PBS’s Frontline recently aired a story on for-profit educational institutions. Ten percent of all post-secondary students are enrolled in one of these relatively new types of institutions. A Los Angeles Times article notes that these for-profit schools offer classes at non-traditional times, offering flexible educational opportunities for people working full-time. Students in these schools receive over 25 percent of the federal financial aid awarded to college students, so not only is this an important education concern, but a public policy issue as well.
College students in all types of institutions are borrowing more money and ending up in more debt upon graduation than just a decade ago. Students in the for-profit colleges end up defaulting on their loans at higher rates than do students in the more traditional public or non-profit colleges.
Why are students in so much more debt than in previous years?
We might surmise that in the past college was cheaper. According to College Board data, even adjusted for inflation, the cost of attending a four-year public institution has more than tripled in the past thirty years.
Fees and tuition have been increasing as public funding has decreased. Private donations and institutional endowments also took a hit during the recent recession. We could also consider the growth of for-profit colleges as a source of this cost increase, since they tend to cost much more than traditional colleges. Their students are more likely to be on financial aid and are less likely to pay the full tuition at the same time they take classes. However, that does not mean that those students are paying less for their classes since they are still liable for the loans.
The National Center for Education Statistics data on financial aid by type of college (Table 9) clearly shows that while they are not the most likely to be on financial aid, students at for-profit colleges are much more likely to have loans than students in other colleges. About 78 % receive loans at for-profit two-year schools, compared with 19 % at public two-year programs. Community college students are often eligible for financial aid yet don’t apply for it, perhaps because they don’t know they can. Staffing shortages mean that many financial aid offices are likely overburdened and understaffed. Students may find they have to navigate the process on their own, get frustrated, and give up. By contrast, for-profit schools make helping students apply for financial aid a high priority because without it the schools wouldn’t be able to stay in business. Perhaps if community college students knew more about their eligibility for financial aid they would be more likely to complete their degrees, as President Obama has encouraged.
Students have to borrow more money than they used to just to stay in school. With the current economic situation, students are less likely to have jobs to help pay for their education. The community college where I teach just finished our program review and our student survey results really surprised us: 52% of our students live with their parents and 40% are not employed. This is at an urban commuter community college campus, which traditionally has served a slightly older population of students than four-year residential campuses. When our campus recently updated our Educational Master Plan (a five-year plan for guiding us in making policy and budgets), our data clearly showed that our potential students often enrolled at the for-profit colleges in our region. This puzzled us since those colleges charge so much more money than we do, but it makes sense when you consider that it is possible for students to enroll in almost any class they wished at the for-profit school.
Since that time, our budget has been cut substantially, which means that we have had to cut classes. We have many fewer classes with much larger class sizes, and every semester we turn away more students than we enroll. Students may find it easier to enroll at for-profit institutions, but the Frontline report raised serious questions about the quality of education some students are getting at for-profit schools.
Some students reported being promised jobs in the health care industry, but when they later applied they were told that they didn't have the necessary training. Other news reports suggest that this is not an isolated incident, and some students have filed lawsuits against the schools they attended. These concerns about educational quality and students’ financial burdens have prompted President Obama to propose new regulations for financial aid at for-profit schools to ensure that taxpayers’ dollars are used appropriately.
Consuming education has become an increasingly expensive endeavor. Economic decisions are taking priority over educational concerns in institutions around the country, whether it be reducing the number of classes offered at community colleges like mine, or offering classes that might serve shareholders needs more than students’ best interests at some for-profit programs. We now have a large portion of the population paying huge student loan bills; for many of these students the soft job market means they might not find a job that pays enough to cover their monthly payments. Why do you thing being educated in the twenty-first century is so much more expensive than in the past?