The New Poor: NY Times article on For-Profit Education

One fast-growing American industry has become a conspicuous beneficiary of the recession: for-profit colleges and trade schools. At institutions that train students for careers in areas like health care, computers and food service, enrollments are soaring as people anxious about weak job prospects borrow aggressively to pay tuition that can exceed $30,000 a year.

But the profits have come at substantial taxpayer expense while often delivering dubious benefits to students, according to academics and advocates for greater oversight of financial aid. Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students.

“If these programs keep growing, you’re going to wind up with more and more students who are graduating and can’t find meaningful employment,” said Rafael I. Pardo, a professor at Seattle University School of Law and an expert on educational finance. “They can’t generate income needed to pay back their loans, and they’re going to end up in financial distress.”

For-profit trade schools have long drawn accusations that they overpromise and underdeliver, but the woeful economy has added to the industry’s opportunities along with the risks to students, according to education experts. They say these schools have exploited the recession as a lucrative recruiting device while tapping a larger pool of federal student aid.

Read the rest of the article here

5 thoughts on “The New Poor: NY Times article on For-Profit Education

  1. Shahar, do you have insight into why urban students would sign up for an expensive for-profit college rather than a low-tuition state college or university located in the city? Either option lets the students live at home rather than pay room and board, both tend to have flexible class hours for part-time students who work. Are the state schools not able to meet the demand? That was the argument made in this article: that community colleges in CA are underfunded so students look to the for-profits out of desperation. Or do the for-profits sell the practicality of their curriculum vis-a-vis more traditional schools, e.g., for job training and placement? I.e., why rack up this debt when less expensive and perhaps also higher quality educational options seem available? Is it the aggressiveness of the sales force?

    • Besides the more aggressive sales pitch, these types of colleges offer course schedules that very often better suit these students’ lives. At traditional colleges or cc’s, students might have a class at 8 a.m., 10 a.m. and 2 p.m, two or three times a week. Or something like that. Many for-profit schools will have classes in large blocks of time, for 4-5 hours at a time, which makes it easier for students to balance work schedules. I know that U of Phoenix (and I’m sure others) has a model that allows students to concentrate on one or two classes at a time, but instead of the semester or quarter, of half semester model, the classes last anywhere between 5 to 9 weeks. This allows students to enroll in courses all year without any break. Also, as far as I understand it, one never gets closed out of courses at these places. They just add more, based on demand. If I recall, in the Frontline documentary one of the execs from a for-profit institution talked about how they are able to move very quickly, adding new programs to match careers that are on the rise and axing those that are waning. The for-profits are run like a business, none of those annoying faculty committees. It’s the same with enrollment–instead of waiting months, or having to deal with bureacracy (waiting in lines, filling out form after form, going to office to office) the for-profits move quickly so you start a few weeks later. This goes hand in hand with aggressive marketing. I read somewhere that upwards of 25 percent of budget is spent on recruitment/enrollment. And a good deal of money and effort is spend on retention–got to keep those coffers full. For me the issue is quality, and from what I have read, for-profit’s are seriously lacking in that area. I think these students are much better off at a community college, where the quality of teaching is better, as is the price. So, aggressive sales force? Yes. Why? Well, in order to survive, a for-profit’s business model is based solely upon selling the student an opportunity for a “new career” in return for that student’s precious signature on a loan. To me, the for-profits are parasitic, or worse, simply a parody of higher education. It was pretty clear in College Inc that a high percentage (if not all) of those for-profit college’s income was from student loans. I think in that same documentary one of the guys they followed around was constantly trying to be approved at the state level to accept student loans, and while he gave lip service to “accreditation,” (one wonders if I got an MA in some field from a for profit the liklihood of it meaning anything to a traditional PHD program). That pesky other stuff, like I don’t know, admission standards, course content, professorial qualifications, and other characteristic of a decent college seem like an afterthought.

      • I think the next educational model (likely to bring a shitload of money) is for-profit colleges offering not only a flexible schedule and better times, but also offering to actually learn things for you, so you don’t even have to show up for classes – just sign on the dotted line (here, and here) and enjoy your education. In the end, you get a diploma with a raised seal just like everyone else, isn’t it the ultimate goal anyway? Win, win – I think.

  2. So why don’t these students go to community colleges or state colleges, where the costs are far lower and the quality is arguably higher? Presumably it’s the more flexible hours and the aggressive salesmanship of the for-profits. The article indicates that the for-profits spend far less than half of tuition revenues on educational costs. If state-funded institutions offered this stripped-down educational model with flexible hours, they could offer free secondary education to everyone. As you say, though, just because it’s free doesn’t mean it’s worth the money.

    I understand that the graduation rate is around 20% for the for-profits, but what’s a reasonable rate for their demographic (open enrollment regardless of high-school grades or SATs, average age in their 30s, working or looking for work, many with kids to support)? The local urban open-enrollment state-funded college, featuring traditional classroom-based instruction with real professors and annual tuition of around $3,600, has a graduation rate of 21%, and that’s with mostly full-time students coming straight out of high school.

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