For-profit 4-year colleges have low graduation rates

Graduation rates are very low for students seeking bachelor’s degrees at for-profit colleges, reports Education Trust in Subprime Opportunity.  Only 22 percent complete a four-year degree in six years.

The University of Phoenix – the nation’s largest for-profit postsecondary education provider – collected more than $1 billion in federal Pell Grant aid last year. In 2008, however, its six-year graduation rate was just 9 percent. At individual Phoenix institutions, the highest student-success rate was 33 percent at the New Mexico campus; the lowest rate was just 4 percent at the Cleveland and Wichita campuses.

In 2008, 31 percent of the students attending DeVry University graduated in six years.

The six-year graduation rate at Westwood College was 27 percent in 2008.

Most for-profit students qualify for federal loans and nearly half also take out private loans, according to the report.  They graduate — or fail to graduate — owing more than public or private nonprofit students — and are twice as likely to default on their loans.

For-profit colleges educate a disproportionate number of low-income and minority students, as well as students who are older than the traditional college age, working, raising families and paying for college without parents’ help. These students have low graduation rates and trouble repaying loans no matter where they enroll.

But demographics don’t explain the disparity in success rates, concludes Subprime Opportunity.

A recent report prepared for the Association of Private Sector Colleges and Universities found that even when controlling for student demographics and completion rates, default rates are still much higher at for-profit institutions than at other colleges.

That’s true for defaults, since for-profit college students take on more debt with less family support. But economist Robert Shapiro argues for-profit colleges’ graduation rates compare favorably with public and private, non-profit colleges with similar percentages of low-income and minority students.

. . .  lower-income students make up nearly two-thirds of those attending private for-profit colleges and universities, compared to just over one-third of those at public and private not-for-profit institutions. . . . The graduation rates for four-year institutions with predominantly lower-income students are 55 percent for private for-profits, compared to 39 percent for private not-for-profits and 31 percent for such public institutions. Similarly, across four-year institutions with predominantly minority student bodies, graduation rates are 47 percent at the private for-profits, compared to 40 percent at their private not-for-profit counterparts and 33 percent for public institutions.

Shapiro’s study was funded by the for-profit industry. But his conclusion is backed by Tom Vander Ark, who found for-profit colleges “do a better job graduating students,” when he was running the Gates Foundation’s campaign to boost college-completion rates for low-income and minority students.

At the certificate and associate degree level, for-profit colleges graduate 60 percent of students versus only 22 percent for community colleges, which enroll students with similar demographics. I have to think the demographics make a difference.

POSTED BY Joanne Jacobs ON November 24, 2010

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[...] Community College Spotlight:   Graduation rates are low and loan defaults are high for four-year for-profit colleges, says an Education Trust [...]

Trace Urdan

Same old bias flogging same old tired data. Ed Trust is getting headlines using first-time, full-time grad rates. This does not describe the student typically served by FP schools. And for what it’s worth these rates are very similar to those of HBCUs and many community colleges. There is no standard for success among students transferring with credits. Meanwhile look at shorter-term vocational programs and you see grad rates that far exceed publicly-funded institutions.

Similarly the conclusion that demographics does not explain the disparity is also incorrect. There has never been a controlled study for demography AND type of program. The fact that for-profit schools skew toward lower level programs and not-f0r-profit schools skew to higher level programs skews the data. Correct for demography AND length of program and you will see the correlation more clearly — or so suggests the regression analysis performed by on the government’s institutional repayment data published in August.

But the real dishonesty in the discussion stems from the fact that none of this information makes a credible case about the quality of the educational offerings — that is merely imputed. Critics are upset that the cost of failure at for-profits is born primarily by the students themselves. Whereas the cost of failure at state-funded institutions is born by taxpayers. On a per-graduate basis, taxpayers get a far better deal from FP schools.

So the government has begun the process of encouraging FP schools to limit access. And that is fine, but we shouldn’t kid ourselves that there will not be public policy consequences. The two possibilities are higher taxpayer costs as students are funneled to public institutions. Or more likely and insidious is that these students simply will not enroll anywhere and will increasingly fill welfare rolls or worse.

Education Trust and Kati Haycock should be ashamed. They have used their standing and strong contacts in the press to present a tired case against FPs as if it were new and in the meantime, not advanced the public policy discussion one iota.

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