Are For-Profit Colleges Threatening Not-for-Profit Colleges?

NEW YORK (MainStreet)—A lot of people have been complaining that for-profit colleges are merely diploma mills only interested in earning money and not educating students. Is this true?

That's not true, according to Frederick M. Hess, a resident scholar and director of education policy studies for the American Enterprise Institute, a free market think tank.

"It is a simple-minded assertion that for-profit colleges and universities are engaged in some kind of nefarious activities or substandard education," he said.

Hess acknowledges that there are some bad for-profits, but he also says the same can be said for not-for-profit institutions. He cited the book Academically Adrift by Richard Arum and Josipa Roksa which noted that a Collegiate Learning Assessment (CLA) study determined after freshman year and the middle of sophomore there was almost no impact on college students' abilities to think critically, to reason and to write.

Hess also claims that while some existing non-profit institutions have become complacent about delivering a quality education, for-profits take a more effective, even corporate approach.

"While they squeeze cost structure, they also rethink operational models and develop new ways to meet client needs," he said.

Some politicians have criticized the growth of for-profit institutions of higher learning. For example, Sen. Sherrod Brown (D-Ohio), during a June 24, 2010 hearing of the Senate Committee on Health, Education, Labor and Pensions called "Emerging Risk? An Overview of the Federal Investment in For-Profit Education" expressed concern about for-profits.

During his opening statement he said,"The rapid growth of these for-profit institutions, compared to other institutions, is a particularly great concern and particularly sort of a risky proposition for taxpayers and for those students."

But, according to OpenSecrets.org, a project of the Center for Responsive Politics an independent research group which publishes political donation data, Sen. Brown is the leading recipient of lobbying money from educational institutions. His leading campaign donor from 2007 to 2012 was Ohio State University. His ninth largest was Case Western Reserve University.

Other politicians, such as Elijah Cummings (D-Md.), have criticized the income of for-profit CEOs. Cummings's inquiries have determined that for-profit executives earn many times more money than their nonprofit counterparts.

But for-profits have their own controversies. A 2010 the Government Accountability Office said some for-profits used deceptive and fraudulent recruiting and enrollment tactics. Lobbying has also increased by for profits.

But as MainStreet pointed out in "Academic Lobbying: Ivy is not the Only Green for Universities": "...despite all the criticism leveled at for-profit colleges, only three are in this Top Ten lobbying list. Moreover, as recently as 2009, there was not one for-profit university listed in the Top Ten. The ten biggest university lobbyists for 2009 were: State University of New York, California State University, University of Texas, Johns Hopkins University, University of Colorado, Boston University, University of Southern California, Texas A&M, University of California and University of Washington. These ten institutions spent more than $10 million to lobby the government on their behalf."

OpenSecrets stated that during the 2012 election cycle the education lobby was the 21st largest interest group campaign donor. The industry contributed close to $11 million. Interestingly 64% of these donations went to Democrats.

None of which is to say that all the criticism leveled at for-profit colleges is politically motivated. The industry acknowledges that it has its problems. The for-profit industry association, the Association of Private Sector Colleges and Universities (APSCU) issued a June 2012 statement in reply to the allegations of unethical and illegal recruiting and enrollment tactics.

"APSCU wants to make clear that we condemn any activity by companies that mislead veterans," it said. "And we continue to work with our members and other stakeholders on initiatives designed to promote clear and unambiguous communications with students and prospective students."

"Last year," it continued, "APSCU convened a task force to develop a self-regulatory vehicle to eradicate such condemnable practices. APSCU is in the process of taking tangible steps to continue critical conversations to improve accountability and ensure best practices for the sector for marketing, recruiting and communications to our students, including veterans."

But the invective against for-profits continues. Media reports and statements from politicians continue to tarnish their image. Sen. Tom Harkin (D-Iowa) excoriated them in August 2012 in conjunction with the release of his committee's report about for-profits.

"In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and profit, and regulatory evasion and manipulation," Harkin told USA Today. "These practices are not the exception. They are the norm. They are systemic throughout the industry with very few individual exceptions."

Nonetheless, the highly regarded research institution, the RAND Corp., praised for-profits. It even said that nonprofits could learn from them.

A February 2012 RAND blog reprint of a Military Times article, by Jennifer L. Steele, a RAND policy researcher, focused a study that was commissioned by the American Council on Education. Ultimately, she was pleased with for-profits.

"Our study involved a nationwide survey of 230 student veterans, service members and dependents eligible for the new Post-9/11 GI Bill, and focus groups with 113 GI Bill users on 13 campuses in Arizona, Ohio and Virginia," she wrote. "Participants included students at public and private colleges — for-profits and nonprofits....Although for-profit colleges are often more expensive than public ones — a legitimate concern for taxpayers underwriting the GI Bill — students we interviewed at for-profit colleges said their institutions offered tuition rates matching allowable GI Bill benefits, giving them the freedom to choose a college that best met their needs."

She continued by saying that for-profits permitted better ease of access for veterans because of multiple locations and more flexible hours. They also accepted military credits more easily.

"The consumer-centric attributes of some for-profit schools offer lessons for their public and nonprofit counterparts regarding how higher education institutions best serve the needs of our troops and veterans," Steele concluded.

 

Are for-profit colleges and universities providing substandard educations or are they merely threatening the revenue of nonprofit colleges and universities?

Stay tuned.

Written by Michael P. Tremoglie for MainStreet

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