For-profit colleges--failing students is a feature, not a bug, new report reveals

by: Paul Rosenberg

Fri Nov 26, 2010 at 12:00


In Quick Hits earlier in the week, expanded upon in a Blue Virginia diary, Lowkell called attention to a highly report from the Education Trust, Subprime Opportunity: The Unfullfilled Promise of For-Profit Colleges and Universities, and asked why Virginia Democrats are considering electing a top lobbyist for these vultures--Brian Moran--as chairman of the state party.

In his diary, Lowkell writes:

What does this new report conclude? A few highlights (actually, lowlights of this dirtbag industry):

*"Today's low-income and minority students, seeking college degrees in record numbers, are recruited aggressively by for-profit colleges."
*"For-profit tuition is higher than at public institutions, and once grant aid is taken into account, unmet need is even higher than at private nonprofit colleges and universities."
*"Students borrow heavily, resulting in heavy debt burden and high loan defaults, which indicates that few end up with a marketable degree or credential."

As if all that's not bad enough, this report concludes that the for-profit "education" industry makes "the rich, richer and the poor, poorer," providing "highcost degree programs that have little chance of leading to high-paying careers," "[saddling] the most vulnerable students with heavy debt," and "[paving] a path into the subbasement of the American economy."

The idea of having a lobbyist for this industry head the Virginia Democratic Party is appalling, and should be opposed by all Democrats.  But because this ties into the ongoing assault on public education that Jeff has been chronicling in his excellent Sunday "Left Ed" series AND because it illustrates the workings of the new American conservative welfare state model (see, in particular, my recent diary, "Mass student failure equals billions for executives running for-profit US colleges") , I want to expand a bit on Lowkell's highlights of the report, using a series of charts from the report itself and the accompanying PowerPoint presentation (both available at the report link above).  After presenting these charts, I'll say a few words about what they mean in terms of the growth of the new model conservative welfare state and how its growth is related to the intentional destruction of America's welfare state at its peak.

First, let's start with the appalling low graduation rates:

As if this weren't bad enough, the "industry leader," Phoenix University, which accounts for over 2/3rds of the students attending the top 10 for-profit colleges & universities, has the lowest graduation rate--an even more appalling low 9%:

Paul Rosenberg :: For-profit colleges--failing students is a feature, not a bug, new report reveals

While a couple of these institutions are comparable to the averages for public an private non-profit institutions, showing that the model is not incapable of delivering the education it promises, if there were outside quality control measures in place to bring all such institutions up to the same level, this says nothing about the other problems with such institutions--most notably the high debts incurred.  Although the report doesn't include data limited to the most successful examples, it seems dubious indeed if there's a salvageable sub-sample that actually performs at a level competitive with the existing traditional models. It's even more dubious that the entire sector could ever improve so dramatically that these graduation rates could be sustained by the for-profit sector as a whole.

Next, let's look at the growth of Pell Grants--federal subsidies, in effect--that has helped fuel the dramatic growth of the for-profit college sector. As you can see, almost a quarter of Pell Grant dollars now goes to students in this sector, with their much, much lower graduation rates:

Looked at from a slightly different perspective, the percentage of students getting Pell grants is higher at for-profits at every level of education:

However, these higher levels of federal aid are overmatched by the much higher costs involved in for-profit education:

The end result is dramatically higher levels of median debt:

And an even more lopsided picture when we look at how many students end up with crippling levels of debt:

Not surprisingly, this results in much higher levels of defaults on students:

Finally, there's one thing that's accurate about such institutions.  They often put themsleves forward as opportunity pathways for those traditionally excluded, and enrollment figures bear this out:

As the report itself notes:

The rapid rise of the for-profit industry has largely been driven by the aggressive recruitment of low-income students and students of color-a fact that is not disputed by the sector, but rather heralded as a sign of its commitment to underserved populations.

But the promise rings hollow:

The rapid growth and record profit levels reported by these institutions might be acceptable if students were succeeding at record rates. But they are not, forcing us to ask: Access to what? And at what cost?

.... Low-income students and
students of color are getting access, but not much success. And access without success-without graduation, without employment-is something the nation cannot afford.

It goes without saying that the makeup of the target student population is one of the reasons that this model has been so successful on the business side, while it's utter failure on the education side has not resulted in any sort of corrective action. One could hardly imagine that this outrageous situation could have ever developed, much less grown dramatically, if the target student population were white and affluent.

And that's just the point:  The traditional American welfare state was established to benefit white Americans, and to help move a large segment of them into the middle class.  While heavily black employment areas, such as agricultural and domestic were excluded from the initial Social Security Act, exempt from minimum wages as well Social Security benefits, later benefits, such housing and education vis the GI Bill were technically available to many blacks who served in the military, but were practically useless for the vast majority due to the persistence of private discrimination, which the government did virtually nothing to combat, and often actively supported (in promoting redlining, for example, that favored the creation of lilly-white suburbs with generous mortgages and tax subsidies.)  Blacks could get college educations under the GI Bill--and end up sweeping floors with their PhDs.

Although some degree of closing the gap did finally occur from the mid-to-late 60s onward, the Reagan era marked a turning of the tide, and the for-profit college sector followed as a supposed "way out" that conformed to Reaganite promotions of the market, but delivered precious little to the supposed "beneficiaries" as opposed to the actual beneficiaries, those college CEOs and their investors who made out like bandits.

In my February 2010 diary, "What's wrong with the third "Third Way", I explain how the American welfare state at its best was an attempt to deal with market failures in a minimally intrusive way, a model common in the British-speaking world known as the "[19th century] liberal welfare state". This differed from the "[continental] conservative welfare state" which had the primary aim of caring for its citizens in a way that bound them to the state and enhanced the power and prestige of conservative elites. As American conservatives discovered how hard it was to destroy the American welfare state, they turned to an alternative strategy of re-purposing it, overlaying the conservative welfare state goals of continental Europe onto the existing liberal welfare state model.  The resulting hybrid, American conservative welfare state, is typified by enormous subsidies to conservative elites, such as the early example of the military-industrial complex.  The for-profit college industry discussed here is but one of the more recent additions to this model.


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This is very timely and relevant (4.00 / 2)
Paul, thank you very much for this. I should also say, that I very much appreciate these diaries, including Adam Bink's "Left Ed" diaries. I'm particularly gratified that you are giving coverage of this issue and its particular impact on higher ed.

At the risk of being accused of tooting my own horn, and also at the risk of giving away my not so double, triple, super secret identity, as a participant in higher ed I have tried on numerous occasions to get both my Union (the Ohio Education Association) and the Ohio Faculty Council to understand, address, and engage in some kind of concerted push back on this and related issues. All of this quite frustratingly has been to no avail.

The issue of graduation rates is being used as a big wedge issue right now against faculty as a whole. Again and again and again, administrators, state education officials, Arne Duncan (and before him Margaret Spelling), the American Enterprise Institute, Bill Gates and the Lumina Foundation have all spread the meme that colleges are failing-and of course, put the blame on faculty first.

Right now, higher ed is heading for a crisis, and there are already signs that some people intend to use this crisis as an "opportunity" to re-organize faculty, lower instruction costs and increase faculty productivity-rather than address the explosion in administrative costs. Yet it is well documented, and even admitted by these people that colleges are and have been already doing more with less. And now, we will be asked to do even more with less. Worse yet, with the victory of Kasich in Ohio, the shitstorm is on its way here. That's not to say that things have been great under Strickland and the current Chancellor of higher ed.

I think the statistics you give on the failure rates of for profit schools is right on the money. Let me give a little more insight:

There is now a lot of good, solid research out there that shows that the factors that improve graduation rates are:

1. Economic security for the student (not having to work excessive hours);
2. Some help, guidance and structure in planning schedules and addressing personal and family problems;
3. Low student faculty ratios;
4. A conscientious, dedicated faculty.

When the data on graduation rates are broken down further, it becomes clear that the "crisis" in college graduation rates is concentrated in part at the for profits and also at the lower level and mid level state schools and among lower and lower middle income students. So it doesn't surprise me that institutions like my own, an open admissions University in Southern Ohio, where many of our students are first generation/low income has a low graduation rate. There is absolutely no evidence whatsoever that faculty are driving students away.

Anyway, I hope this wasn't too long and rambling. I also hope there is some way to bring this into the limelight.

I have been quite astonished so far at the unwillingness of the OEA/NEA, AAUP and other organizations to really push back on this.

Since it wouldn't take a genious to figure out my not so double, triple, super secret identity based on this post, I should add a disclaimer that the opinions expressed in this post are mine and mine alone-though I think a significant number of my colleagues at least share some of them.



Excellant post Paul (4.00 / 2)
Further proof that the "run schools like a business" is totally specious. These for profits can make more money by sellingr false promises to vulneable people and leave taxpayers holding the bag. Sure good for business. Terrible for everyone else.  

Save Our Schools! March & National Call to Action, July 28-31, 2011 in Washington, DC: http://www.saveourschoolsmarch...

Not only complex but sad - (4.00 / 1)
I've taught for a couple of public non-profit institutions and for both ITT Tech and UOP and have been watching this discussion unfold with some interests.

The sad fact is that by and large the public institutions simply don't care about non-classical students - they really only want to deal with the 18 year old that finished High School in June and starts College/University the next September.  The students "served" by the private for-profit schools can need lots of attention so they aren't wanted by the non-profit schools which do nothing to attract them and little to support them.

I say this to point to a simple fact - if the classic non-profit Colleges and Universities decided to they could "eradicate" Institutions like UOP and ITT Tech anytime they wanted to but since they don't want to innovate or change how they do business the private for-profit schools thrive. Certainly they don't want to work with the "needy students" that places like ITT Tech specializes in.

Sadly, the for-profit Institutions have all gone nuts and lost sight of real education and now only focus on the bottom line.  Recently UOP adopted a system where courses were assigned to junior faculty first (they are paid less per class than senior faculty are).  Thus they can make an extra $300 or so dollars a class by putting newer faculty in the classroom and the students are non the wiser (please note one student's tuition for a single course more than pays for the salary of even a senior faculty member that may teach it).  Each student is viewed as a revenue stream and after numerous studies they know one thing above all - its more profitable to keep a student in class than to turf them out.  So standards are forgotten and things are done to keep the existing students in class and the head counts high.  ITT Tech even gives faculty a bonus in certain classes if a high percentage of their students move on to the next class.  

While I believe both of the for-profit Institutions I have worked could provide a good education for students that isn't their focus now - its about dollars and keeping the folks on Wall Street happy.  Its really sad but that's the way it is.  Since the public non-profit Institutions won't or can't change to serve the students the for-profits specialize in ultimately those students are the losers -


The Attitude You Point To At Public Institutions Is A Product of Welare State Rollback (4.00 / 2)
I can readily appreciate the difficulty of seeing far beyond your own immediate experience in teaching, as I've known quite a fair number of teachers in my life--including my father, mother, sister and brother.  One's daily experience is not just compelling, but often overwhelming.

However, for public policy purposes, we desperately need a broader perspective to contextualize that experience.

There are very good reasons that public and private non-profit institutions should be geared towards those who are ready to learn. If they weren't, their quality would undoubtedly erode as a result. But some such institutions in the past--particularly public institutions such as CUNY--have admitted large numbers of first-generation college students, children of immigrants, and done an excellent job of it.  (Both my parents were immigrants' children, first-generation college students at UCLA, then in part a somewhat similar institution.) What enabled this was a very strong public education system, which was itself supported by a broader social welfare system, and vibrant union movement.

Of course, vast numbers of students never made it beyond 8th grade in those days, so it's not like taking all comers then meant anything like it does now.  

Which is to say that a good deal of the problem resides with primary and secondary education, which Jeff writes about weekly, dealing with the real problems at this level as well as and as opposed to the neo-liberal fantasy that almost completely ignores and/or denies the unfilled material deficits that lie behind most of them.

My point here is simply that rather than acknowledge and do something about the unmet needs of todays low-income and minority students, we are now promoting the rise of for-profit instutions that further prey on the failure to adequately educate them early on.

At the same time, there are public institutions that do try to meet the needs of such students: community colleges. They do teach a lot of the same sorts of classes for the same sorts of students, but are not so well wired into the money train.  More Pell grants for them, so that more of their students could attend full-time & graduate quickly would do a great deal more for the under-served student population than the for-profits ever dreamed of.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3


[ Parent ]
I was hired to teach as an adjunct faculty member at a for-profit (4.00 / 3)
because I had considerable teaching experience at both the college and community college levels. It was my community college experience that was most interesting to my employer since the students are so similar. I brought the same teaching skills to the for-profit world that I had used at the community college. After awhile (a few weeks, maybe), being told that I was serving the poor and underprivileged at the for-profit rang hollow. They are largely taught by adjunct faculty, and that is a known factor in contributing to students not attaining a degree. I was a standard, low-paid adjunct teacher with a ten-week contract. I was reminded over and over that I could not assume I would get another contract after the current ten weeks. That is not the treatment of faculty that allows them to be nurturing and put in lots of extra hours to help the needy. I certainly did and do feel for these students and went out of my way to help them. But I definitely had a limit, given my low pay and no benefits, not to mention the lack of resources at my institution to help these needy students. The writing center was hugely understaffed, for example, meaning that students really did not have access to the extra help so many of them needed. I always wanted to be able to say, "Guys, please drop this course and take it at a community college! You might pay $300 instead of $3000." But I was afraid to say that (ten week contract and all), and we were all explicitly told we could never suggest a student drop a course. Never. Even when, say, the student is about to give birth within the first two weeks of a ten-week course, or has revealed they have cancer. It is a sick, exploitive system.

[ Parent ]
basically we agree - just look at the problem in a different way (0.00 / 0)
Paul:

You said: My point here is simply that rather than acknowledge and do something about the unmet needs of todays low-income and minority students, we are now promoting the rise of for-profit instutions that further prey on the failure to adequately educate them early on.

Yes!!  The sad fact that I have to add is that from my experience even the Community College system isn't heavily oriented to working students.  I have degrees in Biology but now do IT (a long story) and would love to go to my local CC or University to take courses in programming but most are during the day and not at night and those that the CC have lack enough content to make them meaningful.

To really replace the for-profit system here's what the non-profits need to do -

1) realize that most of the classes need to be at night or on the weekend

2) make it possible to leave work, park and get to class in a reasonable manner.  Not a small issue - ever wonder why all UOP campuses have large parking lots and are easy to get to?  (Usually near an interchange on an interstate)

3) work with each student as they are admitted to make sure that they can read and write (sadly not a small issue) and have study skills.    

4) have a counselor that checks up on them, especially during the first few courses, to see how things are going and do a bit of intervention when needed. After things get going they still need to keep-up with the student on a regular basis so that the student knows what they have done and what still needs to be done.  Reps (they are called enrollment counselors at UOP) spend lots of time making sure students get to their first class, get enrolled in the next one and show up and attend because they don't get their "bonus" unless the body shows up for 3 classes.  After that students are handed over to the regular counselors who meet with students every couple of months to keep them on the glide path to graduation.

The thing we have to remember is that many of the students we are talking about are the first in their family to ever attend College and they really need a bit of care and feeding to make them successful.  


[ Parent ]
outstanding! thanks Paul (0.00 / 0)
yet another instance of the exploitation of the lower classes

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