Huffington Post: Community College Budget Cuts Drive Students To For-Profit Schools

The Huffington Post

Chris Kirkham

ONTARIO, Calif. -- Just after she started working for an ambulance company in this suburban enclave east of Los Angeles, Cierra Nelson came to admire the quick decision making and street smarts of the nurses she met on runs to local hospitals. She soon opted to pursue a nursing degree, settling on a low-cost, two-year program at a nearby community college that has an excellent job placement record.

But despite her efforts to complete the coursework in the ensuing four years, Nelson is still not a nurse. California's budget cuts have forced the state's community college system to scale back the availability of crucial science classes. Nelson found herself repeatedly turned away from the oversubscribed courses required for her degree.

Frustrated and seeking an alternative, she took out more than $50,000 in student loans to enroll last winter in a nursing program at Everest College, one of many for-profit institutions that have sprung up in the area amid massive cutbacks in public funding for higher education.

"When I first saw how high it was, it was kind of a shock," said Nelson, who eventually came to the conclusion that taking out loans made more sense than waiting semester after semester to take the community college classes she needed to advance. "I know it's a lot of money and I'll be in debt, but I've got to do what I need to do."

While the program at Everest comes with a much higher price tag -- nearly $60,000 in tuition, compared to less than $3,000 at area community colleges -- its degrees appear to be less valuable on the career marketplace. More than 90 percent of the nursing students at nearby community colleges last year passed state licensing exams, which are required to practice in California. Fewer than 70 percent of Everest students passed the exams, registering the lowest success rate of all nursing programs in the state.

Nelson's predicament mirrors that of many students navigating the world of higher education in recent years. Community college degree programs, which have long provided affordable pathways to careers, have been overloaded by soaring demand, just as state governments grappling with budget crises have slashed support for such programs. Lack of public funding is among the more potent forces behind the surge in enrollment at for-profit colleges, which has turned their corporate parents into Wall Street darlings.

This dynamic has played out powerfully in California, where cuts to public education have been particularly deep, and where for-profit colleges have been notably aggressive, tacking up marketing notices on bulletin boards at community colleges where students are increasingly unable to enroll in classes.

"The population that is being pushed out is the most needy," said Jane Patton, past president of the Academic Senate for California Community Colleges, a group representing college faculty members. "These are the most vulnerable students that the for-profits have preyed on."

The for-profit college sector has faced increasing scrutiny in the past two years, as attorneys general in at least four states, including Florida and New York, have prosecuted or launched investigations into more than a half-dozen companies for overly aggressive marketing practices and financial aid fraud. More than 20 state attorneys general have signed on to a working group probing industry abuses.

Federal data has shown high rates of default on student loans among students enrolled at these institutions, prompting the Obama administration to promulgate new rules aimed at limiting abuses. A year-long Huffington Post investigation has found widespread rule-breaking at several of the largest for-profit college chains, with many institutions systematically preying on the anxieties of potential students, while making false promises about the success rates of their graduates.

Faced with the fact that large numbers of students fail to secure jobs that pay enough to keep them current on their loans, the industry has defended itself in part by portraying its campuses as the last bastion of opportunity for many Americans aspiring to a college degree. In testimony on Capitol Hill and in media interviews, industry representatives have emphasized that its schools welcome the least advantaged, hardest-to-educate students: people from low-income households, minorities and first-generation college students.

In the for-profits' scenario, any change in policy that risks slowing enrollment growth at their colleges also risks eliminating the only alternative available to more vulnerable segments of the student population.

But while for-profit colleges do indeed educate more low-income and minority students than other institutions, this is in large part because support for the traditional alternative, community college, has failed to keep pace with demand.

Though no one maintains a comprehensive list of state funding for community colleges, state and local support for community colleges on a per-student basis declined by 5 percent in 2009 from a decade earlier, according to Department of Education statistics compiled by the Delta Project, a nonprofit research group that studies higher education spending. The total subsidies provided to students by community colleges, including funding from public sources and other outside support, fell by 10 percent over the last decade, on a per-student basis.

The Obama administration has significantly boosted funding for Pell Grants, which are available to low-income students. Over the last three years of the program, the federal government has more than doubled spending on Pell grants, budgeting $20 billion more this year than in the 2007-08 school year. For-profit colleges have captured an outsized share of this pool -- roughly 25 percent -- despite educating only 12 percent of college students nationwide, according to the most recent federal data.


Intake of federal Pell Grant dollars, by higher education sector
Source: Department of Education

Had the $7.5 billion that for-profit institutions received via Pell Grants during the 2009-2010 school year gone instead to fund community college systems nationwide, that money could have created capacity for an additional 629,000 community college students, The Huffington Post calculated, using available estimates for the average expenditure per student. That would represent a 20 percent increase in the number of full-time community college students currently enrolled nationwide.

At California's community colleges -- the nation's largest system of higher education, serving a quarter of community college students nationwide -- an estimated 200,000 students will be turned away from classes next school year, according to the state community college chancellor's office, following state cutbacks of nearly 20 percent across the entire system. That amounts to more than 7 percent of the entire state's community college student body, and that does not count those who gave up on plans to enroll due to the difficulties of securing classes.

After accounting for inflation, California is now spending the same amount on community colleges that it did six years ago, despite adding more than 175,000 students in that period, a nearly 20 percent increase. On a per-student basis, the state is spending less this year than it was 15 years ago.

The for-profit college programs that have been absorbing the resulting overflow of students are on average more than five times as expensive as their community college counterparts, according to a Senate report that examined such schools nationally. While only about one in five students at community colleges takes out loans to finance their tuition, four of five students at for-profit two- and four-year schools sign off on loans, according to Department of Education data.

Because of the high costs and high debt loads, students at for-profit colleges are responsible for about 45 percent of all student loan defaults.

In the eyes of public education advocates, for-profit colleges are the inevitable, opportunistic outgrowth of a society that simultaneously rewards those with greater education while it eliminates traditional support for public campuses.

"The economy is essentially telling people that you have to get some kind of post-secondary degree or credential," said Anthony Carnevale, director of Georgetown University's Center on Education and the Workforce. "So the demand is growing very fast, and our ability to fund this function is crashing. It's not just declining, it's crashing. The public sector is basically getting out of the business, so the costs are shifting to the individual students."

RED INK IN THE GOLDEN STATE

California's current status as the leading edge of for-profit college growth represents a substantial change in its history. A half-century ago when the state laid out its master plan for higher education, which quickly became a model for the rest of the country, it leaned heavily on public institutions.

The plan gave rise to one of the most prestigious public university systems in the nation, and it included a vast network of community colleges with a mission of educating "any student capable of benefiting from instruction."

"It is the intent of the Legislature that each resident of California who has the capacity and motivation to benefit from higher education should have the opportunity to enroll in an institution of higher education," the plan declared. "Once enrolled, each individual should have the opportunity to continue as long and as far as his or her capacity and motivation."

The community college system was crucial for career training, but it also provided a logical pathway for transfer to California State University or University of California schools. More than half of Cal State graduates started at community colleges, and nearly a third of UC system graduates began their education there. Nearly 70 percent of the state's college students are enrolled at a community college, a much higher rate than in other states, making California's system by far the largest in the nation.

Perhaps the most revolutionary concept was that of tuition-free education. Under the original master plan, the state subsidized every resident who came through the system, eliminating any out-of-pocket costs, save for some fees for specialized coursework such as labs.

Reuters: Middle-aged borrowers piling on student debt

Reuters
By Mitch Lipka

Middle-aged borrowers are piling up student debt faster than any other age group, according to a new analysis obtained by Reuters.

Educational borrowing is up for every age group over the past three years, but it has grown far more quickly among those between 35 and 49, according to the analysis of more than 3 million credit reports provided to Reuters by the credit score tracking site CreditKarma (CreditKarma.com). That group saw its school debt burden increase by a staggering 47 percent, according to the analysis.

The average student loan debt for those aged 38 to 41 was the biggest of that group -- about $12,000, up from just under $9,000 in 2009. Young people still carry the biggest student loan burdens; those aged 26 to 29 have an average of $14,000 in student debt. But the increased levels in middle-aged student debt is a new phenomenon.

Credit Karma CEO Kenneth Lin says the reason is obvious: The tough economy has pushed people to seek mid-career training.

"More and more people are going back to school," he says. "High unemployment, rising tuition costs, artificially low interest rates from the government, and increased for-profit school advertising... (adds up to) consumers taking on student loan debt at an alarming pace."

For-profit schools tend to saddle more debt on older students with poorer credit than traditional institutions, he said.

For example, Atlantan Janice Derrick might be typical. She was 47, with 25 years of work experience when she got laid off nearly three years ago as an executive assistant. She applied for about 200 jobs without getting a single call.

"Not even temp agencies were taking on people," she says.

Derrick took an aptitude test and found she was well suited to be a social worker or school counselor. But she did the math and realized the low salary expectations and the amount of additional schooling weren't a great combination. So she decided to study to become a court reporter instead, and amassed about $25,000 in student loan debt for her training. That was on top of the credit card debt she accumulated while unemployed.

Now 50, she just got her court reporting license, and she says she's hopeful.

"I am still worried about money, but there is plenty of work," Derrick says. "Unlike most of my friends, I am starting to catch up."

ALL WALKS OF LIFE

Derrick has been working with a financial planner, Cristina Briboneria, vice president, oXYGen Financial in Alpharetta, Georgia.

Briboneria says she sees similar, and sometimes less-positive situations with people from all walks of life.

College loans are a huge problem beyond just this recent move into an older demographic. The financial aid site FinAid.org estimates the amount of outstanding student loans at $966 billion, which surpasses even the amount of credit card debt in the US .

Mitchell Weiss, co-founder of the The Center for Personal Financial Responsibility at the University of Hartford, which gives students personal finance guidance, says he's not surprised to see the trend and has words of caution for those who are considering taking on student debt in a career change: It's easy to get student loans - perhaps too easy.

"The loans they take are often times more than they can tolerate. And they can't always score a better job to pay for them... Everybody believes they will get out school, get a job and pay it back. Few really take the time to do the math and decide how much they could afford to borrow," he says.

The best bet for anyone who feels as though additional schooling will help their job prospects is to enroll while they're still employed and they are able to take advantage of any education support from their employer.

If that opportunity's already gone, it's important to do a realistic evaluation as to whether the job opportunities are going to justify the expense. Weiss says he knows people who assumed a mid-career change would be successful simply because they went back to school and got a master's degree in business. But a degree without any related experience could put a 40-something in competition with a 20-something graduate who's done internships and may be willing to work for less.

Going back to school and accumulating debt without a realistic plan to pay for it is a "roll of the dice," Weiss says.

Both Weiss and Lin noted that this government-backed debt, unlike most other debt, cannot be discharged in a bankruptcy, so it is an albatross for those who can't make enough money after going back to school.

"Some of my clients have come out of their programs with over $100,000 worth of debt and are unable to find a job making six figures," Briboneria says. "Because of the economy, many employers have an abundance of candidates to choose from for their open positions who will work for less money to pay the bills."

There are some alternatives to piling up student debt for those who do want to take the chance and go back to school. Explore what support might be available to you:

--Does you state offer grants toward job training and education if you've been laid off?

--Look for grants or student loan forgiveness if you pursue certain career paths, such as teaching.

--Shop around for aid packages from schools you're interested in attending. The Department of Education says some colleges and universities will offer a "bargain" tuition for older students.

--Ask a prospective college or university if they will award life experience credit to help offset the number of classes you might have to pay for.

The author is a Reuters columnist. The opinions expressed are his own. (Edited by Beth Gladstone and Jilian Mincer)

The Washington Post: 5 reasons for-profit colleges will survive

The Washington Post
By Jay Mathews

I am biased against for-profit schools. I have long thought of them as diploma mills, without ever having visited one. I like public charter schools, but only if they are non-profit. When Kaplan Inc., then the most profitable division of The Washington Post Co., built a chain of for-profit colleges, I never wrote about them.

Teachers I admired saw education as a public trust. They weren’t in it for the money. They wanted to help kids. I noticed that Edison Schools, a management network run by some smart and well-meaning people, failed to win the confidence of many parents and teachers because it, too, was trying to make a profit.

Now those of us who think this way have been vindicated. The federal government has tightened regulation of for-profit colleges, including Kaplan’s, in response to criticism that many students were being misled about loans they were likely to need to obtain a degree. This has put the entire industry on the defensive.

Enter Andrew S. Rosen, Kaplan’s chairman and chief executive officer, with a new book called “Change.edu: Rebooting for the new talent economy.” Who does Rosen think he is, extolling the virtues of for-profit schools while his company faces such threats?

I wasn’t sure I wanted to read the book or write about it. As a 40-year employee of The Post, anything bad I say might seem too little too late, and anything good would be taken as trying to protect the company. I was glad Rosen agreed his company had messed up. He did not shake my feeling that profits and teaching are a bad mix, but I did learn things I needed to know.

Despite the industry’s troubles, Rosen convinced me that for-profit educational ventures are here to stay. People who feel as I do will have to adjust to that.

Here are five reasons why:
1.For-profit schools are less of a drain on tax dollars than non-profit or public schools. Georgetown University business school researcher Robert J. Shapiro and his felllow economist Nam D. Pham found that for-profit schools receive less than 30 percent of the government financial support per student that public institutions and their students do.

2.The public and non-profit private universities that dominate higher education are doing less with their money. They are building luxury dorms, restaurants and athletic facilities which don’t produce more learning or more graduates. In 2007 the United States spent 3.1 percent of its gross domestic product on post-secondary education, twice the 1.5 percent spent by other developed countries that produce more graduates per capita.

3.For-profit colleges often have better graduation rates for the same kind of students. U.S. Education Department data show students with two or more key risk factors, such as delayed enrollment, no high school diploma or full-time job, have only a 17 percent chance overall of getting a two-year or four-year degree. Their chances are 24 percent at for-profit schools. That’s not a big improvement, but they are doing it with fewer tax dollars.

4.In other industries, the rise of for-profits has sparked great controversy, but not for long. In the 1980s hospitals began to shift from publicly funded or non-profit to privately funded, with much criticism. Today, most of us don’t know or care how the hospitals we visit are financed.

5.Aggressive newcomers to higher education have historically been labeled as wasteful, low-quality, hucksters cheating our youth. That was the rap against land-grant colleges and community colleges when they were created. They are now vital parts of our system.

People like me may want for-profits to disappear, but that is not going to happen. They seem destined to become a significant part of what college means in the United States. While we are cleaning them up, we should think about what our own alma maters can learn from them.

Direct link to article: http://www.washingtonpost.com/blogs/class-struggle/post/5-reasons-for-profit-colleges-will-survive/2011/11/27/gIQApBvy2N_blog.html?wprss=class-struggle

Save Student Choice: Private-Sector Schools Work With, And For, GIs

Private-Sector Schools Work With, And For, GIs
By William R. Looney III


Active-duty servicemembers and veterans have defended our liberty. We should defend their freedom to choose among the various alternatives for higher education.

The post-9/11 GI Bill greatly expanded benefits for those who wear the uniform. Unfortunately, many lawmakers continue to view higher education as something delivered only on a traditional college campus.

I disagree. Private-sector colleges and universities (PSCUs), sometimes called career colleges, are a very important part of the postsecondary mix. Here’s why these institutions are so vital to our military.

Most military students begin their postsecondary education after joining the military. It is in the military where these individuals acquire a desire for higher education along with the focus and discipline to be successful. Given the demands of their service, these individuals usually spend years away from the traditional classroom setting. Therefore to serve the servicemember’s educational needs, postsecondary education must be flexible and adaptable. In the case of deployed soldiers, sailors, airmen and Marines, it must be available where and when it is needed, no matter the time or the setting.

Postsecondary educational institutions must recognize that mobility is critical and credits should be easily transferable. Servicemembers do not get to pick when and where they serve. An educational system that only offers the traditional in-residence classroom, liberal arts-andsciences model misses the reality of military life. Deployments play havoc with the educational plans of soldiers, sailors, airmen and Marines. Service in combat zones adds an obvious set of complications to completing assignments and remaining on schedule to complete a degree. Military-friendly colleges and universities must understand and adapt.

Part of adaptation requires the educational institution to provide a range of academic and support services: career-focused programs that expedite the transition from military to civilian workforce, reasonable leave-of-absence policies; enlightened and informed financial aid counseling; and effective credit and SMART transcript reviews to maximize past experience and minimize course redundancy. Undergirding all of this must be a commitment to honest representations about the value of the educational services offered and a commitment to the highest quality of service delivery. All students, whether they have served in the military or not, deserve no less.

But adaptation to support our military students is not just a job for academic institutions. Our elected officials must also understand the need for options to remain open to our servicemembers — and for those options to be unencumbered by the thinking of the past. The popularity of private-sector colleges and universities has recently been called into question, primarily because these schools are just that: popular among military service and veteran students. Like any private school, these institutions do not receive government subsidies. Therefore, tuition at a PSCU costs more than tuition at a public college or university. Private institutions, regardless of their tax status, may simply do a better job of meeting the special interests and requirements of military service and veteran students.

Certainly there are lapses in PSCU education, as there are in traditional higher education. These should be isolated, analyzed and corrected. With unemployment rates for veterans running in the double digits, however, we should tread carefully among our higher-education policy choices. Stigmatizing PSCU education generally for the actions of a few harms military service students and veterans. And building barriers to the delivery of higher education by conjoining federal student aid and military veterans’ earned benefits policies, a step currently contemplated by members of Congress, is counterproductive.

Let’s honor our servicemembers by keeping their postsecondary education options and our thinking open to what works for them.

Gen. William R. Looney III (retired) is a former command pilot with more than 4,000 flying hours, including 2,500 in the F-15. He currently consults on national security, serves on numerous boards, and is a leadership/management mentor. His clients include Spartan College of Aeronautics and Technology in Tulsa, Okla., an Association of Private Sector Colleges and Universities member institution.

Direct link to article: http://savestudentchoice.org/news-articles/private-sector-schools-work-with-and-for-gis