For-Profit Schools Are More Flexible & Convenient Than Community Colleges, But Can Land You In Debt Hell

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For-Profit Schools Are More Flexible & Convenient Than Community Colleges, But Can Land You In Debt Hell

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Whether it’s for financial, academic or personal reasons, a traditional four-year college isn’t in the cards for everyone. Community colleges have long offered the opportunity for people to get started (or restart) their education without having to go into debt, so why have so many Americans recently opted for more expensive for-profit colleges that are regularly criticized for spending more on acquiring students than they do on teaching them?

With so many for-profit colleges under scrutiny by state and federal regulators for deceptive marketing practices, low graduation numbers and the highest rates of student loan delinquency, you might think it would be a simple decision to choose a community college.

Choosing The Wrong Path

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But according to the College Board, between 2000 and 2009, the for-profit college sector went from enrolling just 3% of all post-secondary students in to accounting for 9% of all students. During that same time period, two-year public colleges’ share of students dropped from 43% to 40%.

While two-year schools have a reputation as a place to get started on a longer college career, both for-profit schools and community colleges are full of students who are not fresh out of high school, with the majority of students at both types of college being between 25 to 40 years old.

Where one can see a difference in the demographics between community colleges and for-profit schools is income.

According to research [PDF] from the Institute for Higher Education Policy, community colleges are split almost evenly between students coming from poverty and those from above the poverty line. Meanwhile, low-income students at for-profit schools outnumber the rest of the income groups by more than three to one:

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So how do expensive for-profit colleges convince so many low-income students to take out loans rather than just sign up at the local community college?

The decision to go with a for-profit school often comes down to three things:

  1. Marketing: For-profit schools outspend all other types of schools on advertising and marketing by a factor of more than 20:1

  2. Convenience: For-profit colleges make it as easy as possible to enroll for classes and qualify for loans

  3. Flexibility: Features like online classes and multiple campuses make for-profit schools more attractive to students with families and busy schedules

Not Your Parents’ Two-Year College

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For-profit schools and community colleges may have a significant amount of overlap in certain course and program offerings, but the for-profit industry has managed to position itself as providing something different — and more “college”-like — than you’d expect to get from your local CC.

Community colleges are often viewed as a stepping stone for students who would like to attend four-year universities in the future and many of these schools grant associate degrees, in addition to non-credit programs like English as Second Language or continuing education courses for people just looking to expand their educational experiences without committing to a specific program.

Meanwhile, for-profit schools market themselves not as starter schools or places for curious folks to dabble in new topics, but as colleges that provide start-to-finish education, with some offering everything from non-degree certificates to PhDs.

For-profit colleges also tend to have names that sound more like a traditional university — some even have “university” in their names — which has a certain aspirational appeal to it. The phrase, “I went to Heald College” may have a better ring to it than “I went to Bucks County Community College,” even if the student got the same or better education at the school with the clunkier name.

The marketing savvy of for-profit colleges is likely a result of the types of people who operate these schools.

According to one paper [PDF] from researchers at Ellis University and Drexel University, for-profit institutions are generally helmed by business professionals with limited academic expertise, while not-for-profit institutions are usually governed by highly successful academics with little or no training in strategic management.

“The former are more effective at managing an institution to meet changing landscapes, but rarely have the educational experience or insights to build and sustain strong academic programs,” reads the paper. “The latter have greater capacity to build strong academic programs, but often lack the managerial excellence to support institutional foresight and agile responsiveness to change.”

Time = Money… And Lots Of It

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Students deciding between a community college or a for-profit education typically aren’t comparison shoppers, one community college official tells Consumerist. Instead, these students are looking for what’s most important to them: their time.

For example, if there are three local colleges in a student’s area — one community and two for-profit colleges — these students are more likely to seek a school that offers their desired course at times convenient to them, rather than compare the institution’s prices or completion rates.

The aggressive use of print, TV and online advertising by for-profit colleges gives these schools an upper hand over community colleges.

In 2013, Consumerist reported that the 15 largest for-profit education companies spent $3.7 billion on advertising and marketing in 2009; that’s 23% of their budget. Meanwhile, non-profit schools tend to spend less than 1% of their budgets on advertising and marketing.

A majority of the funds used by for-profit colleges in their marketing campaigns come from taxpayers in the form of federal student aid. In fact, these schools receive nearly 90% of their revenue from federal aid of some form.

The days of using persuasive, and often costly, advertising to lure students to for-profit colleges may be numbered. Legislators have tried several times to limit the amount of federal dollars these institutions can use to create their advertisements.

“Taxpayer dollars should not be used on out-of-control marketing, advertising and recruitment budgets,” said Senator Kay Hagan in a statement regarding a 2013 bill that would have put a limit on the use of taxpayer money for marketing.

Isn’t That Convenient?

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Students who look to attend for-profit colleges often see a more convenient and flexible learning experience, according to a report [PDF] from Stanford’s National Center For Post Secondary Improvement.

“Critics of community colleges contrast the entrepreneurial spirit of the for-profits with the supposedly tradition-bound inflexibility of colleges, reads the report. “According to this perspective, freed from the traditional academic schedules and even from many of the fixed costs of infrastructure and expensive facilities, the [school] is able to offer courses at more convenient times and in more convenient locations.”

Community colleges have long been known to provide education to adult, part-time and returning students, but the for-profit industry has quickly learned how to cater to these needs in a way that may be more attractive to some potential students.

One industry insider claims that for-profit institutions are “ahead of the game” in regards to online courses; something that has likely propelled it into a more enticing option than community colleges for working adults.

Additionally, for-profit schools can be seen as a more structured, or direct avenue, to a career field.

According to the Ellis/Drexel report, for-profit colleges use a high degree of centralization, while community colleges are composed of mostly “loosely coordinated, organically developed curricula,” meaning that a student at a for-profit school with multiple campuses can hop around as needed or take online courses and have similar experiences in all places. At the same time, this can result in a homogenized curriculum without the idiosyncrasies that can make a college class memorable.

Come On In!

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A big selling point of many for-profit colleges is the ease of entry into some programs.

Students, especially those who didn’t do well in high school or who are averse to standardized tests, considering a community college may be turned off by the idea of taking an assessment test. These tests are often used to determine if a student needs to take remedial classes before starting in their desired program.

A number of for-profit colleges require some form of assessment before starting classes, but remedial classes are generally integrated into their chosen field courses so there is less of a stigma attached.

The Ugly Truth

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While it might be easier to see why for-profit colleges seems to be a viable, attractive option for prospective students, there are a number of devastating consequences associated with attending these types of institutions.

The very things that make for-profit schools attractive to new students are precisely what leads to problems for students down the road. The marketing, the TV ads, the promises of free computers and iPads, offering online courses and tutoring; these all cost money. And since these schools are primarily businesses that promise profits to investors, the savings have to come from the one place where there isn’t a direct correlation to the bottom line: the classroom. You’ve already paid for your courses; whether you got your money’s worth is another matter.

The business of a for-profit college is to sign up as many students as possible and to get those students to borrow as much money as possible from the government and other lenders. The school gets paid, and the students are left with loan debt that may haunt them for decades.

In February, the Consumer Financial Protection Bureau filed a federal lawsuit against well-known for-profit college chain ITT Technical Institute alleging the company exploited students and pushed them into high-cost private student loans that were likely to end in default.

That same month, former employees of a for-profit college filed a federal lawsuit against Premier Education Group alleging officials at the schools made false promises of gainful employment to entice students into high cost programs.

“At the end of the day, the numbers tell the story: two-year programs at for-profit schools cost four times what they cost at community colleges,” explains our colleague Suzanne Martindale, staff attorney at Consumers Union. “Only 35% of community college students take out loans to pay for school, while 86% of for-profit college students take out loans.”