Monday’s Mtg: For-Profit Colleges – Market Niche or Scam?

The Obama Administration’s higher education policies are among its least well-known. But, they’re a big deal and about to get bigger. Yesterday we learned that Obama will announce in his State of the Union address an ambitious new proposal to expand Americans’ access to community college.

The new program’s goal will be to make going to community college basically tuition-free! In participating states, the feds would pay ¾ of the costs (which average over $3,000 per year) and participating state governments the other ¼. Not only would this be revolutionary, it would seriously affect the fate of for-profit colleges, the subject of our discussion this week. Going to a for-profit college (like Strayer, University of Phoenix, ITT, etc.) is one of the main alternatives to community college, so this proposal is basically an assault on this controversial industry.

Another accidentally well-timed CivCon topic! But really, even without this announcement, for-profit higher education has been a huge issue for a long time. Obama has been trying to reign in abuses in the industry for years, bitterly opposed at all stages by Republican Congress. I’m just finishing up a book that deals with all of these issues, too, so we have a lot to discuss.

The private, for-profit college industry has exploded in size in the last 20 years, and it’s grown much more controversial, too. The number of for-profits has quadrupled since 1993, to over 1,200, and the number of students they enroll has grown by 80-fold, to 13% of all college students. Some of them are gigantic, highly-profitable nationwide, NYSE-listed, companies. They are advertised on TV and radio around the clock.

The controversy involves a for-profit education’s very high cost to students and the government via student loan defaults, and seroious questions about the quality of the education they provide. These schools charge much more than all but the most expensive private but non-profit universities (like Cal-Tech or the Ivies). And, close to 100% of for-profit college students borrow from federal student loan programs to pay their tuition (average $32,000). Yet, they default at much higher rates than other students. This default rate and other evidence suggests that students may not get a high-quality education for all of that money they, and we as taxpayers, fork over. Most studies show graduates of for-profit colleges earn less than other graduates, too, although it’s not a slam dunk that poor instruction is the reason.

I want to do a lot more on Monday, however, than bash for-profit colleges and the (mostly GOP) politicians that defend to the death everything they do. Defenders of the for-profits raise some important points. They say our higher education system does a poor job of educating just the kinds of students they specialize in educating: Non-traditional students, especially those that are low-income; older, with jobs and even kids; and first-in-their-families college students. Strayer and Grand Canyon are just innovators using the private sector to do what our political system won’t do. They enroll students quickly, offer flexible class schedules and more on-line classes, and vocationally-oriented curricula in growing fields like health care and information systems.

I’m dubious this is true on a large scale. Still, my point is that there are many bigger issues here. The discussion questions below list a number of them. I’ll start our meeting as I usually do, by explaining a few basic facts about the for-profit college industry, the reasons it has grown so quickly, and the main controversies surrounding it.


  1. History as a guide: What is the history of federal government support for going to college or trade school? Were for-profit schools always a problem, and if so, what was done about it that we could learn from today?
  2. Recently: Why has the for-profit college industry exploded in size in the last 20 years? Was it just marketing hype chasing all of that federal money?
  3. Prosecution: What are the worst problems/abuses of for-profit colleges?
  4. Defense: What arguments are used to defend the industry? Does it serve a legitimate market niche, even if poorly? If they serve students poorly and bury them in debt, why do so many students go there?
  5. Solutions: How has the Obama Administration tried to reign in the industry’s worst abuses? Why has it been so hard to do, and what does that tell us about how and how well our political system functions?


Problems with for-profit colleges –

The Other Side –

Solutions –

Next Week: Are we an over-medicated nation?


3 responses

  1. If you had someone come in with a degree from the U. of Phoenix, looking for a job, what would you do?
    Personally, I think I would show him the door.
    But maybe that’s just a prejudice.

    1. One of the links cites a study that found that putting a for-profit degree on one’s resume had no positive association with getting hired.

      1. I would think that would be true.

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