For-profit colleges in the United States are under siege.
Long the subject of intense controversy in education policy circles, the schools are now facing an unprecedented wave of public scrutiny and facing a new set of regulations that will shutter many of them and could ultimately reshape the industry.
A new rule instituted by the Department of Education in July will cut off federal funding for colleges that fail to ensure an adequate number of their students find gainful employment after graduation. The Department of Education estimates that the requirement will result in the closure of around 1,400 programs across the country, and virtually all of them will be for-profit educational institutions, according to Politico.
The for-profit college industry is up in arms over the crackdown and trying to paint the government's measures as unfair.
But the reality is that recent attempts at holding for-profit colleges accountable are long overdue. While some for-profit colleges can serve their students well, the industry on the whole has an abysmal record on educational outcomes. Nationally, for-profit colleges charge their students upwards of four times as much as community colleges for an associate degree and significantly more than flagship state universities for four-year degrees, yet have about half as many of their students graduate — with degrees that are often questionable or useless. Students at for-profit colleges represent about 13% of the higher education population but make up nearly half of all borrowers defaulting on their student loans.
For-profit colleges could be outpacing their rivals with cutting-edge curricula in sync with a changing job market and facilities that are uniquely attentive to the needs of working, low-income students. But the evidence suggests that most are much better at recruiting students than actually serving them. Here are some of the ways in which some major for-profit colleges have left their students off worse than they found them.
1. They have used absolutely absurd recruitment strategies.
The one realm that for-profit colleges seem to excel in above all others is recruitment. In 2012, the U.S. Senate Committee on Health, Education, Labor and Pensions released a report that found that for-profit colleges, which receive a vast majority of their revenue from the federal government for student aid for their students, spend more money on recruitment than on actual instruction for their students.
According to the report, the recruitment strategy employed by for-profit schools was often built within a "boiler-room atmosphere, in which hitting an enrollment quota was the recruiters' highest priority. Recruiters who failed to bring in enough students were put through disciplinary processes and sometimes terminated."
ITT Technical Institute was flagged as having particularly disconcerting practices for luring students into their colleges. They had a sales technique called the "Pain Funnel," an emotionally manipulative interrogation method that one recruiter described as designed to "bring a [prospective student] to their inner child, an emotional place intended to have the prospect say 'yes I will enroll.'"
The for-profit education company Kaplan had its own "artichoke" approach, which, according to training materials obtained by the authors of the Senate report, recommended "peeling back the layers" and "Getting to the PAIN [sic]." The training materials focus little on whether or not the student was a good fit, instead encouraging the recruiter to "KEEP DIGGING UNTIL YOU UNCOVER THEIR PAIN, FEARS AND DREAMS."
For-profit colleges encourage recruitment strategies that rope in as many students as possible, with little regard for whether the students would really benefit from their programs or whether they're financially secure enough to handle their high tuition rates.
2. They've lied about job placement rates.
Corinthian Colleges, the for-profit college operator which finally collapsed in April, was sued by the federal government in September 2014 for running schools that were advertising "bogus job prospects and career services," in the words of the Consumer Financial Protection Bureau. The CFPB's investigation found evidence that the company was "creating fictitious employers" to distort its job placement statistics and used Craigslist to match students with jobs instead of offering them real career services counseling.
In recent years, states have gone after for-profit colleges for recruiting students into programs that aren't certified to train people for the very jobs they promised.
3. They've left many students with a subpar education.
Many for-profit colleges offer degrees that lack legitimacy in the eyes of employers. One study from the National Bureau of Economic Research found that "a bachelor's degree in business from a for-profit 'online' institution is 22% less likely to receive a callback than a similar degree from a non-selective public institution." For certain health jobs, the study found that a certificate from a for-profit institution is 57% less likely to elicit a callback than a similar certificate from a community college.
In its analysis of lower-performing and predatory for-profit colleges, the Education Department found that 72% of the programs they analyzed produced graduates who on average earned less than high school dropouts.
A Mother Jones report found that some students of ITT Tech couldn't find jobs because its schools weren't regionally accredited, and they couldn't transfer their credits to another school either.
4. They've buried their students in debt.
For-profit colleges reign supreme in the land of higher education as producers of debt. At community colleges, 13% of students take out loans. At public colleges, 48% do. At nonprofit private colleges, 57% do.
At for-profit colleges, 96% of students take out loans, according to Mother Jones. They take out loans at extraordinary rates because they generally come from lower-income backgrounds and sign up to take exceptionally expensive classes. According to a report by the Institute for College Access and Success, the average debt for graduating seniors from for-profit schools was $39,950 in 2012, compared to $25,550 for graduating seniors at public colleges.
A number of for-profit schools have also developed predatory private loan programs to encourage students to borrow from when they max out on federal student loans. Before it was shut down, Corinthian Colleges had an aggressively enforced private loan program, and ITT Tech once had an in-house loan service known as PEAKS that had interest rates as high as 14.75%, according to Mother Jones.
The takeaway: For-profit colleges have existed for a long time, but they experienced a huge boom in the 2000s as they were acquired or created by publicly traded companies and private equity firms, which dramatically expanded their nationwide reach. Coinciding with the acceleration of the information economy, during this time for-profit colleges could potentially have been sources of innovation that helped lower-income people find easier ways to work higher education into their difficult lifestyles. But it's evident that many of these schools have chosen to approach their struggling students as a group to be preyed upon rather than assisted.
Ultimately, trying to turn a profit from education has proven to be a disastrous for hundreds of thousands of Americans, leaving them worse off than had they never set out to better themselves in the first place.