"Subprime Opportunity: The Unfulfilled Promise of For-Profit Colleges and Universities," a new report from The Education Trust, represents one of the few pieces of independent research on the fast-growing, yet underregulated, for-profit college industry.
Picture a business that systematically puts its customers in hock—and provides them with very little in return. This is the experience of far too many students who put their hopes for a better future in the hands of for-profit colleges.
These companies aggressively market to low-income individuals and people of color whose dreams of a secure place in the American mainstream include a college degree. And yet these institutions do a far better job at turning a profit for stockholders than ensuring that their students graduate. And while too few of their students acquire degrees, too many end up saddled with crippling debt.
For-profits boosted enrollments by a staggering 236 percent over the decade from 1998-99 through 2008-09, far outpacing modest growth in public and private nonprofit institutions.
For-profits offering bachelor's degrees in 2008 graduated, on average, just 22 percent of their first-time, full-time students seeking these degrees—compared with 55 percent of such students who earn a bachelor's at public institutions and 65 percent who do so at private nonprofits.
Median debt of bachelor's degree recipients from for-profits in 2007-08 stood at $31,190, almost twice that of comparable graduates of private nonprofits ($17,040) and more than three and a half times that of graduates of public colleges ($7,960).
Lax regulation, unconscionable loan debt, high default rates, and low graduation rates for those seeking bachelor's degrees add up to big problems for both our democracy and our economy: The rich get richer and the poor, poorer.