The for-profit education sector is a multi-billion dollar industry. In 2009, students attending for-profit institutions received more than $24 billion in federal grants and financial aid. According to the Education Department, their enrollment soared to 3.2 million during the 2008-09 academic year, an increase of 20% over 2007-08 and more than 60% since 2004-05. Close to half of students attending for-profits are minorities.
Proponents of career colleges, as they also are known, say that the institutions are a boon to low-income and nontraditional students who might not otherwise be able to pursue higher education opportunities. They are more accessible than traditional universities and colleges, and provide the flexibility that many students need to balance work, family and school.
For the several months, however, for-profits have been under investigative fire for aggressive recruiting practices and high student-loan default rates. Although they enroll approximately 12% of college students, they represent 43% of student loan defaults. Critics have likened them to predatory mortgage lenders, saying that for-profit graduates have little to show for their education investment except enormous debt. Minorities, who are often first-generation college students, are particularly vulnerable.
Following much heated debate, the Education Department is expected implement a “gainful employment†regulation that will go into effect in July. The proposed rule seeks to hold for-profit and postsecondary vocational institutions accountable for ensuring that graduates are adequately prepared for the workplace and not overly burdened with debt. They would be required to provide prospective students with graduation and job placement statistics for each program that qualifies for federal student aid, and provide the department with information about student debt levels and incomes earned after program completion. Programs also will be required to provide five-year enrollment projections; documentation from employers unaffiliated with the institutions that their curriculum is aligned with the industry’s needs; and show that there is a demand for occupations in the programs already offered before new programs can become eligible for such aid.
Milton Anderson, Jr., president of Virginia College in Jackson, Mississippi, says that the gainful employment rule is grossly unfair and will force a disproportionate number of African Americans to forego higher education.
“There are some bad actors in our system, but the majority educates students and gets them out into the workplace where they become gainfully employed taxpayers,†Anderson said.
He also argues that the rule should not be limited to for-profits and should be applied on a case-by-case basis. Rev. Jesse Jackson, Sr., National Urban League president Marc Morial, and some members of the Congressional Black Caucus also say the rule is both drastic and harmful to economically disadvantaged and minority students. The industry has launched a massive lobbying and advertising campaign to fight the rule, and has hired former members of Congress, including William Gray (D-Pennsylvania), who previously served as president and CEO of The College Fund/UNCF.
“Unfortunately, there are a lot of students of color from poor backgrounds who might not be getting the proper guidance from families or other resources to let them know what their options are,†said Kimberly Jones, associate vice president for public policy at the Council for Opportunity and Education. “For-profits are not the only option, especially when you consider that a lot of the learning students are looking for can very easily be gained at a far lesser cost at a local not-for-profit institution, particularly community colleges. We don’t believe that the regulation would close the door of opportunity for African American students.â€
Jose Cruz, a vice president for education policy and practice at The Education Trust, said that it is not unreasonable to expect a market-based, for-profit enterprise to provide consumers with the information that they need to make informed choices. “This is an industry that has grown by 236% in the last ten years and has spawned players that have profit levels on the order of a Procter & Gamble,†he said. “Yet as a whole, they fail to graduate four out of every five of their first-time, full-time bachelor degree seeking students.â€
According to Cruz, prospective students should ask schools about their overall graduation and job placement rates. “If you’re a student of color or a low income student, it’s important to ask about the graduation rate because some of these institutions do significantly worse with them than their white or more affluent counterparts.†He also suggested that students ask where graduates are being placed because most schools cater to local populations that expect to be able to find jobs in or near their communities.
Find out if the program you’re considering is accredited and whether there is a licensing exam associated with the occupation as well as how the school prepares students for the exam. Cruz recommends that students seek information about exam pass rates. Otherwise, “you might take a $50,000, two-year degree and find out you’re not prepared for the exam or if the program’s not accredited, that you’re not even eligible to take the exam.â€Â  Â
Students are sometimes surprised to learn that more often
than not the credits they earned at a for-profit institution cannot be transferred to traditional, nonprofit schools. Cruz, who previously worked as a vice president of student affairs for a large state university system, said that this is a problem in higher education in general, but for-profit credits are “almost impossible†to transfer.“Ask how long a typical student similar to you takes to complete the degree or certificate program and how much debt you’ll be expected to incur,†advises Cruz. Because for-profits tend to be much more expensive, most students have to take the maximum amount they can get in federal aid and also take out private loans.
Asking these questions will give prospective students a far greater sense of the actual risk associated with a particular school or program so they can make the right decision, said Cruz, who also recommends shopping around. “If they’re recruiting you, the least you can do is find out if your community college has a similar program or if there’s a nonprofit that’s more affordable.â€