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News reports: For-profits not a viable alternative to public higher education

01 Nov 2011 4:21 PM | Anonymous
For-profit colleges have been under the spotlight since at least last summer, when the Government Accountability Office released its report asserting that the schools were encouraging fraud and engaging in deceptive and questionable marketing practices. An in-depth briefing in a recent issue of The Week summarized media reports on the issue.

The following points from the article should be considered by anyone who suggests for-profit colleges as a viable alternative to community college:

For-Profit colleges focus on recruitment, not graduation
. For example, Bridgepoint Education-owned Ashford University of California has 170,000 student recruiters. The school employs only one person to facilitate job placement for graduates.

Recruitment efforts target people most likely to get loans and least likely to pay them back
. At-risk, minority and low income students, as well as disabled veterans and even homeless people, are among those favored by for-profit school recruiters, critics say, because these groups of individuals qualify for various federal loans and grants. The GAO report showed that former for-profit students accounted for nearly half of all student-loan defaults nationwide.

Think for-profit costs tax payers nothing? Think again
. For-profits receive an average of three-fourths of their revenue from federal grants and loans. In 2010, they got more than $26 billion in federal college loans and grants, a quarter of all such money distributed. Meanwhile, Apollo Group, owner of University of Phoenix, has revenues of $4.9 billion. Bridgepoint, which collected nearly 87 percent of its revenue from federal aid, reported $216 million in profit for 2010. In other words, American taxpayers are footing the bill to fill the for-profits’ coffers.

Student success is not guaranteed
. A state government investigation found that 84 percent of students at Ashford dropped out before completing a two-year program. Fewer than 9 percent of University of Phoenix’s students (currently numbering around 400,000) actually graduate within six years. This remarkable failure coincides with the company’s remarkable success as a business.

Certainly, there are for-profit colleges that operate ethically and in the interest of students. The current crisis in for-profit college management, however, should give pause to anyone recommending that our public institutions of higher education be run more like businesses.

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