WSJ Uses Bad Numbers To Wipe Away Downside Of For-Profit Colleges

WSJ Uses Bad Numbers To Wipe Away Downside Of For-Profit Colleges

››› ››› ELLIE SANDMEYER

The Wall Street Journal editorial board used a misleading comparison of graduation rates to attack community colleges as "inferior" to for-profit schools. In reality, for-profit schools have significantly higher costs and employ questionable business practices that translate to lower employment and earnings for their graduates.

WSJ Attacks Community Colleges As "Inferior" To For-Profit Schools

WSJ: Obama Wants To "Punish For-Profits, Then Subsidize Inferior Public Competitors." The Wall Street Journal editorial board attacked President Obama's proposal to offer free community college education to students who keep their grades up, claiming that the plan is too costly and that community colleges are "inferior" to for-profit institutions.

And now the Administration is proposing to give inferior community colleges another competitive advantage with this new entitlement that bribes students with "free" tuition. So: Punish private schools, subsidize often inferior public schools, snatch regulatory control from states, and add tens of billions in new taxpayer obligations: The ObamaCollege plan is everything we've come to expect from this White House. [The Wall Street Journal, 1/11/14]

WSJ Claims Graduation Rates At For-Profit Schools Are Three Times Better Than Those At Community Colleges. To back up its argument, the Journal claimed that for-profit colleges have superior graduation rates:

Yet according to the National Center for Education Statistics, the three-year college completion rate at community colleges is 21%, compared to 62% at two-year nonprofits and 63% at for-profits. The reason for the disparity is that many community colleges do a poor job of meeting the needs of non-traditional students who tend to be older and work while attending school. Enrollment at for-profit colleges soared over the last decade in part because students and employers could see that many community colleges weren't providing the skills they require. [The Wall Street Journal, 1/11/14]

In Reality, A Variety Of Measures Show Community Colleges Have Better Outcomes Than For-Profit Colleges

WSJ's Use Of Graduation Statistics Is An "Apples-To-Oranges" Comparison

New America Foundation Analyst: Such Comparisons Pit "Associate Degrees Against Shorter Certificate Programs." As Ben Miller, a senior policy analyst for the New America Foundation's Education Policy Program, pointed out in an Ed Central blog post, comparing the graduation rates of for-profit and community colleges is misleading because they emphasize different types of programs. Miller wrote that the majority of these for-profit college graduates likely graduated from shorter-term certificate programs, while the community college graduates were mostly enrolled in longer-term programs, likely seeking associate degrees (emphasis added):

To see why, look at the chart below. These are the graduation rates within 150 percent of expected time to completion for two-year institutions as reported in the Integrated Postsecondary Education Data System (IPEDS).

Graph 1

It sure looks like community colleges are nearly three times worse than for-profit colleges. In fact, this is a common talking point used by both the for-profit industry and its defenders.

There's just one problem, the two bars in the graph above aren't comprised of the same things. At for-profit colleges, 86 percent of students counted as graduates had finished programs of less-than two years, almost certainly certificates. By contrast, three-quarters of community college graduates were in programs that were two years or longer, likely associate degrees.

Graph 2

Comparing the graduation rates of community colleges and for-profit colleges is effectively judging the rate at which students earn associate degrees against shorter certificate programs. This apples-to-oranges comparison is particularly problematic since one would of course expect the completion rate of shorter programs to be higher since there are fewer opportunities to drop out and no need to re-enroll for a second academic year. [New America Foundation, Ed Central, 10/4/14]

NAF Analyst: Educational Attainment By Students At Community Colleges Vs. For-Profits Is "Very Different." Miller examined statistics from a federal survey of students "entered college in 2003-04 through 2008-09" and found that "the overall percentage of students that did not earn something within six years of enrolling was basically the same at public colleges and for-profit institutions":

As the chart shows, about 47 percent of students at for-profit colleges who started out seeking an associate degree or certificate earned something. That's higher than the attainment rate at public colleges (37 percent). But because 18 percent of public college students were still enrolled -- double the number of for-profit students -- the percentage of students who failed to earn anything and aren't enrolled is basically identical.

Graph 3

There's a big difference in what students actually came away with. Most for-profit students earned certificates and less than 1 percent earned a bachelor's degree. At public colleges, students were split between bachelor's and associate degrees and certificates, with more students earning degrees. [New America Foundation, Ed Central, 10/4/14]

For-Profit Colleges Are More Expensive Than Community Colleges

Senate Report: Associate Degree And Certificate Programs Cost Four Times More At For-Profit Colleges Than At Community Colleges. The Senate Health, Education, Labor And Pensions Committee's 2012 report on the business practices of for-profit colleges revealed that for-profit college programs cost significantly more than comparable community colleges:

· Associate degree programs averaged four times the cost of degree programs at comparable community colleges.

· Certificate programs similarly averaged four and a half times the cost of such programs at comparable community colleges. [Senate Committee On Health, Education, Labor And Pensions, July 2012]

Senate Report: High Costs Force 96 Percent Of For-Profit College Students To Take Out Loans. Chadwick Martin, the senior editor of Reuters Opinion, noted that the Senate investigation found that high costs force far more students at for-profit colleges to take out loans than at community colleges:

By some counts, 96 percent of for-profit students take out loans, and nearly all of them are drawing from federal financial aid. In comparison, only 13 percent of students going to community college take out loans, because community colleges are a fraction of the cost. [Reuters, The Great Debate, 9/19/13]

Senate Report: For-Profits Use Deceptive Practices To Generate More Money. The 2012 Senate report also found that the for-profit college industry routinely misled students about costs:

Many of the for-profit colleges, the report found, set tuition at almost exactly what a student could expect in maximum federal aid, including Pell grants and Stafford loans. According to a Bridgepoint Education document, when a new $400 "digital materials fee" would make students pay more than would be available from federal aid, the chief executive frantically wrote an e-mail to the finance officer to complain that the change was going to cause a "shortfall." And documents from Alta Colleges mention restructuring schedules "so we can grab more of the students' Stafford."

Furthermore, the report found, recruiters are often encouraged to avoid directly answering questions about costs and instead emphasize that with federal aid, student will pay little out of pocket. And costs are not easy for students to determine. A former Westwood College recruiter explained that prospective students were told that the cost was $4,800 per term, but not that there were five or six terms a year rather than the usual two or three.

At many schools, students learned only after the fact that their credits would not transfer to another college or university or qualify them for the professional licensing they sought. [The New York Times, 7/29/12]

Community Colleges Offer Higher Return On Investment Than For-Profit Schools

SF Chronicle Editorial: Community College Students "Nearly Double Their Earnings Within Three Years." A San Francisco Chronicle editorial pointed out that community college graduates see their incomes rise quickly after graduation:

There's a role for the state here, too. Community colleges are, on average, far cheaper than for-profit colleges. There's also little doubt about their effectiveness: Students who earn a community college degree or certificate nearly double their earnings within three years. [San Francisco Chronicle, 8/8/14]

National Bureau Of Economic Research Paper: For-Profit College Students Earn Less And Are Less Likely To Be Employed. The Huffington Post reported on a 2012 study conducted by Harvard professors:

The team of Harvard professors sheds new light on the differing fates of students who attend for-profit colleges and those who attend traditional institutions by directly comparing students of similar socioeconomic and demographic backgrounds.

The study finds that a sample of students enrolling at for-profit colleges in 2004 were making, on average, between $1,800 to $2,000 less annually than students attending other types of institutions. Six years after entering college, for-profit students are also more likely to be unemployed -- and to be unemployed for periods longer than three months. [Huffington Post, 1/4/12]

LA Times: Students At For-Profit Colleges Are More Likely To Default On Loans. The Los Angeles Times reported, "Students at for-profit schools default on federal loans at a much higher rate than those at traditional public colleges: more than 19% after three years, compared with less than 13% at public institutions. For-profit schools enroll about 11% of all college students, but the sector is responsible for 44% of student loan defaults, according to federal data." [The Los Angeles Times, 10/31/14]

Senate Investigation: Higher Cost Of For-Profits Do Not Translate To More Resources For Students. The Senate Report showed that, despite their higher costs, for-profit schools do not offer additional resources to help steer their students toward employment:

· But for-profit colleges also ask students with modest financial resources to take a big risk by enrolling in high-tuition schools. As a result of high tuition, students must take on significant student loan debt to attend school. When students withdraw, as hundreds of thousands do each year, they are left with high monthly payments but without a commensurate increase in earning power from new training and skills.

· Many for-profit colleges fail to make the necessary investments in student support services that have been shown to help students succeed in school and afterwards, a deficiency that undoubtedly contributes to high withdrawal rates. In 2010, the for-profit colleges examined employed 35,202 recruiters compared with 3,512 career services staff and 12,452 support services staff, more than two and a half recruiters for each support services employee. [Senate Committee On Health, Education, Labor And Pensions, July 2012]

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Education, College Financial Aid, Education Funding
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The Wall Street Journal
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