Tag Archives: Deceptive Recruitment

Report: For-profit colleges more concerned with executive pay than student achievement

31 Jul

Moi has been following for-profit colleges for quite awhile. In Scary study about what happens to for-profit college graduates moi wrote:

We are in a periodic of extreme economic dislocation and people are retraining and starting businesses in an attempt to put themselves in a better economic position. Because of the economic uncertainty, may are willing to try almost anything to survive. Beware, some choices can leave people in a worse position.

The Center for Analysis of Postsecondary Education and Employment (CAPSEE) has produced a truly scary study about what happens to the graduates of for-profit colleges. According to the press release for the study, For-Profit College Students Less Likely to Be Employed After Graduation and Have Lower Earnings, New Study Finds  See, Study: For-Profit Colleges Offer Weak Job Prospects, Pay http://www.educationnews.org/higher-education/study-for-profit-colleges-offer-weak-job-prospects-pay/

Here is the citation:

The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators? (A CAPSEE Working Paper)

By: David Deming, Claudia Goldin, and Lawrence F. Katz| February 2012

Download the paper: The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?

Press release:For-Profit College Students Less Likely to Be Employed After Graduation and Have Lower Earnings, New Study Finds

Journal article:This study also appears in the winter 2012 issue of Journal of Economic Perspectives.

CAPSEE project: Project 6: The Role of the For-Profit Sector in Higher Education

The conclusions of this report have been echoed in prior reports.

The General Accounting Office (GAO) produced a report which details just how far from bargains some for-profit schools are. According to the article, GAO: 15 For-profit Colleges Used Deceptive Recruiting Tactics written by Daniel de Vise and Paul Kane some for-profit schools used deceptive practices to recruit students. Tamar Lewin reported in the New York Times that Report Finds Low Graduation Rates at For-profit Colleges With any education opportunity, the prospective student and their family must do their homework and weigh the pros and cons of the institution with with the student’s goals and objectives. See, Report Faults For-profit Colleges As Providers of ‘Subprime Opportunity’

Victor Hugo said it best when dealing with many for-profit colleges:           

Caution is the eldest child of wisdom
~Victor Hugo

https://drwilda.wordpress.com/2012/02/26/scary-study-about-what-happens-to-for-profit-college-graduates/

Senator Harkin of Iowa has spent the past couple of years investigating for-profit colleges.

Michael Stratford reports on the Harkin report in the Chronicle of Higher Education article, Senate Report Paints a Damning Portrait of For-Profit Higher Education:

For-profit colleges can play an important role in educating nontraditional students, but the colleges often operate as aggressive recruiting machines focused on generating shareholder profits at the expense of a quality education for their students.

That’s the unflattering portrait of the for-profit higher-education industry detailed in a voluminous report officially released on Monday by the Senate Health, Education, Labor, and Pensions Committee. The report, which also criticizes the accrediting agencies that evaluate the colleges, concludes a two-year investigation into the operations of 30 for-profit higher-education companies from 2006 to 2010….

Profits Over Students

The report says that more than half of the 1.1 million students who enrolled in the colleges under scrutiny in 2008-9 had withdrawn by mid-2010. Those retention rates varied between publicly traded and privately held for-profit colleges. At the 15 publicly traded companies 55 percent of students withdrew, compared with 46 percent at the 15 privately held companies, many of which are owned by private-equity firms.

“While community colleges and two-year for-profit programs have similarly low retention rates, the cost of the for-profit programs makes those programs more risky for students and federal taxpayers,” the report says. Nearly all students attending a for-profit college take out loans to attend, the report says, compared with just 13 percent of community-college students.

Internal company documents examined by the investigation reveal that decisions to increase tuition at for-profit colleges were driven by profit goals rather than increasing costs of instruction. The educational interests of students rarely, if at all, figured into that decision making, the report says.

One of the most significant themes of the report is the role of marketing and recruiting at for-profit colleges. The investigation found that most for-profit companies devote more resources to attracting students than they do to instructing them.

In 2009 the education companies that the investigation studied spent $4.2-billion, or nearly 23 percent of their revenue, on “marketing, advertising, recruiting, and admissions staffing,” compared with $3.2-billion, or more than 17 percent of revenue, on instruction. During the same period, the companies’ pretax profit amounted to slightly less than 20 percent of their revenue.

Of the five most profitable for-profit education companies in 2009, four spent more on marketing per student than they did on instruction per student.

By the Numbers:

  • More than half of the 1.1 million students who in 2008-9 were enrolled in colleges owned by the examined companies had withdrawn by mid-2010.
  • In 2010 the for-profit colleges examined employed 35,202 recruiters, compared with 3,512 career-services staff and 12,452 support-services staff, which amounts to more than two recruiters for every student-service employee and 10 recruiters for every career-services staff member.
  • Colleges owned by a company that is traded on a major stock exchange had 2008-9 withdrawal rates nine percentage points higher than the privately held companies examined. Among the 15 publicly traded companies, 55 percent of students departed without a degree, compared with 46 percent of students at the 15 privately held companies.
  • In the 2009 fiscal year, the colleges examined spent:
    $4.2-billion (22.7 percent of all revenue) on marketing, advertising, recruiting, and admissions staffing.
    $3.6-billion (19.4 percent of all revenue) on profit.
    $3.2-billion (17.2 percent of all revenue) on instruction.
  • 96 percent of students at for-profit colleges take out student loans, compared with 13 percent of community-college students, 48 percent of students at four-year public colleges, and 57 percent of students at four-year private nonprofit colleges.

http://chronicle.com/article/A-Damning-Portrait-of/133253/

Citation:

Senate Committee on Health, Education, Labor and Pensions

+ Congressional Hearings

- Congressional Committee Prints

- 112th Congress (2011 – 2012)

S. Prt. 112-37, Volume 1 – FOR PROFIT HIGHER EDUCATION: The Failure to Safeguard the Federal Investment and Ensure Student…
July 30, 2012

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S. Prt. 112-37, Volume 2 – FOR PROFIT HIGHER EDUCATION: The Failure to Safeguard the Federal Investment and Ensure Student…
July 30, 2012

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S. Prt. 112-37, Volume 4 – FOR PROFIT HIGHER EDUCATION: The Failure to Safeguard the Federal Investment and Ensure Student…
July 30, 2012

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S. Prt. 112-37, Volume 3 – FOR PROFIT HIGHER EDUCATION: The Failure to Safeguard the Federal Investment and Ensure Student…
July 30, 2012

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+ 111th Congress (2009 – 2010)

+ 110th Congress (2007 – 2008)

+ 109th Congress (2005 – 2006)

+ 107th Congress (2001 – 2002)

+ Legislative Publications

Related:

Why the Harkin Report on For-Profit Colleges Really Matters http://higheredwatch.newamerica.net/blogposts/2012/why_the_harkin_report_on_for_profit_colleges_really_matters-70101

For-Profit Colleges Pay Executives Based On Profit, Not Student Success, Report Finds                                                   http://www.huffingtonpost.com/2012/07/27/for-profit-colleges-executive-compensation_n_1712126.html?utm_hp_ref=email_share

Memorandum to Democrats House Oversight Committee http://democrats.oversight.house.gov/images/stories/2012-07-27.EEC%20to%20Dem%20Members.Status%20Update%20on%20Exec%20Pay%20at%20For-Profit%20Colleges.pdf

Before signing-up for any course of study, people must investigate the claims of the institution of higher learning regarding graduation rates and placement after completion of the degree. The U.S. Department of Education has an accreditation database and you can always check with the department of education for your state. Back to College has a good explanation of College Accreditation: Frequently Asked Questions

Dr. Wilda says this about that ©