For-profit universities in the United States have experienced dramatic growth in recent years. These institutions, modeled after traditional colleges and universities, saw a growth in student enrollment from 766,000 in 2001 to 2.4 million in 2010. The industry’s enrollment grew by 225 percent from 1998 to 2008.
An article that appeared on Salon.com in June 2013 stated that for-profit universities attracted African-American students at a rate that was 11 times higher than that of public four-year programs. The article goes on to discuss the fact that students who attended for-profit schools leave with debt (96 percent of graduates according to a U.S. Department of Education survey) and that the certificates they receive are trap doors to poverty.
What are the Employment Numbers for For-Profit Institutions?
One of the problems with the statistics on job placement provided by for-profit learning institutions versus those provided by traditional colleges and universities, is the lack of uniformity in reporting requirements. The U.S. Department of Education provides guidance for job placement services provided by traditional institutions, but state regulatory agencies and accrediting organizations provide such guidance for the for-profit sector. These rates can vary dramatically from state to state because of the varying methodologies employed to measure a for-profit’s placement claims. Without the same level of oversight and regulation that traditional schools receive, for-profits have little fear of consequences when making exaggerated claims.
Specific Claims of False and Misleading Information
For-profit universities received $32 billion in federal aid for students in the 2009-2010 school year. This amount included $7.5 billion in Federal Pell Grants. Attracting students in order to continue accessing this funding is an important mission of for-profit institutions. Attracting more students with promises of employment upon graduation helps the institutions remain profitable, regardless of whether the claims are valid, leaving many students with dashed expectations upon graduation.
Such was the case for Sarah Fisher, a graduate of Brown Mackie College in South Bend, Indiana. Brown Mackie College is one of several institutions of the for-profit education corporation Education Management Corporation (EDMC), which include Argosy University and the Art Institutes. Fisher, a single mother, took a job at a local Wal-Mart, earning $16,000 a year while completing her degree at Brown Mackie. She believed that she would be earning more than double her Wal-Mart wage upon graduation; when this did not happen, Fisher felt she had been misled. The school counted her Wal-Mart job (in customer service) as employment since it related to her degree in business management.
A former admissions supervisor for EDMC filed a whistleblower suit against the company, claiming false, misleading, and deceptive practices. The company is also engaged in a lawsuit with the federal government and 11 states looking to recover $11 billion in student aid the company has received.
Efforts to Regulate For-Profits
The Department of Education, recognizing the inconsistency that exists in reporting standards for for-profit universities and the growing loan default rates for these institutions, released new rules in June 2011. Entitled “Gainful Employment Regulations,” these new rules seek to link employment with a student’s ability to pay back student aid (loans). Continued eligibility of these institutions of higher learning in the Federal student loan program would be predicated on loan repayment rates and debt-to-income ratios of the institution’s students. Several components of these regulations have been rejected by a federal judge and are being rewritten in light of the rulings.
As for the legitimacy of any for-profit institution’s claims of job placement and employment opportunities, “caveat emptor” (let the buyer beware).
In addition to education, Andy Malthus focuses on finance, business, the economy, the stock market, accounting principles and other kindred topics. In today’s economy, many people are using higher education as a means to facilitate transition to a new career field; those who find finance an appealing field should consider viewing these financial planning jobs with moneyjobs.com.
Image credit goes to AmherstCollege.