The cost of attending a for-profit college is far higher than the cost of enrolling at a public college. Completion rates are low, job prospects for attendees are often bleak. Some for-profits spend more on recruiting than they do on instruction.
And student-loan default rates at the for-profits are quite high. Forty-seven percent of the 2009 cohort of for-profit college borrowers defaulted on their loans within five years.
Here are the 5-year cohort default rates for selected for-profit colleges, as reported by a 2015 Brookings Institute paper:
- University of Phoenix-Phoenix campus: 45 percent
- DeVry University-Illinois: 43 percent
- Ashford University: 47 percent
- Kaplan University-Davenport campus: 53 percent
And of course these figures understate the number of for-profit college students who are not repaying their loans because many non-defaulters have their loans in deferment or forbearance and are not making their monthly loan payments.
But the good news is this: the for-profit college industry is shrinking. When the Harkin report came out five years ago, for-profit colleges enrolled 13 percent of all college and university students. In the spring semester of 2017, that figure had dropped to 5 percent. For the industry as a whole, for-profit enrollments dropped 10 percent between spring 2016 and spring 2017.
Part of this drop can be attributed to aggressive enforcement of consumer protection laws by state attorneys general and better regulation by the U.S. Department of Education. In the last two years alone, Corinthian Colleges and ITT Tech closed and went bankrupt. Together these institutions had a half million former students.
Moreover, potential students are becoming more wary of aggressive for-profit college recruiters. This may explain why enrollments are plummeting at several well-established for-profit colleges, such as University of Phoenix and DeVry.
Now, while the for-profit college sector is shrinking, is the time to shut this sleazy industry down. I think the for-profits are hoping the Trump administration will be friendly to their interests, allowing them to get back on their feet.
But let's hope the industry is wrong. If President Trump implements policies that reinvigorate the for-profit college industry, it will be the biggest mistake of his administration--far bigger than his goofy dinner conversation with FBI Director James Comey.
|The for-profits are shrinking, shrinking!|
Associated Press. Enrollment is tanking at University of Phoenix, DeVry, and other for-profit colleges, Los Angeles Times, September 22, 2016.
Paul Fain. Enrollments Continue to Slide at For-Profits and Community Colleges. Inside Higher Ed, May 24, 2017.
Tamar Lewin. Senate Committee Report on For-Profit Colleges Condemns Costs and Practices. New York Times, July 29, 2012.
Adam Looney & Constantine Yannelis, A crisis in student loans? How changes in the characteristics of borrowers and in the institutions they attended contributed to rising default rates. Washington, DC: Brookings Institution (2015).
U.S. Senate Committee on Health, Education, Labor and Pensions. For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success. 112 Congress, 2d Session, July 30, 2012.