Tag Archives: university of phoenix

Who Profits from For-Profit Schools?

In May, I wrote about for-profit schools, and over the Memorial Day weekend, I found a valuable source. The PBS program “Frontline” ran a special in May called “College Inc.” On this special, they explored the for-profit education industry. The program features interviews with school personnel, students, supporters, and critics.

Widely-publicized issues with for-profit schools—that students receive degrees for which they are not prepared because, for example, they have no practical experience in the field; that students come out with enormous amounts of debt and no job prospects; that students enroll in schools that are not accredited, not realizing that their degree will not have the value they expect—are explored on the program.

The University of Phoenix, currently the largest college in the United States, is explored, as is the for-profit education business from the point of view of the investor.

The possible reshaping of how Federal financial aid to hold the for-profits to a higher measure is also explored. Nearly half of the students who defaulted on student loans within three years of graduation calls into question the value of a for-profit degree to boost a student’s earnings.

And those in charge of accreditation of universities are also looking more closely at how the accreditation process works with for-profit schools.

To view the program, which is available online, go to this special section of the PBS website. While you’re there, you may also want to look at the responses from the colleges, and check out the 1053 viewer comments.

And, because one of the most striking stories in the special is that of a student who ended up with $200,000 in student debt and unable to get the job she trained for because the school did not have the proper accreditation, you may wish to read our article on “Financial Aid Options for College.”

For-Profit Schools

For-profit Schools have made the news the last few days as rumors that U.S. Education Deputy Undersecretary Robert Shireman is planning to resign have surfaced. Shireman has been considered a leader among those seeking tougher regulations of for-profit schools—regulations that could potentially reduce their Federal financial aid, which had increased six-fold from 2000 to 2009.

What are the for-profit companies for which Shireman has wanted to see increased regulation? They include Corinthian Colleges, Apollo Group Inc. (which owns University of Phoenix), Career Education Corp., DeVry Inc., and ITT Educational Series Inc. Upon news of his leaving, stocks rose significantly Monday for all of these companies. On Tuesday, with breaking news that Shireman would continue his relationship with the US DOE in an advisory capacity, the stocks all slid down, some more than others.

One of the main criticisms of for-profit schools is that they serve a predominantly low-income population of students who can end up with large, and sometimes unpayable, debt. Shireman had proposed that for-profit schools be required to demonstrate that graduates of the for-profit programs would have incomes commensurate with paying back their student loans.

Many of the schools that offer online technical or vocational training are for-profit schools. Certain of them have been known to have issues with proper accreditation as well as the funding issues, but careful vetting can help you sort these out. You can find useful information for making an assessment in our articles: “Distance Learning” and “Online Technical Schools.”

Technical and vocational education is also offered through schools that are not-for-profit, like high schools with technical centers, community colleges, and state-run colleges, universities, and technical colleges.

Sources

www.businessweek.com/news/2010-05-17/colleges-surge-as-government-official-is-said-to-quit-update1-.html

www.reuters.com/article/idUSSGE64H0JO20100518