New Report Slams For-Profit Colleges

Updated May 19, 2017 |
New Report Slams For-Profit Colleges
The newly released Harkin Report shows that for-profit schools are often high in tuition costs but relatively low in ROI compared to public schools and community colleges.
For-profit colleges have been a growing sector in higher education in recent decades, but they have also fueled plenty of debate among educators and lawmakers.  in 2010, for-profits launched an attack on community colleges, which are their main competitors, and community colleges vehemently fought back against the claims.  While these for-profit schools tout their many benefits through expensive marketing campaigns, watchdogs of higher education claims these schools fail to deliver on their promises at a much higher rate than community colleges, public universities and even some private institutions.  Now, a new report from Senator Tom Harkin indicates that these for-profit institutions are missing the mark in terms of educating students and spending student and taxpayer dollars wisely - marking a wide divide between community colleges and these for-profit schools.
 

About the Harkin Report

The report, dubbed the Harkin Report after its primary author, is a voluminous write-up of nearly 250 pages that details the operations of 30 for-profit institutions around the country, according to Inside Higher Ed. The investigation, which took two years to complete, was headed by Tom Harkin, a Democrat from Iowa. The report was issued by the Democratic Majority and the U.S. Senate Committee on Health, Education, Labor and Pensions.

Senator Harkin presented his findings at the end of July. The Harkin report has since been scrutinized by media, educators and lawmakers. While some agree wholeheartedly with the sometimes scathing report, others believe it is just another political ploy to run these institutions out of business. When the report is taken in its entirety, it does appear there is some truth on both sides of the aisle.
 
Findings in the Report
 
Some of the most significant findings in the Harkin Report include the following:
 
High Dropout Rate
 
The Harkin Report found that a significantly high number of students entering a for-profit institution fail to complete the program and earn credentials. The study discovered that more than 60 percent of students fail to complete a two-year program at a for-profit school. The Washington Post reports that the average student only remained in one of these schools for four months, which is the approximate equivalent to a single semester. Opponents to the report state that this rate is on par with the dropout rates at community colleges and even public universities, as stated at Community College Spotlight.
 

Misappropriated Spending

The report also found that for-profit institutions spend an unusually high amount of their resources to “non-education spending,” which includes marketing and profit-sharing. The study showed that 22.4 percent of resources went to marketing campaigns and another 19.4 percent went to profit-sharing. By the same token, only 17.7 percent of the budget at these institutions went to pay for instruction.

High Tuition Rates

Tuition rates at for-profit schools is much higher than that at community colleges or public universities. The Washington Post compared average costs between institutions and found that for-profits charged around $15,000 more for a certificate program, $26,000 more for a two-year program and $10,000 more for a four-year program than non-profit, public schools.

Lack of Accreditation

In some cases, the study found that programs at for-profits did not have accreditation, even if the school was accredited. There were anecdotal reports included in the study and reported by the Huffington Post, of students who did not realize their programs were not accredited until they actually completed their studies and tried to get a job in their field. This lack of accreditation was not made clearly known to students at the time they enrolled in the program.

Cost to Taxpayers

While for-profit schools boast that they do not use taxpayer dollars to fund their programs, that is not entirely true. According to the report, these for-profit schools have the highest percentage of students seeking financial aid to fund their studies. While community colleges only have 13 percent of their student population borrowing to pay tuition costs, and public universities have 48 percent of their student population seeking federal aid, for-profit schools have 96 percent of their students receiving some sort of financial aid. Since this includes primarily Pell grants and student loans that taxpayers help fund, the bite out of the taxpayer’s pocket for these schools is actually larger than one might think.

How to Fix the Problems

The Harkin Report did more than simply list the problems found with for-profit schools; it also provided recommendations on how those issues could be fixed. Some of the recommendations from this report include:

Accreditation
 
Since lax accreditation is cited as one of the contributors to the problems with for-profit institutions, the Harkin Report recommends that accreditation guidelines be tightened to more accurately reflect the quality of the institution. That process may require additional manpower, since the exponential growth of for-profits in recent year has in part contributed to the looser accreditation standards.

“Accrediting agencies have been overwhelmed by the rapid growth of the non-traditional educational organizations, whose size and methods of education are unfamiliar and demand different protocols of assessment,” the report was quoted as saying at Inside Higher Ed.

Federal Regulation

The report also recommended stricter federal rules governing for-profits. This might include better collection of student data and tying federal aid for students at the school to student outcomes. Other problems at some of these institutions that could be addressed through federal standards include methods of student recruitment, low retention rates and credentials with little or no value.

For-Profits Here to Stay

Despite the many problems cited with for-profits today, the Harkin Report does acknowledge that these institutions will be around for the long haul, and they will continue to play a significant role in the shaping of higher education in the future. For that reason, the report stresses the need for higher standards and firmer guidelines that would ensure students that attend these institutions would get the quality of education they expect.


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