For-Profit Colleges Are Not the Only Problem in Higher Education


The opening scene of the movie Thank You For Smoking, in which tobacco lobbyist Nick Naylor finds himself in the lion’s den of a daytime talk show sitting next to a “cancer boy” made deathly ill by the cigarettes he peddles, offers some insight on the political climate facing for-profit colleges.

Accusations of deceptive recruitment practices, combined with chronically low outcomes and sky-high loan default rates, have resulted in a swath of new restrictions (which the colleges are suing to prevent) on the industry. The most dramatic and controversial of these measures are the yet-to-be-finalized “gainful employment” requirements that could cut federal funding for institutions whose students carry debt burdens too high relative to their income. To focus squarely on for-profit institutions, however, ignores the prevalence of these problems throughout the educational system.

Let’s be frank, first, in saying that some of the facts of for-profits are quite bad indeed. In a recentreport by The Education Trust, three particular figures stand out: 12, 24, and 43. That is, for-profits account for 12% of America’s post-secondary students, 24% of federally-backed loan dollars, and a staggering 43% of loan defaults. Education Trust also reports that bachelor’s degree recipients of for-profits graduate with far more debt — $31,190 on average — than their peers in non-profit institutions. That’s if they graduate at all — only 22% of students enrolling in four-year programs at the for-profits do.

A morally persuasive case for reining in the for-profits, then, seems easy to make. For those who think this will set American higher education back on track, however, this 2010 Washington Monthly article is required reading. It paints a troubling portrait of, among other schools, the public, non-profit Chicago State University, from which only 13% of students graduate within six years. The “college dropout factories” — roughly 200 of the worst performing non-profit institutions surveyed by Washington Monthly and Education Sector — collectively graduate 26% of their students. That’s not much better than the 22% so often decried of the for-profit sector.

The similarities between for-profit and non-profit schools don’t end there. The lowest performing non-profit schools — whether public, private, or sectarian — cater to a large percentage of minority students, particularly blacks and Hispanics. Their students are poorer than peers in more elite universities, and borrow more to finance their educations. They graduate with more debt, and default on their loans at higher rates. The universities themselves, meanwhile, with little by way of endowments or other assets, are dependent on tuition dollars for their survival, and admit even obviously unprepared students because they have an economic incentive to do so. Does all of this sound familiar?

If Washington is serious about reforming higher education — and if it really wants to turn out more graduates — it shouldn’t expect much to change by tacking on new restrictions on the operation of for-profit universities. The worst performing non-profit universities will go on subsisting on federally-backed loans, burdening already vulnerable students with debt for a credential they may not need, want, or be qualified for — and which may turn out to be of little worth.

The issues to tackle, then, are far more fundamental than the matter of what ails for-profit institutions. What ails them ails the higher education sector as a whole — in which 40% of students who begin a four-year degree program fail to complete it within six years. If we are to fix it, some of our most cherished beliefs will have to be challenged, starting, perhaps, with a cold assessment of why the ideal of higher education has proven out of reach for so many.

Peter Bonilla is a Program Officer at the Foundation for Individual Rights in Education. The opinions expressed in this piece are his own. 

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