LOS ANGELES —For-profit colleges have expanded rapidly, with enrollment nearly tripling in a decade to more than 1.8 million students in 2008. But amid growing criticism of its high-powered marketing and doubts about the value of its degrees, the industry faces a federal crackdown.
“Rightly so, the industry is going to have to shift focus” from maximizing profits to ensuring student success, said Jeff Silber, an analyst at BMO Capital Markets. “That means slower growth and less profitability.”
The for-profit industry caters to nontraditional students — 20-somethings with poor academic records and working adults needing flexible class schedules. But the schools lure such students, critics say, by exaggerating their job and salary prospects, then strand them with dubious educations and mountains of debt.
“We’re seeing too many examples where students go deeply into debt and either end up with no diploma or a worthless diploma,” Sen. Richard J. Durbin, D-Ill., said. “It is a terrible outcome for a student who was just trying to get an education.”
Tuition is nearly five times as high at two-year for-profit colleges as at state schools. At four-year, for-profit colleges, half of graduates leave school with at least $31,000 in student loans. That’s nearly four times that of their public-university counterparts, studies show.
For-profit students borrow heavily, receiving 24 percent of government-guaranteed student loans while accounting for only 12 percent of U.S. college students. But many graduates say they can’t get jobs in their chosen fields, and certainly can’t earn enough to whittle down their debt.
One in four students at for-profit colleges default on their loans within three years, more than double the rates at state schools and private colleges, the U.S. Department of Education says.
Defaults can stay with students forever. Student-loan debt can’t be erased by filing for bankruptcy, and collectors can seize money from a borrower’s paycheck, tax refund and even Social Security benefits.
— Walter Hamilton (MCT)
