For-profit colleges are getting a lot of attention lately, and not the good kind.
Theyre being sued, government officials are speaking out against them, and reports are uncovering their shady practices.
What Is a For-Profit School?
For-profit colleges operate more like businesses than institutions of higher learning.
And that shouldnt be a surprise: their very title suggests theyre out to make a buck.
Private, Non-Profit:Mostly funded from student tuition and endowments.
They function as non-profit organizations, usually led by a board of trustees.
Private, For-Profit: Companies that aim to earn a profit for their owners and shareholders.
Non-profit schools may deserve the criticism that theyre treating education like a business, but for-profit schools areliterallya business.
Theres nothing wrong with running a business.
Although the national student debt has skyrocketed, the average borrowercarries less than $30,000.
According to a report from theU.S.
For-profit students represent a disproportionate percentage of the national student loan debt because their loan balances are so high.
In fact, its comparable to the price of a graduate degree!
One might argue that for-profit college students are more likely to borrow, driving up the numbers.
An acquaintance once told me about her own experience borrowing to attend a for-profit school.
Theres even a couple of cases ofschools trying to recruit the homeless.
They target low-income people who are desperate for high-paying jobs and likely to get government aid.
Recruiters are trained to emotionally exploit prospective students, too.
Thatsame study by the U.S. Senate Committee reportedthat recruiters are trained to find a pain point in potential students.
They also mislead students about the cost of tuition, completion rates, and job placement rates.
This is why Education Management Corporation had to pay back $95 million.
Not only did they misled students, they misled the government.
According tothat report from Brookings, for-profit college students make up 44% of student loan defaults.
These recruiters target veterans and low-income households because of something calledthe 90/10 rule.
However, the other 10% must come from private dollars.
There are other ways for-profit schools game the system, too.
According to a report from theU.S.
Or theyll raise tuition just enough that students have to pay out of pocket or with credit cardsprivate dollars.
All of these practices are bad for students, but theyre bad for taxpayers, too.
Much of our taxpayer dollars fund Federal financial aid.
Considering many of these students default and/or never graduate, that doesnt seem to be a great investment.
Plus, there are counterpoints to the above arguments.
Proponents of for-profit schools argue that they offeropportunitiesto veterans and low-income households.
Were they employed or employed in their field of study?Theres a huge difference.
You should obviously research the specific schools reputation, too.
Nonprofit Colleges Online has alist of the 25 worst for-profit colleges, for example.
And you might read student reviews at a site likeNiche.com.
Illustration by Nick Criscuolo.
