Recent stories on Frontline and NPR (Targeting those Who Can’t Pay and Recruiting Policies) reveal the concerns over For Profit Education. These groups provide an education to anyone willing to pay (or willing to take on enormous loans). Some of these institutions may cost less for a degree than traditional colleges and universities, but become a dept trap when students can’t get a job in their field or earn enough to pay back the loan, which is often funded by taxpayers. Some of their recruitment practices may not be considered ethical by the general public, identified by increased default on these student loans and various lawsuits over recruitment practices and advertising. Especially in today’s economy, where more people are looking for ways to improve their job opportunities and people with college degrees from prestigious universities are struggling to find jobs, the For Profit Colleges can easily mislead prospective students into a debt trap.
The government is discussing ways to regulate these educational institutions. Revisions to current accreditation practices and creating “Gainful Employment” rules
- increased reporting on graduation rates,
- job placement rates, and
- the number of graduates who are able to repay their loans.
This threat of oversight and transparency has caused investors to be cautious about financial investment in these groups, and caused wall street investors to bet against these institutions (story by NPR). Apparently lobbyists against these rules are convincing politicians not to support the legislation.
The latest criticisms are also having a positive impact and some groups are taking action on their own to verify that students can complete the coursework (Forbes story). We should also hope that the level of instruction increases and provides a minimum standard of preparation for students.
After reading through the articles and video listed above, the summary is: People have taken investors money to create For Profit Colleges, charging large tuition fees to students rejected from traditional colleges/universities, encouraging them to use federal loans to pay the fees, who are then stuck with significant debt they cannot repay using the education provided by the For Profit College.
Curious about who’s getting the profit and how much? Bloomberg reports the millions various administrators receive in pay at these groups. Wikipedia provides an alphabetized list of For Profit Colleges or check the list for your state on Wikipedia.
Don’t be fooled by these institutions; just because they legitimately help some students does not justify misleading advertisements and preying tactics to recruit desperate students. But we need to make fair oversight and Gainful Employment rules are implemented.
More information on California Watch.org
Update on 27 April 2012, President Obama signs a bill to protect veterans from being deceived about these colleges.
Newer Frontline articles on the For-Profit colleges and their political might in Washington D.C..