Nearly a half-million people are borrowing $5 billion a year to pursue advanced degrees from for-profit colleges and universities, even as the industry is reeling from investigations, lawsuits and the collapse of prominent players, according to a study that the Center for American Progress released Thursday.
The findings are striking for an industry that has watched enrollment in its certificate, associates and bachelor’s programs slide as the economy recovered and government scrutiny intensified. Policy analysts at the center worry, though, that the industry is thriving in a segment of higher education that largely operates in the dark.
Graduate schools are under no obligation to report graduation or attrition rates to the federal government, so there is no comprehensive way of tracking outcomes for programs that often saddle students with six-figure debt. The lack of data on for-profit institutions is especially troubling because of the sector’s track record of aggressively recruiting students and pressuring them to take out loans, said Elizabeth Baylor, author of the study and the director of postsecondary education at the Center for American Progress.
“Because graduate education at for-profit colleges is a little unproven, it’s important for policymakers to be paying attention to outcomes,” she said. “We don’t have a lot of information about how these students fare.”
Whereas only 3 percent of graduate students attended for-profit schools 15 years ago, 11 percent are now enrolled at places such as the University of Phoenix, Capella University and Walden University, according to the study. Those schools, along with DeVry University and Grand Canyon University, enrolled almost 60 percent of for-profit graduate students in the 2014-2015 academic year. Walden and Grand Canyon, in particular, are experiencing an upswing in enrollment.
Baylor suspects open-admissions policies and the flexibility to meet new demand are driving enrollment at these schools. Applicants only need a 2.3 grade-point average from an accredited bachelor’s program to be admitted to Capella, or a 2.5 grade-point average to get into Walden, according to the study.
Tamara Chumley, a spokeswoman for Walden, said the university is “extremely proud that it has filled an important national educational gap providing access online to graduate students who might not otherwise have had the opportunity to achieve educational or career advancement.”
She pointed out that the loan amounts of Walden graduate students is not that different from their peers at public and private nonprofit schools, by the Education Department’s estimates. What’s more, the school’s student loan default rate of 6.7 percent is below the 11.3 percent national average. Chumley added that Walden confers more graduate degrees on African American and all minority students combined than any other institution.
Racial diversity is prevalent within graduate programs at for-profit colleges, where people of color make up 55 percent of the population of students pursuing advanced degrees, according to the CAP study. About 3 in 10 black graduate students attend a for-profit college. The Brookings Institution has linked the overrepresentation of African American students in these programs to growing racial disparities in student debt, with black graduate students being twice as likely as whites to leave school with hefty loans.
It’s difficult to make any assessments about the value of for-profit graduate degrees without any sense of the path students take after leaving the programs. Still, the amount of debt that students incur in some for-profit graduate programs is astonishing.
An earlier CAP study of 20 universities receiving the largest share of federal graduate loans in the 2013-2014 academic year found that eight of those schools were for-profit colleges. Graduates students borrowed the most amount of money, $756 million, to attend Walden that year.
New federal rules will give the public a window into the outcomes in career education, including for-profit graduate programs. The Obama administration is releasing earnings data under “gainful employment,” a controversial regulation that threatens to withhold federal financial aid from institutions whose graduates fail to land jobs earning enough to repay their education loans. Still, Baylor is concerned that it may not be enough.
“The new gainful employment data will measure debt-to-earnings data, but that’s only for graduates,” she said. “For people who sign up for these programs but might not complete, we don’t know whether they are going to struggle to repay their debt.”
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