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Low Graduation Rates at For-Profit Colleges: Cause for Concern?

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An average of just 22 percent of students at for-profit colleges graduated in 2008 and a new report from the Washington, DC—based non-profit research and advocacy group known as the Education Trust is claiming that such colleges offer students little more than immense debt.

In comparison to for-profit colleges’ 22 percent graduation rates, Bachelor’s degree graduation rates at public colleges and universities averaged 55 percent while graduation rates at private non-profit colleges and universities averages 65 percent during the same year.

Enrollment Increasing Drastically at For-Profit Colleges

Subprime Opportunity: The Unfulfilled Promise of For-Profit Colleges and Universities urges the public to “Picture an industry that systematically puts its customers in hock—and provides them with very little in return.”

The report claims that for-profit colleges target and aggressively recruit low-income and minority students that are seeking college degrees. Enrollment at for-profit colleges increased by 236 percent over the decade from 1998-99 through 2008-09.

Although tuition at for-profit colleges is drastically higher than tuition at public colleges and universities, these students’ needs are not met once their financial aid is received. Even so, the students continue to borrow heavily and go deeper into student loan debt while very few wind up with a degree or credential that is worthwhile.

Student Loan Debt Higher at For-Profit Colleges

The median debt of Bachelor’s degree recipients at for-profit college graduates is $31,190, nearly double that that of private non-profit college graduates, which stands at $17,040. The amount is more than triple the median debt for graduates of public colleges, which is $7,960.

A separate study conducted by the Pew Research Center titled The Rise of College Student Borrowing found that college students borrowed 50 percent more in 2008 than they did in 1996, due in part to enrollment surges at for-profit colleges. The private for-profit college sector has expanded more rapidly than either the public or private not-for-profit sectors. Students who attend for-profit colleges are more likely than other students to borrow, and they typically borrow larger amounts.

Key Differences Found Among Students at For-Profit Colleges

Other key findings of the Pew Research Center report include:

  • One-quarter of 2008 bachelor’s degree graduates at for-profit schools borrowed more than $40,000, compared with 5% of graduates at public institutions and 14% at not-for-profit schools.
  • Roughly one-in-four recipients of an associate’s degree or certificate borrowed more than $20,000 at both private for-profit and private not-for-profit schools, compared with 5% of graduates of public schools.
  • Graduates of private for-profit schools are demographically different from graduates in other sectors. Generally, private for-profit school graduates have lower incomes, and are older, more likely to be from minority groups, more likely to be female, more likely to be independent of their parents and more likely to have their own dependents.
  • For almost every field of study at every level, students at private for-profit schools are more likely to borrow and tend to borrow larger amounts than students at public and private not-for-profit schools.

Associate’s Degree Graduation Rates Higher at For-Profit Colleges

The Education Trust’s Subprime Opportunity does acknowledge that for-profit colleges’ three-year Associate’s degree graduation rate of 60 percent is considerably higher than the 22 percent rate at public community colleges, but feels there is still cause for concern because for-profit students graduate with so much more debt than community college students. Many for-profit graduates default on their loans or struggle to make payments.

“For-profits proudly claim to be models of access in higher education because they willingly open their doors to disadvantaged, underprepared students,” said José L. Cruz, a vice president for the Education Trust. “But we must ask the question, ‘Access to what?’ ” reports the New York Times.

Inside Higher Ed explains that even though students drop out of public and private not-for-profit colleges, too, the combination of low graduation rates and high prices is seen as dangerous by the consumer-oriented student advocates such as the Education Trust.

The University of Phoenix was one for-profit college specifically mentioned by name in the group’s report. The school issued a statement in response: “It is unreasonable to expect nontraditional college students to complete their studies within an arbitrary, predetermined timeframe, especially when we know those students take longer to finish their degrees because they have families and professional obligations.”

Kati Haycock, president of the Education Trust, says that the group is so active in the debate over for-profit colleges because "aside from what the numbers tell you, the price of failure is so much higher.”


Melissa Rhone+

Melissa Rhone earned her Bachelor of Music in Education from the University of Tampa. She resides in the Tampa Bay area and enjoys writing about college, pop culture, and epilepsy awareness.

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