For-profits Vs. Community Colleges

A new study, scheduled for release Thursday, suggests that for-profit colleges do a better job educating students than community colleges, even while serving a more at-risk population, and does so for a comparable sum of money.

Commissioned by Corinthian Colleges, a major player in the for-profit sector, the study was conducted by the Parthenon Group, a Boston consultancy that has done education research for the New York and Chicago public schools.

Leaders of Corinthian Colleges ordered the study "in response to the hyperbole, the insinuations that we are not delivering value," said Mark Pelesh, executive vice president for legislative and regulatory affairs. The fast-growing sector has a reputation — undeserved, the colleges say — for charging students too much, over-selling the market value of their services and leaving students deep in debt.

(Note: The Washington Post Co. is a player in the for-profit college industry because it owns Kaplan, Inc., a test-preparation company that also offers distance higher education.)

The study examines U.S. Department of Education survey data on input and output and reaches the following conclusions:

  1. For-profit colleges are adding capacity at a rate of 6 percent, investing $800 million to $900 million a year, compared with a 1-percent annual growth rate among two-year public institutions, whose growth is hindered by dwindling state funds.
  2. For-profit colleges serve a larger proportion of high-risk students (meaning at risk of dropping out) than community colleges. Fifty-four percent of for-profit students meet three or more "risk factors" as defined by the federal government, including parenthood, delayed enrollment and lack of a high school diploma. Thirty-six percent of community college students are considered at high risk.
  3. For-profits have — arguably — a higher success rate than community colleges. Sixty-nine percent of students surveyed by the federal government attained the degree or certificate they sought or transferred elsewhere within five years of enrollment in a for-profit college. The comparable rate in community colleges is 62 percent. Community college students are far more likely to transfer to other schools, whereas for-profit students are more likely to attain certificates and then conclude their studies.
  4. For-profit colleges receive $26,700 in funding, on average, for every student who successfully completes study or transfers. Community colleges receive $25,300 per student. The funding sources, of course, look entirely different: the for-profits receive most of their funding in tuition and fees paid by students, whereas community colleges get most of their funds from state and local government.
  5. For-profit students start out with a lower income than community college students but yield a greater earnings gain through their studies. For-profit students earn $14,700, on average, when they begin their studies, and see an income boost of $7,900, or 54 percent, when they leave. Community college students earn an average $20,300 when they start, and see a boost of $7,300, or 36 percent, when they finish.
  6. For-profit students are less likely than community college students to report that they were surprised by how much they owed at the end of their studies. More than half of for-profit students report they were told how much they would have to borrow by their institution, according to a survey of students by the Parthenon Group. By comparison, about 40 percent of community college students said their institution provided information on debt.


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