The welcome decline of for-profit colleges
Some good news from The Wall Street Journal:
For-profit colleges are facing a tough test: getting new students to enroll. New-student enrollments have plunged—in some cases by more than 45%—in recent months, reflecting two factors: Companies have pulled back on aggressive recruiting practices amid criticism over their high student-loan default rates. And many would-be students are questioning the potential pay-off for degrees that can cost considerably more than what’s available at local community colleges.
Additionally, the stock prices of many of these companies are falling. Just one example:
Per-share earnings at Corinthian Colleges Inc. are expected to be down about 72% when it reports results Tuesday, according to analysts’ forecasts. The company, with offerings in health care and criminal justice among other areas, has seen its stock sink to 11-year lows, closing Monday at $2.10, off from its 52-week high of $7.35. In early 2009 the stock was trading about $20 a share.
That’s encouraging. Investigations (such as “For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices” from the U.S. Government Accountability Office) have found that the vast majority of these companies engage in misleading and dishonest recruiting tactics. Additionally, because their primary (and perhaps sole) concern is profit, they both exploit students and fail to provide the thorough and valuable educational experience that students deserve.
For-profit college students are eligible for guaranteed federal student loans. Because students who attend for-profit colleges default on their loans at a much higher rate than students who attend non-profit colleges and universities, for-profit colleges turn a profit at the expense of taxpayers when a student drops out or fails to find gainful employment after graduation.
This is all so very depressing and infuriating. Full disclosure: I teach at a community college. Almost every student attending a for-profit college could study the same subject matter at a community college. Community colleges (and other non-profit colleges and universities) provide a higher quality of education at a much lower cost. The above-mentioned GAO investigation found that:
14 out of 15 times, the tuition at a for-profit sample was more expensive than its public counterpart, and 11 out of 15 times, it was more expensive than the private counterpart. Examples of the disparity in full tuition per program include: $14,000 for a certificate at the for-profit institution, when the same diploma cost $500 at a public college; $38,000 for an Associate’s at the for-profit institution, when the comparable program at the public college cost $5,000; $61,000 for a Bachelor’s at the for-profit institution, compared to $36,000 for the same degree at the public college.
Because I am a community college teacher and community colleges and for-profit colleges have similar student demographics, I feel quite protective of these students. They deserve much better than what the corporate model of education provides.
Are for-profit colleges in an irreversible decline? If so, good riddance.