For-profit Colleges Seek Better Graduation, Loan Default Rates

Two of the nation’s largest for-profit colleges, both with branches in the Miami Valley, are fundamentally changing the way they recruit to attract better students and improve graduation and student loan repayment rates.

Kaplan College and the University of Phoenix are offering prospective students a chance to attend a class free of charge in an effort to reduce the number of dropouts. Kaplan, which has a branch in Moraine, offers a free introductory course; while Phoenix, which has a branch in Dayton, offers a no-commitment student orientation that recruits must complete before enrolling.

The for-profit college industry has continued record growth locally and nationally despite poor graduation rates, higher costs and rising defaults on student loan repayment. More than 95,000 students in Ohio are enrolled in for-profit colleges, a 37 percent increase from 2008.

The move to offer free classes comes as for-profit schools enter an era of tighter federal regulations meant to prevent the enrollment of students in degree programs for which they are unprepared.

"This is a real effort on their part to deal with the impact of some of the regulatory changes that are coming," said University of Dayton graduate Kevin Kisner, a professor at State University of New York at Albany who studies the industry.

R. David Rankin, director of the for-profit advocate the Ohio Association of Career Colleges and Schools says schools are monitoring registration and admission more than ever.

“That’s a great idea, for students to have the opportunity to experience a course or college life and what is expected of them before making a financial commitment,” Rankin said.

This week the battle over for-profit regulation continues in Congress with an amendment being offered to kill a pending “gainful employment” rule that would limit how much students attending for-profit schools could borrow based on prospective future salaries.

New recruiting strategy results in better prepared students
Administrators at local branches of the country’s largest for-profit schools say changes to their enrollment process is a risk-free way of empowering students.

“It is helping them see: Am I set up for the rigor?

Do I have the 15 to 20 hours a week to commit? We want to set them up for success,” said Chris Montagnino, campus director for University of Phoenix branches in Dayton and the Cincinnati area.

New Phoenix students without previous college credits must now complete a three-week orientation before enrolling. Kaplan is offering a similar program that allows both the student or the college to end an enrollment after the completion of an introductory course.

“We believe in what we do,” said Karen Larsen-
Reuter, president of the Dayton-area Kaplan campus on East River Road in Moraine. “This is an opportunity to try it out without any strings attached.”

These new programs suggest a much different recruiting style than was detailed in an August 2010 report by the Government Accountability Office. The agency’s undercover investigation, which has undergone some revisions, found both Kaplan and Phoenix used “deceptive and questionable marketing practices.” None of the schools’ local campuses were included in the findings.

The rapidly growing for-profit industry has been criticized for overpromising to students who are underqualified for degree programs and often drop out.

State Rep. Clayton Luckie, D-Dayton, drafted a bill to increase oversight of Ohio for-profits after students reported problems at Miami-Jacobs Career College. He believes the recruiting changes are a positive step for the industry. “Students need to know what they are getting into,” he said.

The Education Trust, a research and advocacy group, released a study last fall that found only 22 percent of students at four-year, for-profit schools graduate within six years compared to 55 percent at public schools.

“So many students who enter these schools never graduate,” said University of Dayton graduate Kevin Kisner, who teaches at State University of New York at Albany and studies the industry.

“This is real because it directly affects their bottom line.”

The new practices have had an impact on both enrollment and retention rates at Phoenix.
Kaplan denied a request for an interview with a corporate representative about the program.
About 80 percent of students involved in the pilot orientation programs went on to enroll at Phoenix, said Montagnino and a representative for the university’s parent company the Apollo Group. Those trends are reflected in local enrollments.

“We are seeing higher retention rates of students going through their degree programs,” after completing the new orientation, Montagnino said.

R. David Rankin, director of the Ohio Association of Career Colleges and Schools, said he wasn’t aware of any other local schools offering risk-free trials, but thought it could catch on. “It sounds like a great idea,” he said.

Phoenix reported a 42 percent drop in new students this year, but those losses have not been felt locally, Montagnino said.

Phoenix enrolls about 5,000 students at three campuses in southwest Ohio and northern Kentucky. Kaplan has about 800 students at its Moraine campus.

The for-profit industry has continued to see rapid growth across the country in the last few years. In Ohio, for-profit schools served 96,000 students in 2010, up from 70,000 in 2008.

Nationwide, Phoenix has more than a half-million students and Kaplan more than 100,000.


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