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At For-Profit Colleges, It's All About Profits, Not Students

Common Dreams staff

Source: For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success

For-profit colleges are following a corporate model that puts profits above students, according to the findings of a U.S. Senate report published Sunday.

The report, "For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success," is the result of a two-year investigation led by Senate Committee on Health, Education, Labor and Pensions Chairman Tom Harkin and looks at institutions including Apollo Group, Inc., which operates University of Phoenix, the largest for-profit college in the U.S., Kaplan, Inc. and Devry, Inc..

The report states that "by 2009, at least 76 percent of students attending for-profit colleges were enrolled in a college owned by either a company traded on a major stock exchange or a college owned by a private equity firm." The for-profit colleges' financial success is therefore watched by shareholders, in a situation that incentivizes profits, not student academic performance.

"The investigation found that while certainly not all for-profit colleges are run by investors looking to make a quick return on investment, too many of them are. It also found that even those for-profit colleges that are committed to the educational mission, that invest in their students and in robust support services, and that offer programs in high demand fields, still engage in troubling practices in order to achieve the levels of profitability and growth that keep them competitive with less scrupulous players," the report states.

"Internal company documents provide examples of tuition increases being implemented to satisfy company profit goals, that have little connection to increases in academic and instruction expenses, and demonstrate that for-profit education companies sometimes train employees to evade directly answering student questions about the cost of tuition and fees."

Among other troubling findings, the report lists

  • High Debt: 96% of students at for-profit colleges take out student loans.  And many of these loans are from institutionally operated loans offered at a higher rate than Federal loans. Many students leave the institution before gaining the degree that would have allowed them to earn the money needed to pay off the loan.  The programs themselves at the for-profit colleges are more expensive than those at community colleges or public universities.  In fact, the report finds that they may cost six times more than at a community college and twice more than at a 4-year public school.
  • Emphasis on Recruitment Over Retention:  The report states that "companies together devoted less to actual instruction costs (faculty and curriculum) than to either marketing and recruiting or profit."  Because the goal is to "maximize financial returns to shareholders and investors," just maintaining a high enrollment number is sufficient; there is no incentive to retain these students or demonstrate academic achievement.
  • Disposable Faculty:  As the emphasis is not on education itself -- in 2010 more than 80% of faculty at schools investigated was part-time. 

"Education and profit are like oil and water," says Bill Bigelow, author of A People's History for the Classroom, reacting to the committee report. "It should come as no surprise that for-profit colleges spend more on marketing than they do on instruction, and care more about their rate of return than about student learning. At the K-12 level, this offers another piece of evidence of why we need to keep the public in public education. Schools should serve students, communities, and society, not stockholders."

Read the full report here.

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