A recent study of abuses in for-profit post-secondary education highlights a reputational disparity within American higher education. For-profit programs and colleges are distrusted and maligned. Their proven value to populations for whom traditional college is out of reach and various good-faith reforms win little or no notice. Neither do the abuse of non-profit colleges, themselves rife with institutional decadence and dishonesty.
The study, a 780-page doorstop from University of San Diego’s Child Advocacy Center entitled “Failing U.,” asks whether state laws adequately protect students from “for-profit predators.” It lines up one critique after the next of recruitment and regulatory oversight. Any time the premises of a study identically match its conclusions, we pause. But what immediately strikes the reader about the USD study is this: that many of these complaints are equally applicable to for-profit and non-profit programs.
One of the study’s stated goals is “to start a discussion about how to protect taxpayers, who ultimately pay the price when students who attend unscrupulous institutions cannot repay federal student loans.” But of course taxpayers ultimately pay the price whether a defaulter has attended for-profit Strayer University or non-profit Stanford. Loan default rates have risen significantly at non-profits and for-profits alike.
The stories of fraudulent for-profits like the Corinthian Colleges, whose closure set Congress on the warpath, are well known. The sham of Trump University has been hard to miss. And lately a crackdown on DeVry University’s dishonest recruitment techniques demonstrates the value of stricter accreditation oversight and auditing. We didn’t need a lengthy study to tell us this.
The highest concentration of student loan defaults have, since the late 1970s, come from the ranks of the for-profit college, according to a recent data report from the College Board. But for-profit graduates’ debt loads are lighter than those of their non-profit college-going counterparts. To put it the other way around: Non-profits’ loan defaulters, though they’re less common school by school, tend to owe more. Moreover there are far fewer for-profits than non-profit schools, and the for-profit sector is shrinking fast—11 percent of the country’s for-profit colleges closed in 2016, and the trend continued last year. The spectacle of traditional universities funding giant studies about the problems of their tiny and shrinking for-profit counterparts seems to us a bit rich.
While analysts malign for-profit schools, often rightfully so, the underlying problems afflicting non-profit colleges are not widely understood. Expensive four-year schools are rapidly losing money and relevance, feeling pressure to close or consolidate. Graduation rates falter, and graduates fail to find work.
Indeed, the vast majority of the 177 colleges designated financial failures by the Department of Education last year are small, non-profit private colleges. A 2016 study from the center-left think tank Third Way used the Education Department’s college scorecard to diagnose an unexamined “quality crisis” in non-profit colleges. They found that “at the typical institution, nearly half of the students aren’t graduating, many students aren’t earning sufficient incomes even years after enrollment, and far too many are unable to repay their loans.” None of which will come as a shock to anybody who’s followed the follies and failings of traditional non-profit higher ed: the politicized and hyper-specialized curriculums, the astronomical prices, the ever-expanding armies of administrators, the diminishing quality of university teaching. All this at institutions that pay no taxes and that, in the case of state universities, receive hundreds of millions in direct appropriations every year.
The essential premise of USD’s report is that for-profit postsecondary colleges need stricter oversight lest they find new ways to swindle uninformed students and saddle them with debts they can’t repay. But the far deeper and less studied scam may be the non-profit private college. Perhaps the University of San Diego should confront its own demons.
