Searching for a profitable education
September 9, 2010
Tour guides at the College of William and Mary may have to start including the College’s non-profit status alongside their puns about tripping over bricks. Aside from deciding which school has the best academics, parties or food, high school seniors also have the choice between non-profit and for-profit schools.
At the outset, for-profit schools seem beneficial. Since 1998, for-profit schools’s enrollment rates have increased by 225 percent, according to the New York Times article “Why the Department of Education Wants to Change the Rules.” Appealing to the less traditional college student, for-profit schools offer a range of degrees and flexible schedules, allowing students to graduate sooner, and tend to focus on technical or vocational education.
Yet the distinguishing feature of for-profits is the source of their funding. For- profit schools are subsidiaries of private companies, which are expected to make a profit. The University of Phoenix is the largest of the 3,000 for-profit universities in the country.
Non-profit schools, like our own alma mater and most state and community colleges and some private colleges, receive most of their funding from the government.
All colleges, for-profit and non-profit, abide by the “90-10” Rule, which allows a college to collect up to 90 percent of its revenue from the government. A minimum of 10 percent must come from non-governmental sources, such as student tuition or investor funds.
However, there are many drawbacks to for-profit colleges. Recently, lawsuits and controversies have emerged accusing for-profit colleges of “pushy recruitment and questionable degree programs.” Accounting for 9 percent of college-enrolled students in the country, for-profits can also take credit for 24 percent of the student loans and 44 percent of student loan defaults. Aside from typically being more expensive than their non-profit counterparts, for-profit colleges also have lower graduation rates.
This brings about the most damaging problem associated with for-profit colleges: accreditation. It is not uncommon for for-profit graduates to be $40,000, or even $86,000, in debt. Unable to find a job, these graduates end up defaulting on their loans leaving taxpayers and prospective for-profit students to pay the bill.
Many employers will not recognize degrees from for-profit colleges, a fact many for-profit graduates say was not mentioned as their admissions sessions. Graduates who wish to transfer to non-profit institutions often find that for-profit credits will not be recognized because of their national accreditation — a fact which has brought about many recent lawsuits. Many four-year non-profit institutions are regionally accredited, leaving a for-profit education comparatively useless. It is no wonder that Sen. Richard J. Durbin (D-IL), Chairman of the Judiciary Committee’s Human Rights subcommittee. called for-profit colleges “federally subsidized rip-offs” in a Congressional hearing last Tuesday.
In his article, Warren criticizes politicians for the recent trend of holding for-profits accountable for gainful employment, debt-to-earning ratios, and graduation rates, while non-profit institutions are left with fewer restrictions. I agree that financial backing for both for-profit and non-profit institutions should be based on the same standards that evaluate graduate success. Even so, I still believe for-profits should not be kept on a tighter watch because of their controversial history.
Restrictions politicians are placing on for-profit colleges are not the result of an “ideologically based suspicion” of corporate profits, but a reasonable concern for valuable education. The problems of for-profit graduates are too great and too numerous to be accounted for by the types of students that attend, or a couple of bad admissions sessions, as for-profit spokespeople would have the public believe.
I, for one, will smile the next time I trip over one of the College’s non-profit bricks.