Correcting the Falsehoods about For-Profit Colleges

by Lanny J. Davis – November 13, 2014

There is some disagreement among pundits as to why the Democrats got so badly whupped on Nov. 4 in races for the U.S. Senate and Congress, and in the statehouses. There is one thing, though, on which there appears to be agreement among conservatives and many liberals: Voters are tired of government policies that are driven by ideology, not facts, leading to partisan food fights and Washington gridlock rather than solutions.

Take the example of the widespread use of false and misleading data by critics of “for-profit” colleges when measuring their performance as compared with publicly subsidized community colleges. When I represented a coalition of career colleges several years ago (and I currently represent the sector today), I was always mystified as to why these distortions were so widely accepted and repeated in the media.

Here are three of the biggest whoppers when performance by for-profit colleges is compared to that of community colleges among students in similar two-year degree programs: For-profits have substantially higher tuition costs; substantially higher default rates by their students; and substantially lower graduation rates than community colleges.

Each of these assertions is not true.

In fact, when taxpayer subsidies from state and local governments to community colleges are taken into account, for-profit college tuition costs are substantially lower than community colleges for the same two-year degree programs. Studies have shown community college tuition costs $25,000 more per graduate than for-profits enrolled in these comparable programs.

Default rates, in fact, are slightly higher for community college students — 21 percent for two-year community college graduates versus 20 percent for two-year for-profit programs. The reason should be obvious (and supported by several academic statistical studies). To paraphrase a political expression, it’s about demographics and socioeconomic status, stupid — not the tax status of the colleges they attend.

For-profit schools’ graduation rates are more than three times higher than those of community colleges (63 percent versus 20 percent) for the same or comparable two-year degree programs, according to the Department of Education’s own Integrated Postsecondary Data System. Additionally, minority students are 78 percent more likely to graduate by attending a two-year for-profit school than a community college. At-risk students are 48 percent more likely to graduate by attending a two-year for-profit than a community college.

What is going on here? Why have so many political leaders and members of the media ignore the facts on for-profits’ versus community colleges’ performance?

The most obvious is ideological: Some think that any organization that is “for-profit” is a bad thing, by definition, leading to fraudulent recruiting practices and “diploma mills,” paying recruiters bonuses for more students enrolled and helping them obtain federal loans to finance their education. Omitted is the fact that the Department of Education has a regulation addressing this very issue.

In truth, for-profits must be better — to compete successfully for students, with each other and with community colleges. They have to be — and are — more flexible in hours, allowing part-time workers to take courses at night, and more focused on courses that will lead to successful outcomes; i.e., post-graduation placement in vocational or career jobs.

It’s time to hit the reset button and let the facts drive policy, rather than ideology.

The objective should be to benefit lower-income students and working families get access to higher education that will help them find good jobs. Forcing just the lower-income students who attend for-profits to lose their college loans and to drop out of school makes no sense — especially to me, as a liberal Democrat. It is obvious that overcrowded community colleges cannot absorb them. Will taxpayers want to pay the extra, substantial tab to community colleges when for-profits cost them little or nothing to produce better results? I doubt it.

We can and should support a successful for-profit college sector as well as quality community colleges. Both are needed and both should be required to meet the highest standards of education and transparency. This is the right policy for students and for America — based on facts, not falsehoods. It is also good politics.

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Mr. Davis is a Washington D.C. attorney in his firm of Lanny J. Davis & Associates and serves as Executive Vice President of Levick Communications.

To read the column on the The Washington Times, click here.