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For-profit tech colleges: Can employers trust them?

Robert L. Scheier | March 7, 2011
IT-oriented colleges such as University of Phoenix, DeVry, Kaplan, and others have come under fire for high costs and deceptive practices

A November 2010 report from the Education Trust found that for-profits offering bachelor's degrees in 2008 graduated, on average, 22 percent of their first-time, full-time students, compared with 55 percent of such students at public institutions and 65 percent at private nonprofits. It also found that the median debt of bachelor's degree recipients at for-profits in 2007-2008 was $31,190, almost twice that of private nonprofits and more than 3.5 times that of public colleges.

September 2010 figures from the U.S. Department of Education show that 11.6 percent of students at for-profit colleges default on their student loans, compared to 4 percent for those at private schools and 6 percent at public schools. Industry spokespeople say that's due, in part, to the fact their students tend to be lower-income.

"There's some truth to that," says Ben Miller, a policy analyst at Education Sector, a nonprofit educational research center in Washington, D.C. However, he says, even if "they are offering a high-quality program, if it costs too much" the student won't be able to get a job that pays enough to let them repay the loan.

Figures from outside observers show for-profits charge the highest premium for certificate programs, and less of a premium for two-year associate degrees; they come closest to the cost of not-for-profits for four-year bachelor degree programs.

According to the College Board figures for the 2010-2011 school year, tuition and fees averaged $13,935 at for-profit schools, $2,713 at public two-year schools, and $7,605 for in-state students at public four-year schools. (Out-of-state tuition at four-year public schools averaged $19,595, with tuition at private not-for-profit schools averaging $27,293.)

An August 2010 Government Accountability Office (GAO) report found that a certificate program in computer-aided drafting would cost $13,495 at a for-profit school, compared to $520 at one community college. It also found a certificate in Web page design could cost as much as $21,250 at a for-profit, compared to as little as $2,037 at one public school.

How to increase the odds for success with a for-profit school In response to such reports, for-profit schools have posted online tools to help students estimate their costs and taken other steps to assure ethical practices. Kaplan University, for example, puts students through a detailed introductory process before they incur any charges. The government has also proposed a "gainful employment" rule limiting students' access to federal loans if previous graduates of their programs fail to meet benchmarks for repaying their loans, or for limiting their loan debt to a certain percentage of their income.


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