http://www.theatlantic.com/business/archive/2011/09/how-for-profit-colleges-can-save-themselves-and-higher-education/244595/
The Atlantic published a great article in September about the changes in For-Profit education in comparison to proprietary schools. I found this interesting after our topic discussions on Friday night, especially focussing in on the financial aid sector. The discussions that ranged from how much for-profit colleges charge for learning compared to that of public schools, and leaving their education with a degree, but with a huge amount of financial debt. This article links into with other political issues attached to these issues like Perry from Texas and his plan to of getting the major Texas schools to deliver degrees for $10,000. This is creating a mass hysteria of controversy of who and how it is going to get paid for. It also attaches an article about President Obama and how he wants there to be 8 million college graduates by 2020.
The idea of this article talks about how 25% of students from for-profit institutions began defaulting their loan payments after 3 years. This is more than doubled what the public college default numbers are showing. One of the reasons is because of how much more expensive for-profit institutions are charging for degrees, in a shorter amount of time. Up front it seems like a good idea, but on the tail end, people are realizing that there is more debt attached than seen originally.
There is a saving grace to this though. Proprietary colleges have learned a great deal from for-profit institutions because of the increased number of students that have enrolled int he last 10 years. Proprietary colleges have opened up their campuses to try and meet the needs of the students that are moving towards for-profit institutions, mostly because from 2000-2009 the number of students enrolling in for-profit institutions have gone from 400,000 to 1.58 million. The article does say the numbers have dropped 14% in 2010, but to have your numbers quadruple in 10 years is substantial. Proprietary colleges are seeing the opportunity, both financially and student driven, to modify their traditional modes of education and open their campus to more mainstream ideas, like on-line learning.
For the for-profit schools, there are some goods that are coming out of this. They have set the foundation for most public colleges to focus on labor market demand students. Focus on the working individuals who want higher degrees, and make education an feasible opportunity in a reasonable amount of time and cost. Also, even though the numbers have dropped 14% in 2010, to have the numbers of enrollment quadruple in 10 years is a great sign and shows what the population wants and values as far as higher education is concerned. People want to further their education, as long as it is convenient and cost effective for them. And most importantly, from this article, this is the first time that "non-traditional" students have outnumbered "traditional" students. Non-traditional students being students with GED's, on-line learners, etc. while traditional students are classified as full-time, first-time students. That sparks quite an interest in public colleges to adjust where the numbers are.
The downside to this is that the cost of for-profit schools are now being seen as too much for students. Even though students are getting a degree in 2 years, they are paying much more than their community college counterparts in financial aide and after three years, there are more for-profit students defaulting on paying off their loans.
I see this as a great opportunity for proprietary schools to advance and further what their philosophies are. I believe in the public college idea and 4 year institutions, however, even right now, UNC offers this cohort opportunity to for a working stiff to go back to school which would not have happened a few years ago. I could have gone to a for-profit institution, and paid a lot more for it (and I even had the paperwork filled out to do so until I saw this program), but I believe more in the system of public colleges and what they stand for. Now that the public schools have opened their doors to people away from Greeley, it is giving them more revenue, but also allowing for more adults to have the opportunity to return back to school and further their education.
As I read your post, I was shocked to hear that 25% of the for profit students were defaulting on their loans after 3 years. That is an alarming percentage of loan defaults. I would imagine that the loans for the for profit schools will become increasingly difficult to obtain. Financing companies cannot take on such risks in todays' economy. There will be more strict criteria for these loans which, in my opinion, will have more students returning to the traditional 4 year degrees at nonprofit institutions. I know that is an assumption that might be difficult to back up but I have done some work with auditing of banks. Banks and other lending institutions have to be very careful of high risk loans. They lose their ratings which is very important to them as they have a large number of defaults. Then, companies that are willing to take on more risk will fund such loans but at much higher rates and payments. It will be interesting to see if my prediction does prove to be even somewhat right.
ReplyDeleteI believe that some for profit schools have good curriculums and allow the non traditional students the ability to get through at a more desirable pace. I never considered this as my option though as I come for the traditional background of their is more prestige in a traditional University. I know that these for profit schools are making for some good competition for the traditional universities but finding ways to compete is always good for the ever changing environment of the traditional universities. The global campuses, on line courses and the offering of classes that fit into the non traditional students day are all ways to continue to compete.
I am pulling for the traditional non profit universities and hope they continue to fight for those students!