Tag: For Profit Colleges

States Crack Down On For Profit Post Secondary

Oversight of for-profit colleges and universities by the U.S. Department of Education has been mired in political quicksand and thwarted by the colleges’ effective lobbying and legal challenges. But now, states and other federal agencies are stepping in and cracking down. Attorneys general across the country are investigating for-profit colleges accused of leaving students with overwhelming loan debt and without marketable job skills. At least 32 states are working together to investigate the schools, and 14 of those have already filed subpoenas for information, while several more are working independently on similar cases. In cooperation with several of these states, the new federal Consumer Financial Protection Bureau—the agency set up after the financial downturn to regulate financial institutions—has sued ITT Education Services for predatory lending practices, the CFPB’s first such lawsuit. The article is from The Hechinger Report.

Community College Students Who Transfer to For-Profit Colleges Earn Less

Community college students who transfer to for-profit colleges earn less than students who transfer to public or private non-profit colleges, concludes a new study from the Center for Analysis of Postsecondary Education and Employment (CAPSEE).

The study is the first to examine the income effects of transferring to a for-profit college from a community college. Earlier studies, including a recent study from CAPSEE, have compared earnings for students who attend community colleges and for-profit colleges and found that students who attend for-profit colleges are less likely to be employed after college and earn less on average than community college students.

For this study, CAPSEE researchers analyzed the earnings of 80,000 first-time, degree-seeking students who enrolled in community college during the 2000s and transferred to another college or university. Student incomes were tracked via state unemployment insurance data through the beginning of 2012.

The study found that there were significant differences in the community college students who chose to transfer to a for-profit institution: Black and Hispanic students, and students who performed poorly and accrued fewer credits at the community college were far more likely to transfer to a for-profit than a non-profit or public college.

Even when controlling for these differences in student characteristics, however, the study found that students who transferred to for-profit colleges earned 6-7 percent less than students who transferred to non-profit or public institutions.

The study also found that students who transferred to for-profit colleges had higher earnings whilst in college. Students who attended for-profit colleges saw a decline in income of $130-$270 per quarter; by comparison, the decline in income for students enrolled in public colleges was four times as large, and for students at non-profit colleges, the decline was ten times as large. This difference—the lower ‘opportunity cost’ of attending for-profit colleges—may explain why these colleges are attractive to low-income students.

However, the earning gains after leaving college were significantly higher for public and nonprofit college students. Over time these gains more than offset the ‘opportunity cost’ differences. Looking over ten years, for-profit students experienced net earnings gains of only $5,400, whereas public and nonprofit college students experienced gains of $12,300 and $26,700 respectively. These figures do not account for the higher tuition costs at for-profit colleges.

The wage penalty for transferring to a for-profit college was consistent across subgroups of students, although the penalty was greatest for for-profit students who did not complete a degree.

For-Profit Colleges Fail To Deliver Code Of Conduct

In 2011 for-profit higher-education companies unveiled plans to develop a voluntary code of conduct—a response to critics who argued for reining in an industry they considered prone to abuses of students. Today hardly any trace of the effort can be found. The Foundation for Educational Success, which was coordinating the effort, no longer exists, said Stephen White, vice president for communications at the Kaplan Higher Education Group, in an e-mail. Mark Spencer, director of corporate communications at the Career Education Corporation, also said the foundation does not exist. Both companies were original members of the foundation

Source: Carnegie Foundation

Federal Report Has Evidence Of Damaging For Profit Practices

Higher Ed Watch

Here’s why Senator Harkin’s report on the for-profit higher education industry is so important: It puts thousands of pages of internal company documents into the permanent record, providing crucial evidence that fraud and abuse have run rampant throughout the sector.

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Graduates of For-Profits Lag Behind Their Peers in Earnings and Employment

For-profit colleges do a good job of retaining students in their first year and getting them to finish, but these students also tend to fare worse than similar students at community colleges and public and private nonprofit institutions, according to a new study. Six years after they enter college, students from for-profit institutions are employed at lower rates and earn less than their peers. Source:ECS

For Profit-Colleges Are Not Always What Media Says They Are

While many of the recent debates about for-profit companies in K-12 and higher education have reflected traditional ideological divisions between Democrats and Republicans, a closer look at federal education policy, congressional politics, and public opinion reveals that these lines in the sand are far from constant, particularly when it comes to the Democratic position.

In “More Than Meets the Eye: The Politics of For-Profits in Education,” the second report of AEI’s Private Enterprise in American Education series, AEI research fellow Andrew P. Kelly, who was recently named one of sixteen next-generation leaders in education policy, illustrates how the typical political divides do not tell the whole story when it comes to the appropriate role of for-profits in education.

Some of his findings include:
1. In K-12 education, Democrats have been amenable to for-profit involvement on policies like Supplemental Education Services and school turnarounds, where the for-profit role is limited to support services or a small subset of troubled schools.
2. In higher education, Democrats are divided on the “for-profit question.” A surprising coalition of fifty-eight Democrats–including some of the most liberal–broke ranks and joined Republicans in their effort to prevent the enforcement of proposed gainful-employment regulations.
3. At the K-12 level, roughly 75 percent of the public is supportive of for-profit contracting for peripheral services like transportation and facilities management, but only 25 to 30 percent are comfortable with for-profit management of entire school sites and instruction.
4. At the higher education level, the majority of Americans approve of for-profit colleges and universities, though they consistently see them as lower quality than public or nonprofit institutions.
Kelly argues that public attitudes toward for-profit involvement reflect a sense of risk: Americans are quite risk averse when it comes to for-profit management of K-12 schools, support private management of peripheral school services, and generally approve of for-profit colleges. Federal policies tend to mirror these preferences, reinforcing the public’s conception of what constitutes the “appropriate” role for for-profits. Going forward, the question for policymakers is whether public opinion on for-profit colleges will come to reflect the recent high-profile criticism of those institutions.

Andrew P. Kelly can be reached at andrew.kelly@aei.org.

Some For Profit Colleges Say Federal Regulations Will Help Them

Executives from Career Education, DeVry and Rasmussen agree that increased federal scrutiny of the for-profit sector provides an opportunity to generate competitive advantage through an increased focus on student success.

For-Profit Colleges Change Policies And Their Stocks Decline

For-profit Schools Reel as Rules Affect Enrollment
The Apollo Group Inc. – the nation’s largest for-profit college – said it will provide new students with a free trial program to see if they are ready for its University of Phoenix curriculums and weed out those at risk of leaving school before earning degrees. And it will no longer pay its counselors bonuses based on how many students they enroll. The move comes as the government ramps up regulation of an industry which critics say preys on lower-income students and leaves them with hefty debt loads and meager job prospects. Source:ECS

Are For-Profit Colleges Reforming Themselves?

  The September 11 issue of the Economist highlights self imposed reforms by for-profit colleges like Phoenix and Kaplan. Some of these changes are:

  -Hiring there own mystery shoppers to test their sales practices to prospective students.

-Disconnecting recruiters pay from the number of students recruited

-Create a three week orientation during which students can quit without charge

Offering a full refund if students drop out during their first term

 Calling for new federal and state regulations to apply to the non profit colleges.

  I wonder how wide spread these policies will become throughout the industry.

For-Profit College Spokesman Disputes Federal Regulation Attempt

The following was provided by Jorge Klor de Alva of the University of Phoenix, the largest for-profit university in the world.

American higher education is everywhere in the media today. Although it has long been a source of pride, critics today are assailing it in unprecedented fashion. Most agree it is too expensive for students, too costly for taxpayers, too ineffective in both retention and completion rates, and too unwilling to share data on itself so that it can be made more accountable.
But no part of higher education is being subjected to more intense scrutiny than the for-profit sector.

For-profit colleges and universities, the fastest growing segment of American higher education, are being accused by the media, the Department of Education, Wall Street’s short sellers, and Congress of deception, greed and a failure to comply with regulations. These accusations rest on only the barest of evidence, relying primarily on anecdotes. In fact, two Government Accountability Office studies this year, one covering thousands of schools since 1998, found only 37 for-profit institutions in violation of Departmental regulations. Despite this weak evidentiary base, the minimally supported charges have managed to shave billions of dollars off the market value of the stocks of the publicly held firms that own the largest colleges and universities, thereby leaving many Americans poorer as billions were lost by pension funds and 401k accounts. This situation, which some have called a “witch hunt,” is so clearly against the nation’s interest that I decided to focus Nexus’ inaugural study on it.

This study points to reasons why policy makers and legislators should step back from supporting some of the regulations proposed by the Department and the Senate HELP Committee. One such regulation, labeled “gainful employment,” is so potentially hazardous that it is not just likely to result in the exclusion of hundreds of thousands of students seeking to enroll in areas such as teaching, nursing, and public safety, but if it were applied to all institutions of higher education would remove so many programs from eligibility for federal financial aid that it could lead to the possible closure of 40% of community colleges, 90% of Historically Black Colleges and Universities, and 45% of campuses where Hispanic students constitute more than 25% of the students.

By using the University of Phoenix as a case study, the document shows with specific data why the proposed regulatory reforms will end up doing more harm than good, undermining the only sector of higher education that can grow sufficiently to accommodate the millions of students the nation must educate to remain globally competitive-at no cost to taxpayers. At no cost because, as the study details, the interest students pay on their federal loans plus the taxes paid by the institutions are greater than the Pell Grants and all of the other government subsidies received by the students and the institutions. Consequently, in the absence of a robust for-profit sector helping the nation reach President Obama’s degree attainment goal of 2020, this goal will cost the nation nearly one trillion dollars.

Instead of regulations with such negative consequences, the study concludes with the importance of pursuing a reform of higher education focused on something that would truly benefit taxpayers, namely to require all institutions of higher education to measure the learning outcomes of their students and to publish those results regularly. Then at last taxpayers would have the data needed to distinguish good from bad performers, making for the efficient disbursement of local, state and federal education subsidies.

In summary, the accompanying document means to update anyone who is trying to make sense of how an Administration, whose explicit goal is to get everyone to attend at least one year of postgraduate instruction, is so intent on dismantling what has proven to be the most important and effective innovation in making access possible for the general public since the Morrill Land-Grant Act of 1862 made access to practical higher education possible across the land.

About us: As an independent, nonprofit, nonpartisan organization, Nexus Research and Policy Center is organized to conduct educational research-such as in the fields of the learning sciences, assessment and measurement-and to prepare action-oriented analyses of pressing policy issues facing states and the nation regarding the improvement of educational efficiency, effectiveness and degree completion success, especially on behalf of underserved student populations and the institutions that provide them access to higher education. In particular, Nexus seeks to do research and promote policies that improve the for-profit education sector and that contribute to a better understanding between the for-profit and traditional sectors of higher education.


Jorge Klor de Alva, President