U.S. News

Fewer for-profit college students graduate

WASHINGTON (Reuters) - Just 22 percent of freshmen who enroll in for-profit schools graduate within six years, compared with 57 percent at nonprofit schools, according to a report by Education Trust issued on Tuesday.

The report was released in the midst of a battle over an Education Department effort to crack down on schools in the for-profit sector, many of which are accused of loading students down with debt while failing to educate them.

The schools say they educate minority and poor students who are ignored by the nonprofit sector.

The shares of for-profit schools have moved sharply in recent months during jockeying over the regulations.

The University of Phoenix, owned by industry giant Apollo Group Inc, had a six-year graduation rate of just 9 percent in 2008, while 31 percent of DeVry Inc students graduated, the report said.

Strayer University graduated 17.4 percent of its freshmen from its Washington, D.C. campus, while Kaplan, owned by the Washington Post Co, graduated 27.8 percent of its first-year students, according to an online tool that accompanied the report.

Fifty-seven percent of first-year students at nonprofit colleges go on to graduate, according to EdTrust.

Kati Haycock, president of EdTrust, said the poor graduation rates were “a huge change from five or 10 years ago” when the for-profit sector was considerably smaller.

“The more we dug into it, the more concerned we got. We could care less if they make a profit,” she said.

The report blamed some of the low graduation rates on the fact private schools spend an average of 3-1/2 times more than for-profit schools spend on their students.

“Students, especially low income students, pay more ... but the for-profits spend less on them,” she said.

The Association of Private Sector Colleges and Universities, which represents the for-profit schools, called the report “unfair” and argued failure to graduate does not mean that a student has failed.

“Every year of education is widely acknowledged to add 8 percent to earnings,” the group said in an email statement.

The Education Department has issued a preliminary rules that say programs at for-profit schools could lose their eligibility for student loan funding if 65 percent of students default or are shown to be unable to pay their loans. Losing federal aid could cripple some for-profit schools.

Many of the schools, including Apollo Group and Corinthian Colleges Inc, have raised admissions standards in the hope of bringing down loan default rates, even though the decision will hurt revenues.

The Education Department is also seeking to ban entirely incentive pay for admissions recruiters, limit the creation of new programs, require disclosure of graduation rates and job placement rates to new students and strengthen the department’s hand in taking action against schools that fail to advertise honestly.

For-profit schools often offer graduate and undergraduate degrees, but also offer trade training for people wanting to become mechanics and medical technicians, for example.

Editing by Andre Grenon