Washington
For-profit colleges, under scrutiny in Congress and in the press, have been on the defensive this summer, pressed to explain aggressive recruiting practices and higher-than-average student-loan default rates.
Their latest move came on Monday, when the nation's largest for-profit higher-education company, the Apollo Group, parent of the University of Phoenix, released a report on "the current state of higher education in America and the vital role of proprietary colleges and universities," and held a briefing for education reporters here.
The 36-page report, titled "Higher Education at a Crossroads," argues that for-profit colleges will be critical to meeting President Obama's goal of leading the world in college-completion rates, and estimates that meeting the goal without proprietary colleges would cost taxpayers more than $800-billion over the next 10 years.
While the statistics-heavy report does not specifically mention the Education Department's "gainful employment" proposal—which would cut off aid to programs that saddle their students with unmanageable debt—its message is clear: Program closures at for-profit colleges would jeopardize the president's college-completion goals.
During the press briefing, the company's president and co-chief executives fielded questions from reporters about Apollo's recruiting practices, its spending on marketing, and the proposed "gainful employment" rule. Gregory W. Cappelli, a co-CEO, said the company would no longer compensate recruiters based on their success in securing enrollments, reiterating an announcement Apollo made this month after a government investigation uncovered recruiting abuses at several for-profit colleges.
Previously, a third of recruiter compensation was tied to enrollments, said Joseph L. D'Amico, president and chief operating officer. He said recruiter pay was not based on "quotas," per se, but on "improvement over time."
Mr. Cappelli said the company had also reduced its reliance on third-party marketers who solicit information from prospective students online, cutting its spending on "lead generators" in half over the last two years.
"We wanted to get away from not having control over our brand," he said. "Now we have control over it, we create the message."
Mr. D'Amico said some of the third-party marketers had used "techniques we're not proud of."
Asked what effect the "gainful employment" rule would have on the company's growth and bottom line, Mr. D'Amico said that it could "potentially eliminate programs," but didn't offer specifics. Mr. Cappelli argued that the rule could be drafted in a way that was "not as costly to society" as the current proposal.









Comments
1. 12100026 - August 23, 2010 at 04:49 pm
Here's where we need Mark Twain, "There are lies, damn lies, and statistics (produced in a self-serving manner)."
2. betterschools - August 23, 2010 at 05:15 pm
This is an accurate and well thought out report. I recommend reading it with a critical eye.
There are many other documents circulating on this topic. So many there is a repository for sharing documents on all sides of this issue. Download any or all and upload any you find missing.
http://www.intered.com/for-profit-regulation
Documents are updated twice daily.
3. jmmcmorrow - August 23, 2010 at 06:01 pm
I am glad that the for profit schools are starting to stand up and defend themselves. While some of the recruiting practices were indefensible, I do believe they are isolated. I also believe that the for profit schools play a vital role in the post secondary education process - serving many populations that would not otherwise be able to access post secondary education. For more to think about - see the blog my business partner at TopSchool wrote trying to provide an objective view of cost to taxpayers of the for profit schools versus the nonprofit schools - http://ow.ly/2rv3K
4. dboyles - August 23, 2010 at 06:58 pm
I am interested in knowing where for-profit school graduates are finding jobs as well as how well graduates perform for their employers in comparison with traditional graduates. Are positions primarily low-level jobs in the US? Are they jobs in China or India (unlikely non-traditional students will take those)?
As far as the rosy idea cited in the "Higher Education at a Crossroads" report that every American will have one year of college, I would be just as pleased if not moreso were every American to have more stringent K-12 courses so they didn't require one year of college. Of course, the not-for-profits wouldn't benefit from that particular arrangement, which causes me to think...
5. betterschools - August 23, 2010 at 07:31 pm
dboyles,
Our firm has been conducting in-depth interviews with employers every year since 1995, about 20,000 interviews, about 10% of those being with program-specific visionaries and leaders of national and state professional associations and oversight bodies.
We do this for state colleges and universities, independent colleges and universities, and for-profit colleges and universities. In other words: (a) we have no specific skin in this game and (b) we have orders of magnitude more objective data (more data period) bearing on your question than does the Department of Education, which seems to rely on anecdote and outliers that support their political agenda. They do this under all administrations.
While the detail is rich in texture, what I can tell you, and what we can prove as the most sound generalizations are as follows: (1) Very few employers know and of them very few care about the institutional charter of the college that graduated their employees. (2) Of the small group of employers that do care, there is no consistent pattern of preference. Allied health employers show a slight preference for graduates of career colleges (for profit). High-tech employers of engineers, etc. have definite preferences for hiring graduates of partner institutions, usually state universities, etc. (3) Even when there is a preference, its contribution to variance lasts about 30-90 days into the job. Generalizations #2 and #3 are small whereas #1 accounts for most of the variance.
Robert W Tucker
6. mkant69 - August 23, 2010 at 08:01 pm
One of the statements in the Apollo Group report is accurate but somewhat misleading. Specifically, on page 16 of the report it states that "students at four-year proprietary institutions still borrow less, on average, than those at four-year independent private institutions." However, four-year for-profit colleges award a much different mix of degrees than four-year traditional colleges. For example, http://www.finaid.org/educators/20100715institutionlevel.pdf demonstrates that 43.2% of the degrees at four-year for-profit colleges are Associate's degrees, compared with 3.2% at four-year non-profit colleges and 4.8% at four-year public colleges. This difference is reflected in the average cumulative debt at graduation shown in the two tables at http://www.finaid.org/loans. The first table shows the average cumulative debt by institution level and control. That data agrees with the Apollo Group assertion that average debt at four-year for-profit colleges is lower than at four-year non-profit colleges. But the second table shows average cumulative debt by institution control and degree program. This table shows that the average debt at graduation for a Bachelor's degree is higher at for-profit colleges than at non-profit colleges.
7. disembedded - August 23, 2010 at 11:56 pm
I've just been waiting for the Chronicle to come back down on the side of the greedy for-profits. Next, we'll see their high-paying ads back up on the Chronicle.
Also, get rid of the creepy spam in your comments!!
8. feudi - August 24, 2010 at 08:46 am
I guess the for profits haven't greased Congress enough yet. No problem. They just appoint a few legislators to their Boards and this great concern will soon disappear. We saw the same thing happen in for profit healthcare in 2002 when Senator Grassley killed the investigation of Tenet Healthcare.
9. 11200153 - August 24, 2010 at 09:06 am
The title of this Chronicle article is not correct. The title should says that Apollo Group goes on the OFFENSIVE, not defensive. The release of a statistics laden report supporting the proprietary sector is an OFFENSIVE move, a proactive strategy.
Is this an error by Kelly Field or did some editor change her title without carefully reading the article?
10. gotham1013 - August 24, 2010 at 10:35 am
I don't trust their claims of quality and it is offensive to read their claims about social mission. Several years ago I served on a large evaluation team asked to evaluate several U/P programs. We visited several sites, read their materials, observed classes, the usual drill. We found little in the way of an academic culture, low but consistent standards, and, in general, a high fat diet as in MacEd. At that time, there were quite ahead of many adult degree programs in marketing, student services, and training of adjunct faculty (albeit less qualified by credentials). We issued a negative report but that didn't stop the administration from getting approval to operate in this Eastern state that I don't want to name. They just out flanked the team and the staff education staff. Several months later, I found them in a curriculum at a small catholic college in another state without any recognition in the materials sent to the state about this relationship. I reported it was a better curriculum because of the local implementation, but was bothered by the lack of transparency. Now to the present, I've made these points by email to the editor of the Chronicle, criticizing the full page ads in the print version and what I think is co-branding by offering joint workshops. Of course, I don't blame all for-profit colleges and I know of a few good ones, but my personal experience with this one has been troubling, to say the least.
11. disembedded - August 24, 2010 at 10:48 am
Oh, I see a big University of Phoenix ad posted up here right now. Wonder how much big money the Chronicle is getting paid for this one....
12. 12096136 - August 24, 2010 at 11:17 am
When a for-progfit college enrolls as many students as possible, because they know when the first student loan checks are issued, half of the enrollment never returns to class, that is not a quality institution. The institution is one of the top 10 in the default category and they targeted the students that they enrolled. Why should they care, they got the grant money and the balance of the tuition from the loans. So what if the students can never get out of debt.
13. challah10 - August 24, 2010 at 04:41 pm
For jmmcmorrow -- What is good about an unrecognized degree and exorbitant debt for those individuals who would not qualify for anything but a worthless diploma mill without standards for prior preparation? A pitiful situation already exists for those students from populations that supposedly qualify for the hallowed halls of academia but still require substantial remediation. America needs to get its proverbial head out of the sand and smell the stench of exploitation, on one hand, and malpreparation in PK-12 on the other.
14. softshellcrab - August 24, 2010 at 07:13 pm
#5 was an interesting post and I can believe it. However - and I apologize to anyone I offend by saying this (really!) - I just cannot see for-profit schools as anything but money-mills without any real standards. I have taught on the side for some of these, and unlike my traditional school, it's all about retention,and intervention for problem students, and 2d and 3d chances for the students who don't do their work when they should. It's all about don't lose their tuition money! If some of you say there are some good for-profit schools, maybe there are. It's hard for me to believe, though. The ones in my experience simply want to keep the students at all costs and their tuition. You can say,aren't there also non-profits who drop standards to retain students just to keep their money? Yes, this happens there too. But what I have seen from the for-profits goes far, far beyond any reaonsble standard, and enters into the "scam" category. I guess I would say any I have dealt with were all scams.
15. jenniferburcham - August 25, 2010 at 12:16 pm
#15: I'd have to strongly disagree with your entire post. Every university is a money making institution - the money comes in different forms. I can best equate profit in K - 12 public education as a test score. There is always a "profit" to be derived. Public universities have a profit margin as well.
If you think that public universities are not worried about keeping students enrolled, your are clearly misguided. During my Master's Degree program at a large public university, I took a course on University Leadership and Administration. This large unversity was very concerned about attrition. The university was having a particular problem retaining Native Americans to which end they were trying to do anything they could to get them to graduate. Attrition is directly relataed to a university's reputation - public, private, profit, or non-profit.
As far as your analysis about for-profit universites giving students second and third chances to do their work, I would suggest you further research this claim rather than making such loaded statement. You need to cite which universities are doing this. Having done some research on several of Apollo Group, Inc.'s affiliates, I know that they have policies regarding late work and the acceptance of late work. I am sure that Apollo Group, Inc. is not alone in their standards. Public univeristy professors have much more leeway in the area of acceptance of late work. I would also look to the boards that accredit these universitites you speak of with lax standards; if a university is receiving accrediatation with such lax standards, I would go directly to these boards to begin the questioning.
16. betterschools - August 25, 2010 at 04:11 pm
@jennifer,
You are correct in calling for objective data to support such claims. While some programs are difficult to evaluate, others are not. If you look at the professional pass rates for externally standardized degrees qualifying graduates to sit for credentials such as CPA, RN, teaching certificates, and the host of health related credentials that require degrees, you will not find a pattern of evidence that supports softshell's negative view. Overall, for-profits have the same pass rates, sometimes a little higher, sometimes a little lower. If softshell is objective, he will acknowledge that this constitutes counter-evidence. If he has an a priori ax to grind, he will shift the argument to another facet.
I can appreciate that softshell had a bad experience at a for-profit. I don't know if it was organic to the institution or to the division in which he was teaching. I have had such experiences at two indolent public institutions, one private, and two for-profits. Either of us would be wrong to generalize them. There are nearly 1,000 for-profits.
I would urge him to examine Apollo's report that can be found at http://www.intered.com/for-profit-regulation. (Look for Apollo Group, Inc., August 2010. Position paper outlining the important role of proprietary schools in American higher education.) Examine these facts and generalizations objectively. Come back here and let us know what he sees. Other relevant documents can be found on this page (a repository for the issue) as well.
Softshell is correct in noting that many (by no means all) for-profits have relatively open admissions standards, although he expresses it in a value-laden way. Giving everyone a chance to fail, or even a second chance, is by no means a reprehensible policy. I am in favor of it, especially when applied to working adults whose first try at college may not have been successful due to family and work combined with youthful inexperience. The problem I see in some for-profits and other schools as well is that getting in and showing up are tantamount to getting out. A chance to fail means just that. Standards must be in place, communicated, and enforced.
17. betterschools - August 25, 2010 at 04:23 pm
#13 "When a for-progfit college enrolls as many students as possible, because they know when the first student loan checks are issued, half of the enrollment never returns to class, that is not a quality institution."
This is a display of pure ignorance. Why do people such as you insist upon commenting in areas in which you have no expertise?
At least inform yourself as to the facts of: (a) federal requirements for enrollment, course completion and payment to the providing school, (b) federal payback requirements for students who do not complete courses and the stiff penalties for errors (it is never in the school's interest to err, it occasionally happens because of the complex fed procedures), and (c) the basic construct of break/even analysis including learning that the most efficient for-profit university will lose, not make, money when a student attends one or two courses and then drops out. (Most for-profits offer courses sequentially, did you know that?) Many for-profits lose money if the student drops before the fourth course and begin making incremental profit after that.
18. docfox - September 03, 2010 at 02:32 am
betterschools is fond of presenting the reports and analyses of InterEd, Inc. (his/her obvious employer) as some sort of objective, impartial collection of facts, but I encourage everyone to consider the interesting links between InterEd, Inc. and the Apollo Group when examining their reports (you'll need to scroll down on some of these pages and pay attention to name changes and mergers):
http://starpas.cc.state.az.us/scripts/cgiip.exe/WService=wsbroker1/corp-detail.p?name-id=07181606
http://starpas.cc.state.az.us/scripts/cgiip.exe/WService=wsbroker1/history-detail.p?corp-id=01434491
http://www.faqs.org/sec-filings/091027/APOLLO-GROUP-INC_10-K/p16132exv21.htm
19. studentsuccess10 - September 05, 2010 at 04:54 pm
Most higher education institutions thrive on exagerations and vicarious living. Not only do the recruitment claims seem too good to be true but the famous graduates are usually few and many are just leaches on society. Why listen to any of these folks? Just choose a program you are interested in and can afford and move on. The status thing is not work a penny in the long run! It's what you put into the program that pays off, not what they claim to provide for you. Learning is a long term activity that requires effort and time as well as patience. The U. of Phoenix or any other institution (Oxford, Harvard, UPEI, etc) is simply playing the game of bait and switch. Just don't end up being the bait!