Attendance Down at For-Profit Colleges
Posted By Donna Fuscaldo on September 16, 2015 at 10:36 am
For-profit colleges have been getting a bad rap of late, in the wake of the bankruptcy of Corinthian Colleges and a government crackdown on an industry it contends is over-charging students for worthless degrees.
Although for-profits only account for about 11% of the total higher education population, they make up 44% of all federal student loan defaults according to the Department of Education. Many have also been cited recently for predatory recruiting tactics as well as low-quality courses and degrees – not to mention low employment rates for graduates.
Last month, the Obama Administration took steps to reign in for-profit colleges, instituting a gainful employment rule that requires for-profit colleges and certificate programs to offer degrees that lead to gainful employment, or else lose the right to participate in federal financial aid. That’s a big deal for these schools, since federal financial aid can account for up to 90% of a for-profit school’s revenue, according to The National Association for College Admission Counseling. If annual loan payments don’t exceed 20% of borrowers’ discretionary income or 8% of their total income, then the school or program passes the rule. If a school fails to meet the standard, it could be ineligible to receive federal financial aid.
In the wake of these scandals and sanctions, attendance has dropped at for-profit colleges across the country. Enrollment at for-profits has been on the decline since 2010 – it peaked at 1.7 million in 2010 and dropped to 1.5 million by 2012 and 1.3 million in 2013, a decline of 21% (compared to a decline of just 3% for public institutions and an increase of 4% for private nonprofit institutions over the same time period). Attendance has also been down at individual for-profit institutions. Enrollment at the University of Phoenix has more than halved since 2010 (from 470,800 students to just 214,000 in 2015). Numbers are also down at Education Management Corporation, operator of Argosy University, Brown Mackie College, The Art Institutes and others, as well as DeVry University, Career Education Corporation, Kaplan University and, needless to say, Corinthian Colleges.
What it means for students
All the bad press surrounding for-profits has understandably made many students and parents wary of a for-profit education. And it’s wise to be cautious – but should for-profits be avoided now? Below are some tips and expert advice for students and families still considering for-profit institutions:
Vetting for-profits is a must
To be sure, there are a number of for-profit schools that behave badly, engaging in deceptive marketing practices and charging high tuition rates. But not every for-profit college is going to be detrimental. “For-profit, degree-granting colleges have played an integral role in the higher education system since the first part of the last century, helping to make higher education accessible and affordable to many, including so-called non-traditional students, such as older, working adults and those from minority or disadvantaged backgrounds,” says Marc Jerome, executive vice president of Monroe College, a for-profit college based in the Bronx, New York.
The problem for potential students? Trying to weed out the good ones from the bad ones. Like any other institution, for-profit colleges fall at both ends of the spectrum. Some are great programs that allow students to get degrees with flexible schedules or at lower costs, while some charge high tuition and don’t provide a good foundation for employment, leading to high student loan burdens and default rates.
According to higher education experts, there are a host of ways potential students can vet for-profit schools. But before starting, they need to choose a degree that’s going to ensure a realistic paycheck after graduation. With student loan debt currently standing at $1.5 trillion, there are countless stories of people who took out $150,000 in loans to pay for school and graduated, only to be unemployed or under-employed. Doing a little homework can greatly reduce the chances of that happening.
Be skeptical of self-reported job placement rates
A school’s job placement rate for different degree programs has always been one way students can gauge their future prospects. But in the case of for-profit schools, students need to be wary of the claims. After all, one of the charges against bankrupt Corinthian Colleges and other for-profit schools is they inflate job placement rates. This spring, the Department of Education fined Corinthian Colleges close to $30 million in part for “misrepresentation of job placement rates to current and prospective students.” The Department of Education said it found 947 cases of so-called misstated placement rates.
Because placement rates aren’t always a good gauge, experts say to do your own salary and employment research to determine if you will be better off once you get out of school. Checking job and salary websites to determine employment prospects and if you are over paying for your education is a smart way to identify the good programs. A good rule of thumb? “Don’t borrow more than your expected annual starting salary,” says Mark Kantrowitz, student financial aid expert and publisher at Edvisors.com.
According to Carrie Johnson, a spokeswoman for the Association of American Colleges and Universities, students should also consider whether or not they will get a broad-based education from the school they attend. Getting field-specific skills is a must, particularly in certificate programs, but to land a job in the current economy, graduates also have to possess soft skills like communications and critical thinking. “Any quality program will have both integrated,” says Johnson.
Choose an accredited school and program
Once the viability of the degree is confirmed, prospective students have to make sure they are going to an accredited for-profit school. And that means the school as well as the specific program. Some occupations, like an ultrasound technician, need to be accredited by a specific accreditor to sit for licensing exams, says Kantrowitz. The last thing you want to happen is to take out pricey loans and get your degree, only to learn that you can’t become certified. The U.S. Department of Education runs a database of accreditation where people can search by campus and program.
Graduation rates can signal if something is amiss
Another important number prospective students need to look at is the graduation rate. If graduation rates are, low it could signal that the quality of the program is less than stellar. Not to mention, the school could be at financial risk, which could spell disaster if it goes bankrupt midway through your education. It was only a few months ago that Sweet Briar, a 114 year-old women’s university, shuttered its doors mid-school year, largely due to a decline in enrollment.
Jerome of Monroe College says that prospective students can check graduation outcomes, tuition assistance availability, and loan default rates at the colleges they are considering by using the National Center for Education Statistics’ College Navigator. “Program completion outcomes – namely, graduation rates – are a key metric,” he says. “If students aren’t finishing the course of study, clearly something is lacking there.”