Are For-Profit Colleges a Good Return on Investment?
The New York Times ran an interesting piece last week about the rise of for-profit colleges and the surging enrollment numbers they’re seeing during the recession. In New York state, there’s been a 61 percent increase in the number of students attending for profit schools over the last decade (compared to a 15 percent increase at SUNY). For-profit institutions like Devry and the University of Phoenix are luring students by touting their career placement numbers (Devry claims that over the last 30 years, 90% of its graduates had jobs within six months of finishing their studies) and their tight focus on giving students ready applicable skill sets:
“The for-profits are concentrating 100 percent of their effort on teaching students what they want to be taught, when they want to be taught,” says Richard Vedder, director of the Center for College Affordability and Productivity. Programs are designed around fields that need workers, like information technology, nursing and criminal justice. They operate year-round, at night and on weekends. They promise more career guidance than do cash-strapped community colleges.
But the cost of attending a for-profit school is proving to be prohibitive in some cases, especially when compared to community colleges:
For-profit colleges are not cheap, compared with public institutions. One reason is they don’t get government support or collect alumni donations. Tuition at Monroe, which is family owned, costs $11,744 for two semesters, versus $3,150 for a City University of New York community college and about $5,000 in a SUNY baccalaureate program.
According to the College Board, of four-year graduates who take out loans to attend for-profit colleges, 60 percent have amassed at least $30,000 in debt. To attend publics, only 20 percent of borrowers owe that much. And more graduates of for-profit schools default on their loans: 11 percent within the first two years, compared with 5 percent of nonprofit graduates. “With community colleges, you probably aren’t taking on huge amounts of student debt, so your life isn’t ruined even if you fail out,” says Stephen Burd, editor of the New America Foundation’s Higher Ed Watch blog. “But people who drop out of for-profit schools can end up in a nightmare situation with a huge amount of debt.”
So the question becomes: is it a good bet to pay more upfront in the hopes that you’ll land a job quickly and can start to pack back your student loans, or does it make more sense to pursue the cheaper option? Many community colleges are creating programs with targeted training in fields such as health care, so they’re adapting in an effort to win over more students by offering something the for-profits have done and it will be interesting to see which sort of institutions will be able to sustain their growth.