Traditional Colleges and For Profit Colleges What’s the Difference?
With the economy in bad shape, every dollar spent is always going to be reviewed carefully.
Over the last couple of years, if there was one area where a lot of people were looking at closely, it has been the education system and the financial aid provided to students, especially to those studying in for-profit colleges.
Traditional colleges operate as non-for profit organizations meaning they are your basic 4-year public or private schools. The money that it receives is reinvested back into the university. Some of the characteristics of non-profit colleges are:
- Will offer a number of student support and career services
- Many will include a variety of campus life activities, most notably collegiate sports programs (football, basketball, baseball, hockey, track and field, etc.).
- The professors are more than likely be involved in research which may be federally funded and will structure their own classes and curriculum.
In addition, since they have been around longer they will have better name recognition and be considered more prestigious. Their mission tends to direct it to cater to a student’s overall college experience.
For-profit colleges are generally educational institutions that are run by private, profit-seeking companies. These are backed by investors, and they seek to maximize their profits. For-profit colleges are usually:
- They are in essence all about educating and teaching skills that allow a student to become gainfully employed in the work-force immediately. As a result, they will not have sports programs and other activities.
- Will offer classes and class times that are flexible and highly geared toward adult students.
- Generally target a wider cross-section of students from the “traditional” college student to low-income, minority, and first-generation college students as well as.
Student Loan Default Rate Among Students in For-Profit Colleges vs. Traditional Colleges
The number of students who are defaulting on the financial loans provided to them is on the rise. Incredibly the government tends to under-count these defaults. The percentage of borrowers defaulting on their educational loans is much higher than what the short term data provided by government might suggest.
In fact, according to recent surveys, the default rate is higher for students who are studying at 2 year colleges. Also, the percentage of defaults is much higher, almost 40%, amongst those students who are attending for-profit institutions. A lot of these defaults are because the students are not completing their education and not finding the gainful employment that the school promised to prepare them for. No job, equals no money, which equals no loan re-payments.
Cost Per Class For-Profit Colleges vs. Traditional Colleges
Most traditional colleges are looking to offer high quality education at as low a cost as possible. So the motivation in traditionally funded colleges is the education standard. On the other hand the main motivation of for-profit colleges is to earn more money.
In a recent study by the United States Government Accountability Office (USGAO) it was found that the tuition costs at a for-profit college tended to be considerably higher versus a comparable non-profit public college more than 93 percent of the time. The study also showed that the for-profit school was higher than private colleges 73 percent of the time.
Examples of the disparity in full tuition per program include: $14,000 for a certificate at the for-profit institution, when the same diploma cost $500 at a public college; $38,000 for an Associate’s at the for-profit institution, when the comparable program at the public college cost $5,000; $61,000 for a Bachelor’s at the for-profit institution, compared to $36,000 for the same degree at the public college.
That is because the same aid which can sponsor the entire education of a student in traditional college will not suffice for a single semester sometimes, in a for-profit college.
Are For-Profit Colleges Respected in the Work World?
Another point of contention is the quality, reputation or standard associated with for-profit colleges. Although the image of for-profit schools has improved, there is still the perception that a for-profit college is not a “real” college even though it’s accredited. Many employers and their traditional college educated employees may not view a for-profit degree as on a par with a traditional one.
Also, let’s face it more than a few people have borrowed a lot of money to pay tuition at for-profit colleges, only to find that the college goes out of business before they complete their degree… or worse, only to find that employers do not regard a degree from that college as worth the paper it is written on.
A Need for Better Regulation
It’s clear that when you take into consideration the above, that the for-profit college “business-model” is in need of some tweaking. There is something fundamentally wrong when an educational institution’s primary mission is to make money first and not educate its student second. Businesses and corporations are in the business of making money and maximizing profits, when colleges are in that business, the students will always receive an “academic down-sizing”.
Also, given the high default rate and given the fact that educational loans are likely to be higher in case of for-profit colleges, better regulation is needed to ensure that the system (and the student) is getting the best value out of making these loans and that there is a process with audit points to prevent miss-use and fraud.
Lastly, the regulation is needed so that we are positioned to always safe-guard the mission of colleges, and that mission is to educate our children, so that they are prepared to compete in a global economy.
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