Why do I do it? Easy job, earn money. I guess that I am for profit.

It is shear nonsense to believe that for-profits serve an underserved market. Their are thousands of public community colleges offering more choices and better quality instruction. To seduce minorities, mostly black, to colleges whose degrees are meaningless is a sham. It has nothing to do with the right to earn a profit, instead it has everything to do with fooling students into believing that they are getting a quality education and fooling the taxpayer who is funding the scam.

63. gloriawalker - July 30, 2010 at 01:25 am


64. supertatie - July 30, 2010 at 07:33 am

I have no problem with investigating graduation and employment rates of so-called "for profit" institutions AS LONG AS THE SAME STANDARD IS APPLIED TO ALL INSTITUTIONS OF HIGHER EDUCATION.

The New York Times recently featured an article (and related commentary) about the same problem with students graduating from TOP "traditional" universities. You can start here:


And you'll enjoy readers' comments here:

In a related article, the student expressed her regret for borrowing $100,000 for a degree in "women's studies" (a position she later recanted: http://bucks.blogs.nytimes.com/2010/06/01/more-on-cortney-munnas-student-loan-saga/)

Whether she sticks to it or not, however, her point is well-taken. How many of us know students who are pursuing degree programs that are, from the standpoint of employability (and thus ability to repay loans), completely worthless??? It's one thing to get a degree in underwater basketweaving when it costs you $2500/year. It's another thing altogether to spend over $50,000/year for a degree that leaves you either unemployable, or underemployed.

Higher ed - and I am talking about the TRADITIONAL institutions here - is one of the few market sectors ("market" being something of a misnomer here) where price has outstripped inflation, outstripped cost of living increases, etc. Much of this has been driven by a culture that tells people - completely fraudulently, in my view - that "college is for everyone" and where "free money" from the federal government creates an artificial demand for education. As is ALWAYS the case where the government messes with people's ordinary incentives, people are deceived into buying things they cannot afford, and then left holding the bag when times get tough.

I do not want to hear about corruption in PRIVATE LENDING. When a BANK lends you money, you can adjust your interest rate down as often as you like. When the FEDERAL GOVERNMENT hands out student loans, you can adjust your rate down ONCE, no matter how low the interest rates continue to go. When a BANK lends you money, if you go through bankruptcy, you can have your indebtedness wiped out. When the FEDERAL GOVERNMENT hands out student loans, you can never eliminate that indebtedness in bankruptcy. How is any of this fair?

While I am not arguing for bankruptcy protection for student loans (God forbid), I AM saying that it is the universities and the federal government that are leading these students and their families down the primrose path. And now that hard times have hit, they are looking for scapegoats in for-profit colleges and universities. Remove the beam from thy own eye, folks.

My own alma mater now costs TEN TIMES what it cost to go there where I was there in the 1980s. It took 150 years for my alma mater's first ten-fold increase in tuition. It only took 30 years the second time. And I'm sorry, but I don't believe there is a school on the planet where a four-year education is worth $200,000 or more.

We're saddling our kids with a mortgage, before they even have a JOB.

I reject this inflated and distorted pricing model, and the inflated and distorted value assumptions that go with it.

As a professor and university administrator, I am asked all the time by students, "Where should I go to graduate school?" I ask them how much the tuition is at the schools they are considering, how much they have to borrow. Then I take them straight to www.bankrate.com, and plug that borrowed figure in at the prevailing interest rate, and show them how much they will be paying back -- IN INTEREST!! -- and what they will translate to as a monthly payment for the next 20 years of their lives. Then I ask them, "How much will you make? How much will be left over for a home? Rent? Children's school?" Students don't mind repaying what they borrowed, but they blanche - rightfully - when they see that $120,000 in loans at 5% interest will cost them nearly $200,000, and take $800 out of their paycheck for two decades.

I've been in higher ed for 19 years. I have two small children. And my husband and I agree - we are plowing our money into their K-12 education, where there are real and meaningful differences between schools. When it is time for college, they will go where I am teaching (or have tuition benefits), to a state school (assuming there ARE any financially secure state supported universities left), or where they get grants. They will NOT undertake hundreds of thousands of dollars in debt.

65. gree6846 - July 30, 2010 at 04:18 pm

which for profit colleges are you all talking about that have teachers who are not teachers and students who do not take tests? where my husband works the educators all have to have AT LEAST a BS/BA (alot of them have masters degrees and some even PhD) in the area they teach, have to have worked in the field they teach for at least 3 years, they have an accrediting body, the students take ass busting exams and have to pass board exams to get licenses in their career path they choose. their degrees are earned thru hard work. yes they are ONLY associate degrees, and yes they are expensive but these people actually want to get a job. the school also have on-line classes, but again the teachers have to have a BS/BA to teach them, they have to meet standards set by the state/national accrediting bodies and the students have exams they must take, along with papers they must write and projects they have to do.
my guess is there are schools out there that just "sell the degree" with no actual working being done, but not all schools work like that.

66. joelkline - July 30, 2010 at 07:07 pm

The framing of arguments around tangential concepts really muddies these comments. From my view, clarification of facts might help:

- There might be some good for-profit programs. But the majority exist to harvest student loan money. Although online and for-profit are not interchangeable, they really are. The for-profit schools with physical locations are often reputable...they have to deliver outcomes to a small geographic area or die.

- Competition is generally good, but many for-profits are manufacturing "demand" for competition through overzealous marketing. Get your degree "fast", "easy", or get a degree to "make a lot of money" tends to dominate for-profit advertising.

- The students for-profits serve (typically first generation college in a low to low-middle income bracket) are often unaware that the degrees do not hold the same reputation as traditional schools. To many of these students, a degree is a ticket to a better job and the faster and easier the pathway, the better.

- This is not a conservative vs. liberal issue. Sure, a lot of traditional schools are liberal bastions. So what? You think the adjuncts that teach at for-profits are there because they are conservative? Adjuncts teach online because they need work...politics may seem easier for online programs because there is no F2F discussions and little interaction with classmates (in most cases). Tough to think broadly about your positions and ideology when there is limited engagement ( I am a conservative, BTW).

- Think about all the costs for-profits don't have: networks, faculty offices & computers, gymnasiums, sports teams, buildings, and a lot of administration. Now ask yourself, why is their tuition so high(and why does Wall St. think they are cash cows?)

- It's not the default percentage that matters, long term, it's the amount. It takes 10 community college defaults of $1000 to make one for-profit default of $10,000.

- The study that compared online and classroom outcomes did not include a lot of the recently created for-profit programs. It did say outcomes were equivalent, but it started with reputable online and classroom programs in traditional disciplines. Not the major du jour (like criminal forensics) that is created solely to sound attractive.

- Sorry Michael Clifford. But no one who is genuine about Higher Ed as a calling lacks a real degree. Hypocrisy. How can anyone say they can provide a valuable service when they have never even taken a college course? Clifford's rhetoric is a smokescreen for the profits that we taxpayers are paying for a small percentage of a huge group to get a degree. This is embarrassing when you consider the value of the degree.

67. amberdru - July 31, 2010 at 01:13 pm

When government funds are available your basic entrepreneur will suddenly become interested in providing education. Here in Ohio our charter schools have given many millions of dollars to the White Hat group whose owner/president/adviser has managed to get paid every which way, make millions while the school's employees aren't paid and they go under.

The same is true for government funded retraining programs where the flyby night business pitches it's software training programs, gets paid and goes out of business before the graduates are tested.

I'm sure if the Dream Act passes everyone including your mother will suddenly have a "school".

68. gsawpenny - August 04, 2010 at 12:14 pm

The fix is simple. A national metric that measures graduate success both regionally and nationally in terms of dollars earned after graduation in each field/degree offered. If a Midwestern State College grad with a History BA is making 60K a year as secondary school teacher while nearby "Joe Schmuckally" University grad with the same degree is making $9 an hour at Walmart then I for one will not apply to JSU.

On the other hand, if JSU can educate me online, at home while I hold down a full time job, get me through the process faster with some creative scheduling, and give me a regionally recognized degree that lands me a $50K secondary school teaching job then game on!

Without a measuring tool that looks at degree cost and empoyment outcomes on a national and regional level this issue will never be solved.

69. isambard - August 05, 2010 at 10:19 am

Isn't there a ton of data out there already on which degrees from which universities/colleges predict higher and lower earnings? The conventional wisdom has always been that science degrees predict higher earnings than arts degrees, and that when you factor in years of forgone earnings plus tuition and loans for living costs, most arts degrees are a break-even bet at best. In the US context, this needs further refinement by what sort of institution has awarded the degree. (And it's always open to the two objections that 'success' reflects employers' prejudices rather than 'real' value, and that it doesn't measure what the student gets out of it.) Masters degrees add to future earnings, but doctorates reduce them. But this is the conventional wisdom of a long time ago, and there must be a ton of more recent and more useful data. It should be easy enough to gather graduation rates, rates of (involuntary) unemployment six months after graduation, and lifetime earnings. Once there's some hard factual information, it's possible to have a rational discussion of whether better or worse performance reflects the incoming students' prior education or the schools' teaching, or what. In its absence, it's hard to say anything sensible.

In principle, for-profits ought to be perfectly effective at teaching students for recognised vocational qualifications, but probably not so hot at either remedial education or traditional liberal arts, where a lot of face to face interaction is indispensable. But that's a testable proposition, and given the amount of educational research that goes on, the evidence must be sitting out there somewhere. For what little it's worth, anyone who wants to compare for-profit and not-for-profit schools needs to begin by acknowledging the differences between Ivy League schools, where 95 percent graduate within five years, and the multitude of places where far fewer than half graduate within six years. Since many if not most students at for-profit schools would have gone to schools with pretty poor graduation rates, one ought to be careful about setting sensible benchmarks.

70. ac3000 - August 16, 2010 at 01:53 pm

Good piece. The headline and the final paragraph both offer a very clear message.

Add Your Comment

Commenting is closed.

subscribe today

Get the insight you need for success in academe.