Report: For-profit colleges ‘defraud’ students

Study compares tuition costs; graduation, loan-default rates

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For-profit colleges, already the target of Senate Democrats, took another beating in a report released Wednesday by an education trade publication that says such institutions “defraud” young people.

Youth Today Publisher Sara Fritz, who unveiled the “Guide to For-Profit Colleges” at the National Press Club in Washington, said many for-profit institutions promise a first-class education to young people but instead leave thousands of dropouts with insurmountable piles of loan debt.

“There are many, many young people for whom this is the alternative, the best alternative, because these schools are easy to get into … this is obviously an appealing option for kids who didn’t do very well in high school,” she said.

The guide provides details on more than 100 nontraditional college campuses, including trade schools, fashion institutes, online-only institutions and others. The colleges are compared by graduation and loan-default rates, tuition costs, transparency in providing information, percentage of revenue from federal financial aid and other figures.

Andrew P. Kelly, research fellow in education policy studies at the American Enterprise Institute, said that while the report raises questions, it cannot be used as a “blanket indictment” of all for-profit colleges, which vary in size, scope and mission.

For example, Mr. Kelly said graduation rates among nontraditional colleges differ greatly, ranging from 5 percent to nearly 90 percent. The average amount of loan debt after graduation is also widely varied, with students at some for-profits only a few thousand dollars in the hole after getting their diplomas.

For-profit schools have become a hot-button issue on Capitol Hill, with Senate Republicans threatening to boycott next month’s tentative hearing on the subject unless the focus is expanded to include all colleges and universities.

Sen. Tom Harkin, Iowa Democrat and chairman of the Health, Education, Labor and Pensions Committee, already has held four hearings on for-profits. Republicans on the committee think Democrats are waging a war on for-profits and say the biased hearings have been little help in finding solutions. The problems highlighted by Youth Today, Republicans and for-profit proponents argue, are present in all corners of higher education.

The survey singles out Corinthian Colleges Inc., which operates more than 100 campuses in the United States and Canada and offers a wide variety of programs. But Youth Today is encouraging students to “avoid [for-profit colleges] like the Corinthian Colleges” because, among other reasons, the company dedicates more than 20 percent of its budget to student recruitment.

After the report was released, Corinthian came out swinging. Spokesman Kent Jenkins said Youth Today makes a serious mistake by comparing Corinthian campuses to other for-profit institutions, most of which, he said, offer vastly different class structures and have very different student bodies.

“The statements they made today seem to fundamentally misunderstand the nature of private-sector colleges,” Mr. Jenkins told The Washington Times. “They seem to believe we are a one-size-fits-all, everybody is the same sector. We’re not.”

He also said Corinthian, like other for-profits, challenges last year’s Government Accountability Office report that found misleading recruitment practices at 15 randomly selected private-sector colleges. The GAO issued revisions to that report several months later but stands by its general findings.

Youth Today, an independent, nationally distributed education trade publication, is primarily funded through donations, including money from the Bill and Melinda Gates Foundation, Atlantic Philanthropies and others.

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