Report criticizes for-profit colleges for low graduation rates

By Daniel de Vise
Washington Post Staff Writer
Tuesday, November 23, 2010; 3:22 PM

A report from an influential Washington think tank on Tuesday likened for-profit colleges to subprime lenders for their meteoric growth, and for their propensity to drive customers into debt.

The report says that 22 percent of students in four-year programs at for-profit colleges earn degrees within six years, compared with 55 percent graduation rates at public colleges and 65 percent at private nonprofit schools.

"What we found is a profit model that is based on failure, not on sustained success," said Kati Haycock, president of EdTrust, speaking in a conference call with reporters.

For-profit colleges have operated under an intense regulatory microscope this year. The Obama administration is pushing reforms that focus on aggressive recruiting practices and programs that don't lead to what officials call "gainful employment."

The schools, also known as career colleges, compete most directly with public two-year community colleges. But the report from the Education Trust, a nonprofit group primarily concerned with achievement gaps, examined the for-profit industry in its role as provider of four-year bachelor's degrees.

The Washington Post Co., through Kaplan, is a player in the industry. Kaplan wasn't named in the report, however, largely because Kaplan is not among the leading providers of bachelor's degrees. Kaplan students tend to participate in shorter-duration professional certificate and degree programs.

The analysis by Education Trust found six-year graduation rates in the industry ranging from a high of 67 percent at School of Visual Arts in New York, with 3,351 students, to a low of 9 percent at the University of Phoenix, with 238,326 students.

Haycock noted that some institutions in propietary higher education boast strong completion rates, including ITT Technical Institute and School of Visual Arts. But she said, "The reality is, most of these [colleges] have pretty horrible results for students."

Among 42 campuses of University of Phoenix, which is both the largest for-profit college and the largest provider of bachelor's degrees in the sector, the report found 12 with 2008 graduation rates in the single digits.

Leaders of the for-profit sector say their students tend to have low household incomes, full-time jobs, children and other factors that complicate higher education goals. That makes it difficult to compare for-profit colleges to traditional four-year schools. The student populations at for-profit colleges more closely resemble those at community colleges, whose completion rates hover below 25 percent.

"Many of these nontraditional students are working, they're taking care of families, some of them are even serving in the military," said Ryan Rauzon, spokesman for the University of Phoenix. He cited internal data showing a higher six-year graduation rate of 36 percent.

For-profit leaders say their programs cost taxpayers less than comparable state-supported offerings. But for-profit schools are more costly to students. The EdTrust analysis found that bachelor's degree recipients graduate with a median debt of $31,190 in the for-profit sector, compared with $17,040 among private nonprofit colleges and $7,960 at public institutions.

For-profit colleges educate 12 percent of all college students, but the sector is responsible for 43 percent of student-loan defaults.

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