Senate report finds large cost gap between for-profit, public colleges
by Erica Perez ,
The Bay Citizen
August 7th, 2012
Among the findings of a U.S. Senate committee’s recently released
investigation of the nation’s for-profit college industry is a stark
assessment of the huge gap between what it costs to get a degree or
certificate from a career college and the price tag of a comparable
program at a public college or university in California.
The two-year investigation by
the U.S. Senate Health, Education, Labor and Pensions Committee took a
sweeping look at 30 for-profit education institutions nationwide,
combing through financial statements, internal company documents and
other data to create a picture of a sector that it says fails to provide
adequate return on investment for students and taxpayers.
Republicans on the committee criticized the report as biased, as did
organizations representing the for-profit sector. Steve Gunderson,
president of the Association of Private Sector Colleges and
Universities, said in a statement that the report "twists the facts to fit a narrative."
The high price of tuition was one piece of the committee's report.
Overall, the investigation found that bachelor’s degree programs at
career colleges cost 20 percent more, on average, than comparable
programs at flagship public universities.
Associate degree programs at for-profits averaged four times the price tag of community college programs.
In California, a medical assistant diploma at the for-profit Heald
College in Fresno costs $22,275. A comparable program at Fresno City
College costs $1,650, according to the Senate report. An associate
degree in paralegal studies at the for-profit Everest College in Ontario
costs $41,149, compared with $2,392 for the same degree at Santa Ana
College.
Both Heald and Everest are owned by Santa Ana-based Corinthian Colleges Inc.
At American Career College in Anaheim, the medical assistant program
costs $17,068 – more than eight times the cost at Orange Coast College,
where a certificate of achievement in medical assisting would cost
$2,046.
Sometimes, those costs are not fully disclosed or easily understood
by students who take on loans to foot the bills, the report claimed.
For-profit colleges reaped $32 billion in federal financial aid last
year. Meanwhile, more than half of students who enrolled in a for-profit
college in 2008-09 left without a degree by the middle of 2010. The
report claims that high-priced degrees, high withdrawal rates, poor job
placement services and questionable academic rigor combine to leave
students saddled with formidable debt.
Michelle Leggitt, 38, chose to go to Heald College's Roseville campus
in fall 2011 for a degree in medical office administration – a two-year
program that costs an estimated $30,000 in tuition alone. She opted for
Heald rather than the local community college because she thought Heald
offered a quicker, more efficient way to earn an associate degree.
“I don’t have the education behind me. I have the work experience
behind me,” Leggitt said. “I wanted to get a degree to be able to show
my kids, it doesn’t matter how old you are, you can still go to school.”
Leggitt ended up withdrawing from the program because of personal
issues, as well as an ongoing disagreement with the college
administration. She's not sure how much she owes the school.
Another former Heald student, Sandra Muñiz, filed a class-action
lawsuit against Corinthian Colleges Inc. in February 2011, accusing the
company of fraud, breach of contract, and violations of California’s
Unfair Competition Law, False Advertisement Law and Consumers Legal
Remedies Act.
According to the complaint, Muñiz enrolled at Heald's Rancho Cordova campus in 2007. After
completing a business skills program certificate in 2008, she couldn't
find work, so she went back to Heald for the paralegal program.
She withdrew from that program, dissatisfied because there were no
assignments or homework. She transferred to Heald's Roseville campus to
study criminal justice. Overall, she took out $19,000 in loans, the
complaint states.
The lawsuit contends that Corinthian deceives students about the true
cost of attendance by quoting tuition rates for only part of a full
degree program, not disclosing hidden administrative fees and omitting
attendance costs from college websites.
Corinthian spokesman Kent Jenkins Jr. said that the allegations in
the complaint were "simply wrong" and that Corinthian clearly discloses
the costs of its programs.
U.S. District Judge David O. Carter last year denied a motion by Corinthian to force the case into arbitration. Corinthian is appealing that motion in the 9th U.S. Circuit Court of Appeals, according to court records.
Jenkins said the for-profit programs cost more because they are not
getting the state and local subsidies that community colleges receive.
For-profits pass that cost along to students, who choose to pay the
price because they can get their degree or certificate faster than they
could at a public institution, Jenkins said.
"People come to us not because they’re being fooled or being
exploited, but because they make a very informed and intelligent
choice," he said.
He also cited data from the National Center for Education Statistics showing that nationwide,
62 percent of students at two-year for-profit colleges graduated with a
degree or certificate, compared with 23 percent of students at two-year
public institutions. The data looked at students who completed programs
within 150 percent of the time necessary to complete the degree
requirements according to the college's catalog.
Debbie Cochrane, research director for The Institute for College
Access and Success, said the comparison isn't quite apples to apples
because most career college graduates get short-term certificates, while
most community college graduates get degrees. Plus, the figures don't
include transfers, which are a big part of community colleges' mission.
For-profit college students also leave with more debt. More than 1
out of 5 for-profit college students default on student loan debt within
three years, compared with 1 out of 11 students at public and nonprofit
colleges, the Senate committee report said.
Cochrane pointed to the for-profit college sector's spending on
marketing and recruitment to help explain why some students end up
choosing career colleges over less expensive options.
"I think a big reason why students will opt to go to a for-profit
college rather than a lower-cost public or nonprofit option is that the
for-profits do a bang-up job with getting students in the door and
enrolled in the classes, and they do it because their bottom line
depends on it," Cochrane said.
The Senate committee's report found that some for-profit colleges
spend more on marketing and advertising than they do on instruction. The
30 institutions the investigation dug into spent an average of $2,622
per student on marketing.
"Whereas a student who may go to a college fair and may take a
brochure from a community college, they may put their phone number into a
for-profit college website and get dozens and dozens of calls until
they sign up," Cochrane said.
