A recent report issued by the US Senate criticizes for-profit colleges for having high dropout rates, with students leaving deeply in debt from student loans, with a high degree of default loans resulting. At the same time, the colleges are alleged to have raked in hundreds of millions of federal dollars for their marketing campaigns.
This story from the Minneapolis StarTribune, July 30, 2012, explains in detail:
WASHINGTON – Three for-profit colleges based in Minnesota took in tens of millions of taxpayer dollars to boost their marketing and profits while many of their students dropped out in large numbers, often burdened with enormous debt, according to a two-year investigation led by Sen. Tom Harkin, D-Iowa.
The 1,100-page report was critical of almost every aspect of the for-profit college industry, whose schools educate nearly 2 million students nationwide, including tens of thousands in Minnesota.
“In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation,” Harkin said. “These practices are not the exception — they are the norm.”
The Harkin probe examined 30 for-profit colleges across the country, including Minnetonka-based Rasmussen College, Capella Education of Minneapolis and Walden LLC, an online school based in Minneapolis. The three Minnesota colleges defended their work and their safeguards to assist students.
The report further alleges that for-profit schools spent copious federal dollars on marketing campaigns, dollars that were intended to support educational endeavors. Additionally, the salaries of the executives at these schools were found to be far higher than those at public and non-profit institutions. The Senate report states that the for-profit schools tend to charge far higher rates for tuition as well.
Note that the Minnesota schools were only singled out because the article was published in a Minnesota newspaper. Notice that at least two of the colleges mentioned, Capella and Walden, are known primarily for offering online education opportunities. Not that this fact is in and of itself relevant, but whether a school is for-profit or not may be an important consideration when choosing which institution to enroll in if you’re interested in earning a degree online.
Of course with any official report, there are at least two sides to the story, and the newspaper article allowed both to be heard. Regarding loan default rates:
Capella and Walden fared better in the report. Both schools reported loan default rates that were well below the 22 percent average for for-profits and the 12.3 percent average for schools of all types.
With a default rate of 2.5 percent, “Walden safeguards federal funds better than most institutions in all of higher education,” the school said in a statement.
Capella, with a 6.5 percent default rate, issued a statement that said: “We are pleased Senator Harkin recognized the value of a Capella degree, our low cohort default rate and the investments we’ve made in student support.”
Where Capella and Walden appear to have an excellent record in regard to defaulted loans, they were both taken to task on their marketing expenditures anyway.
For-profit colleges definitely provide a service with their online education opportunities, but they are also clearly big business in their orientation. The push for profits may in some cases supercede what is in the best interests of the students:
But Pauline Abernathy, vice president of the California-based Institute for College Access and Success, a nonprofit that runs the Project on Student Debt, called the report “a real wake-up call for action to stop the flow of taxpayer dollars to schools that are in some cases doing harm to students.”
To learn more, read the full article at StarTribune.com.