FOR PROFIT COLLEGES – LET THE BUYER BEWARE
According to the National Center for Educational Statistics, about 1.7 million people will receive their Bachelor’s degrees, and another nearly 750,000 will receive associate’s degrees this May and June. The numbers have been rising over the past ten years, with 22 percent more receiving bachelor’s degrees (the growth in women’s degrees is faster than that of men), and 12 percent more associate’s degrees (again, with the degrees awarded to women growing faster than those awarded to men).
Too many of these students will graduate with heavy debt. While the data suggest that the average student graduates with about $30,000 of debt, the fact that some students have no debt at all makes the number even higher. African American students are nearly twice as likely to graduate with debt as Caucasian students. And it is often much harder for African American students to find jobs than it is for others. Still, a college degree makes a difference in life chances and lifetime earnings, which is one of the reasons that public policy has focused on postsecondary education.
Students who have attended for-profit colleges go to school with the same hopes and dreams as those who attend traditional not for profit universities. They attend schools like Kaplan and DeVry and Corinthian because they want to improve their education and find better jobs. They go into debt, and seek grants because they believe the investment is worth it. And too many of them have been sold a bill of goods.
Corinthian Colleges, Inc. had more than 77,000 students at its peak, although those numbers have dropped since then. Their students, in 2012-2013 were mostly adults who worked full time, mostly minority (51.8 percent), and mostly low-income enough to qualify for Pell Grants (72.9 percent). According to one source, these students borrowed more than $7600 each year to pay for their education. Corinthian is among the for-profit schools that depend on the federal government for their income stream. They direct them to apply for Pell grants, push them to seek federal student loans that have subsidized interest rates, and encourage them to get bank loans with higher interest rates. They tell students that these loans are worth it because it will help them get better jobs later.
The federal government has been scrutinizing Corinthian and other for-profit colleges for years, especially because they have found that these colleges often exaggerate their success in placing students in better jobs. Now, Corinthian Colleges have shut down, leaving more than 16,000 students stranded. These students have used up semesters of their Pell grant eligibility (which is capped at 12 semesters), and have thousands of dollars of debt. If they are mid-degree, they face the challenge of trying to transfer credits to another college. While there may be some relief for these students who owe money, others will either be forced to repay debt or imperil their credit standing.
Is Corinthian the exception, or is it the rule in the world of for-profit colleges? We know that these colleges target adult learners, and market to minority populations. More than half of the students at Corinthian were students of color, and at many of the other for-profit colleges the enrollment of minority students exceeded 30 percent. We know that these colleges rely on tuitions for their profit, which means that when they find students who qualify for Pell grants, it boosts their bottom line. According to the California Association of Private Postsecondary Schools (CAPPS), at least 60 percent of the students enrolled in the top six for-profit colleges received Pell grants. Corinthian topped the group with nearly 73 percent of their students receiving Pell grants, but ITT Technical Institutes was not far behind with a 71.8 of their students receiving Pell grants. In comparison, 39 percent of the students at public colleges, and 34 percent at private nonprofit colleges have Pell grants.
Some for-profit colleges do a better job than Corinthian, and many have not run into trouble with the federal government. Still, because taxpayer dollars are being used to finance these colleges, they must be more carefully scrutinized both by the federal government and by accrediting associations. Furthermore, the Corinthian debacle is a warning to students who might get a lower cost and better education by going to a public university or to a community college. Before enrolling in one of these colleges, students need to consider other options, and also check on the placement records these schools like to brag about.
Students of color are especially vulnerable to the hype these colleges offer. They say they provide opportunities and jobs, but too often they don’t. They market to those at the periphery; those who believe their lives would be significantly improved with education. Their lives can improve with more learning, but the students must beware of for-profit colleges that often promise more than they can give, and push students into debt. The closing of the Corinthian Colleges, Inc. is a cautionary tale for those who choose for-profit colleges as the gateway for their hopes and dreams.