When Chris Treiber left the Navy in 2011, he set sail on uncharted waters. His 10 years of service offered no natural path into a good job. He’d spent his last five of those guarding prisoners and had no civilian job experience. He had a GED, having dropped out of high school in 10th grade. And at age 32, he had a wife and five kids to provide for.
He landed a low-paying quality-control and marketing job at a body-armor manufacturer in Virginia. But if he was going to do better, he thought he needed a college degree. So he enrolled in a four-year business program at the University of Phoenix. He finished in three years while working full-time because some of his military experience translated into credits. Classes were one or two nights a week after his workday was over, running from 6 to 10 p.m..
While in school, he moved his family three times for work — from Virginia to Florida and from there to San Jose. In all three places, the university had nearby campuses and he could transition between them without a hitch, he says. Treiber earned his degree in 2014 and went on to get an MBA from the school, which he finished this January. His progress toward his MBA landed him a job last year as a compliance investigator in the Davis office of the U.S. Department of Agriculture’s crop insurance program. Now 37, Treiber says he wouldn’t have qualified if he hadn’t been close to getting the degree.
Treiber is the kind of nontraditional student whose complicated profile doesn’t neatly fit the mold that most four-year schools can accommodate: working full-time, family at home, marginal academic background. And that’s where for-profit colleges come in, say they and their supporters. For these schools, 2015 was a year to forget. But without them, it’s not clear who will train and educate those in a hurry to gain marketable skills.
When Heald College shut down last spring, it left about 16,000 students nationwide without a school, including those at its Roseville and Rancho Cordova campuses. Heald was part of the for-profit Corinthian Colleges system, which folded after the U.S. Department of Education concluded it had misrepresented its job placement data. The department’s subsequent $30-million fine and a lawsuit by the California Attorney General effectively shut its doors.
Corinthian wasn’t the only target. Last summer, University of Phoenix’s parent company, the Apollo Education Group, disclosed that it was being investigated by the Federal Trade Commission for allegations of deceptive advertising and marketing (an inquiry ongoing at press time). In January, the FTC filed suit against for-profit DeVry University for alleged misleading advertising. (UC Davis chancellor Linda Katehi resigned her paid board seat with DeVry in March.) Another for-profit, ITT Educational Services, was sued by the U.S. Securities and Exchange Commission for fraud. Behind those investigations was a post-recession spike in for-profit school graduates who defaulted on their student loans. Of those who attended for-profit schools and began repaying their loans in 2009, almost half defaulted within five years, according to a report last year from the Brookings Institution.
Together, those developments have helped crush enrollment at for-profits. Nationally, the Fall 2015 numbers at privately owned four-year schools were down 14 percent from fall 2014. In California, the number of students enrolled at for-profits dropped 13 percent from 2011 to 2014, according to state data. At the University of Phoenix, enrollment dropped by 38 percent in the last quarter of 2015 alone.
“The sector is definitely shrinking,” concedes Robert Johnson of the California Association of Private Postsecondary Schools.
Who Serves Nontraditional” Students?
The relentless bad news has meant that most media coverage of for-profits since 2011 has portrayed them as enticing students into expensive degree programs that leave them with huge debts and credentials that don’t help them get jobs.
But some experts who have looked closely at the schools say they get students into college who otherwise likely wouldn’t go. Eighty percent of students at for-profits are the first in their families to attend college, and more than half come from low-income families, according to a 2012 government report. In fact, almost 20 percent are in poverty when they enroll, according to a 2011 study — that compares with 6 percent at traditional community colleges. The University of Phoenix says its student body averages 34 years old, more than three-quarters are working while in school and more than two-thirds are supporting dependents.
Community colleges already serve some of these students. But for the most part, they only offer two-year degrees and many are already at capacity. A team from Harvard University that looked at education data in 2013 concluded that public community colleges “may provide an equal or better education at lower cost than for-profits.” But because of budget pressures, community colleges can’t meet the demand — their courses and programs already are overcrowded, they concluded in a paper in the journal The Future of Children in spring 2013.
In California, an August 2015 Hechinger Report story noted that overcrowding, tuition hikes and budget cuts at state community colleges have limited the number of students who can take classes. When enrollment in the region’s Los Rios Community College District spiked to more than 80,000 students during the recession, students complained of not being able to get into classes. “At its root, the for-profit sector is addressing a really important issue, which is access to college,” David Deming, a member of the Harvard team, told a reporter last year.
Younger nontraditional students also sometimes want a college program where they get both support and a touch of boot camp. MTI College’s Sacramento campus, for example, appeals to a certain type of student — those who need more structure, says campus director Malcolm Carlingsmith. “We take attendance here,” he says, unlike at traditional schools. He says MTI surveys of its students consistently show that they like the smaller class sizes and the clear expectations — the fact that they don’t have to schedule their classes or figure out what books to buy, for example.
And students at for-profits typically want intensive programs because they’re in a hurry to get a credential they can use. Natalya Kis, for example, immigrated from Kazakhstan in 2003. She wanted to go into health care but didn’t want to take two to four years to get a degree. So she enrolled in MTI’s one-year medical assistant certification program in January 2006, attending class every morning five days a week at the school’s Sacramento campus. Even before she graduated with her certificate that December, she had a job as a medical assistant in a private plastic surgery practice. She’s since twice moved up to better jobs — now she’s a charge-capture analyst at Sutter Health, where she reviews the accuracy of medical bills. She graduated with about an $8,000 student loan, which she finished paying off last year.
Can For-Profits Bounce Back?
Even as enrollment at for-profits is dropping, their student loan default rates are turning a corner as the economy improves. The proportion of their graduates who are defaulting has fallen from 23 to 16 percent, according to the latest three years of government data. The latter figure is still about 4 percent higher than at public colleges. But a Brookings report last September noted that for-profit graduates default at a higher rate in part because most have fewer financial resources to draw on if they fall behind on their loans than do traditional students. (The Oakland-based Institute for College Access & Success, a national nonprofit that has been critical of for-profit colleges, didn’t respond to multiple requests for comment.)
And on other outcome metrics, local for-profits compete favorably with traditional schools. Carrington College-Citrus Heights and Kaplan College-Sacramento both have 67-percent graduation rates, well above the national average, according to the White House College Scorecard. More than 90 percent of MTI’s graduates who are actively looking for work get jobs in their fields by six months after graduation, according to the school’s 2015 figures. And 10 years after they enter school, the median salary of students in the University of Phoenix system, which includes its Sacramento Valley campus, is more than $53,000. That puts it ahead of well-known flagship schools like Purdue, Clemson and Vassar, according to the White House Scorecard.
Still, for-profits say that the way some federal data are calculated make their numbers look worse than they are. The University of Phoenix, for example, shows up in federal data as having a graduation rate of only 17 percent for the 2014 data year. But those data count only first-time, full-time students, and most of its students are transfers who don’t get counted, says the school. That’s been a common complaint of both for-profits and community colleges over the years. The university’s real graduation rate for 2014 when all students are included, it says, is 41 percent — on par with or better than some private colleges.
For-profits also say they are responding to the crunch in enrollment by slimming down and jettisoning programs that don’t work. University of Phoenix president Timothy Slottow says that, based on conversations with employers, the school is cutting the number of associates programs it offers to get rid of those that are less career relevant. The school is also piloting a more rigorous diagnostic testing system at admission that will identify students who need remediation and get them help before they start regular classes.
Perhaps more importantly, the shareholder model for financing for-profit schools is gradually disappearing, says Johnson. As a sign of that, in February the Apollo Education Group agreed to be bought out by a group of private investors. “I think that’s a very good trend because I don’t think [for-profit post-secondary education] is a model that fits well with quarterly projections for increases,” says Johnson. “It’s a longer-term investment that will see ups and downs.”
For all of the choppy waters at the University of Phoenix, Chris Treiber says the school got him onto a career track that he’s happy with. His current job has the potential to grow to a GS-12 level, only three rungs from the top of the government pay system. Looking back, he’s happy with how school administrators and faculty worked around his needs while pushing him academically. “They treated me like a paying customer,” he says.