At a recent hearing on Capitol Hill about higher education, Rep. Virginia Foxx of North Carolina complained about the attention given to problems with for-profit colleges. She said, "To sit here and grind a tired old ax against certain types of institutions you don't like is just disgraceful."
But for-profit colleges have a bad reputation for good reason. And in North Carolina, this is no exception.
In fact, a key indicator shows that for-profit colleges in North Carolina have the lowest completion rates in the nation. While public four-year colleges in the state have a completion rate of 56.4%, for-profit four-year programs have an abysmal 16.1% completion rate.
Poor for-profit college outcomes mean lifelong consequences for North Carolina families, particularly people of color, low-income students, women and veterans – ignoring that fact is the true disgrace.
Consider the costs of an expensive, but substandard educational experience. North Carolina for-profit graduates carry over $30,000 in debt at graduation, compared to $23,000 for public students. Since for-profit colleges do such a poor job of preparing students for careers, for-profit college students also have much higher default rates on their student loans.
Education should pull people out of poverty. It should give women and people of color the opportunity to close income and wealth gaps with hard work and perseverance. But these for-profit schools do the opposite, making the poverty traps deeper and the wealth gaps wider. In North Carolina, 55% of for-profit students are African American and 69% are women – much higher rates than at public and non-profit private institutions combined where 23% are African American and 58% are women.
North Carolina has a robust system of Historically Black Colleges and Universities (HBCUs) that would much better serve these African American students. In North Carolina, HBCUs are 16 percent of the four-year institutions, but enroll 45 percent of all African American undergraduates and award 43 percent of all bachelor’s degrees to African American students in the state.
With slick marketing and promises of new opportunities, for-profit colleges target older, nontraditional students. And since seniors are also co-signing loans for younger generations now, these multiple factors are adding up to heavy debt for older people, who often have no hope of paying it off during their lifetimes. This means no hope of retirement for many folks, and seniors are even in danger of having their Social Security benefits garnished for federal student loans.
The aggressive marketing and recruitment leads to experiences like these, described by a former for-profit student in Florida (Strayer is the largest for-profit school in North Carolina by enrollment): “Strayer is like the University of Phoenix; the people do everything for you. They do the loans for you, they do all that for you…you think I am going to get this degree and get this wonderful job and I will be able to pay everything, it doesn’t work like that unfortunately. Because those loans are expensive.”
Reform of for-profit colleges, which should include oversight and establishment of standards that are currently lacking in the sector, are an obvious solution to the for-profit element of the student debt problem.
The U.S. Department of Education is attempting to delay, suspend and rewrite rules that hold for-profits accountable. So Congress should maintain their focus on for-profit colleges as they grapple with responses to the crisis. And states like North Carolina should step up as the feds are stepping back and pass basic measures that give them the tools to oversee for-profit colleges and protect students within our borders.
We can increase oversight and scrutiny of for-profit schools based on poor performance on key indicators like graduation rates, cohort default rates, and job placement rates, requiring that schools meet these basic standards in order to remain licensed. And since for-profits spend much more on advertising and recruiting than on actually teaching their students, states can require, for example, that for-profit schools reverse that and offer value closer to that of public schools, spending more on education than advertising.
The widespread “dislike” of for-profit colleges held up by Rep. Foxx is not arbitrary. What folks don’t like about these institutions is plain and simple. They tend to rake in federal education funds and leave students with heavy debt and no degree or one of little value. With that kind of performance, what is there to like?