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Stop subsidizing sham colleges with public dollars

Our neighboring U.S. senator, Tom Harkin (D-Iowa) has the right idea. It is time to stop wasting taxpayer money on low-quality, high-cost, unaccredited, for-profit higher education. He has taken up this fight in the U.S. Senate, and I encourage our Minnesota congressional delegation to support his efforts.

For those new to this issue, our tax dollars fund federal student financial aid, which includes both need-based grants (money that does not require repayment) and subsidized loans (government low-interest loans).

The data speak for themselves: For-profit colleges educate fewer than 10 percent of U.S. students, yet they suck up nearly a quarter of all federal student aid and their students are more likely to default on their debt ("For-profit colleges: Do they short-change students?").

Certainly, not all for-profit colleges are low quality, but most tend to be quite expensive. Those which lack regional accreditation tend to be both.


For those unfamiliar with the jargon, regional accreditation is an essential designation when it comes to assessing institutional quality, transferring credits, or gaining acceptance to an advanced degree program. Program specific accreditation may also be necessary. The Higher Learning Commission of the North Central Association accredits colleges in Minnesota. Without this designation, Minnesota students may be left with bogus credits culminating in a useless degree.

An opportunity to lead
Not only do I encourage our elected representatives to pursue this in Washington, we should also attack this issue here at home. Minnesota is well-known nationally as a policy innovator (e.g. school choice, tobacco regulation, health-care access), and this is another such opportunity.

We must support robust state legislation that prohibits the Minnesota State Grant program from supporting educational institutions that (1) lack relevant regional accreditation, (2) spend a disproportionate amount of operating funds on marketing and recruitment, and/or (3) have a record of fraudulent behavior that places corporate shareholders above student needs.

Just watch an hour of daytime or late-night TV to see how much the for-profit sector spends on advertising. And these marketing campaigns tend to target the most vulnerable and uniformed regarding higher ed.

Let us take a page from useful tobacco and pharmaceutical regulations and require for-profit institutions to disclose essential consumer information in their advertisements — like accreditation, fees, job placement rates, and the percentage of tuition dollars absorbed by marketing and corporate profit.

A competitive disadvantage
I will conclude with an admission of bias. As a community college professor, I see how Minnesota's public investment in colleges transforms lives and opens doors. Our public college system is of the highest quality and provides hundreds of affordable degree programs to every part of the state.

Yet these fully accredited, affordable and accessible nonprofit institutions often find themselves at a competitive disadvantage for one reason: They spend public dollars and student tuition on education rather than shareholder profit and a ubiquitous and often deceptive marketing machine.

Zack Sullivan, Minneapolis, serves as political science faculty at Inver Hills Community College in Inver Grove Heights.

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Comments (8)

Good thought-provoking article.

I share your concerns, but many public institutions might have a difficult time with being asked to disclose:

1. The amount of money being spent on marketing - of all types!

2. Job placement rates

3. The amount of tuition and fee money being spent for non-educational expenses.

Don't get me wrong. I am a strong supporter of public higher education. But we are going to have to make a lot better case for ourselves than has been done so far. Otherwise we are in danger of the public buying Pawlenty's idea that a college level course can be offered for $199.

Yes we should go after the for profit scam artists (and not all of them are.) But we had better start cleaning up our own act.

Bill Gleason, U of M faculty and alum

I'm thinking of starting up my own post-secondary educational "college." All I need to do is decide what areas my school will specialize in (not than I expect I'll know anything about those areas of study), find a warehouse I can rent inexpensively and convert into classrooms and offices, etc.

Next I need to design a marketing scheme built around making classes sound effortless and the jobs you can get after you graduate sound like a sure thing, sound as if they're fantastically well paid, and most of all, sound as if they're fun to do.

Finally, but most importantly I need to put together a top notch sales and marketing team with a boiler room-type call center designed to charm those who respond to our beautiful TV ads into signing on as students, and a staff of on-site people with real gifts for getting them to sign their lives away as they agree to using nothing but student loans to finance their (high profit for me, massively over priced for them) "education."

Or perhaps not.

Sadly, our conservative "free market" friends and neighbors who so often complain about what they see as they extremely high cost in tax dollars of the excellent schools of our state-sponsored post-secondary institutions will be loathe to take any action against these privately-owned, high profit schools that consist of little more than a converted warehouse with an attached boiler room call center.

The difference between these schools and our excellent, well-established system of public colleges and universities is the difference between long-term and short term perspective. It's also the difference between making money for a few, privileged individuals, by taking advantage of those seeking to raise their own standard of living through education and doing things that work for the entire population of the state.

These private colleges are generally less interested in providing quality education which will offer long-term benefits for their students than they are in allow their executives and investors to make a killing in the education "game" by temporarily allowing them to make big bucks (until the jig is up, that is). A very few profit massively at the expense of many others.

The public colleges, on the other hand, tend to raise the quality of life, not only for those who attend them, but for the entire population of the state, since a well-educated work force tends to bring far more stable, well-paying jobs into our state. The more jobs such as these that we have, the more the income they produce gets spread around, supporting all the other businesses in the state. The cost of supporting such institutions is spread over the vast majority of the state population with those most able to contribute giving their fair share. The benefits go to the entire state.

I fear some of our most conservative friends would like to see the public system disappear in order that they and more of their friends and neighbors might even more effectively make a very high-profit killing through providing over-priced education of VERY questionable value to desperate-but-unsophisticated students, thereby increasing their own standard of living by extracting resources from those most in need rather than offering the means for those needy people to lift themselves out of lives of desperation and poverty.

I speculate that the real change will come from information technology. The model will be to assemble a team of content experts,cognitive scientists, media and IT professionals, who will design a course. I believe the process will be perfected on the college level where small private colleges purchased by for profit firms have huge online enrollments. The performance of the course ware can be tracked and modified. Thousands of K12 students now use good but not spectacular online programs, sometimes completely substituting a virtual high school for a physical school. When you combine virtual schooling with regular schooling, teachers can increase the size of their student load dramatically.

Three points of clarification:

Clarification 1:
"...wasting taxpayer money on low-quality, high-cost, unaccredited, for-profit higher education."
Only students who attend accredited colleges can can get federal financial aid."

Clarification 2:
"...regional accreditation is an essential designation when it comes to assessing institutional quality, transferring credits, or gaining acceptance to an advanced degree program."

Speaking as a graduate of nationally and regionally accredited colleges, ex-provost of a multi-campus regionally-accredited college, peer reviewer for a regional accrediting body and an owner of a nationally accredited college, I can truthfully say: national accreditation is different than regional accreditation, not weaker.

The agencies have different agendas. National accreditation emphasizes educational quality by focusing on outcomes. Career colleges, most of which are nationally accredited, must measure retention rates, graduation rates, placement rates, beginning pay, and employer satisfaction. I can't even start a program unless I prove graduates will get jobs that promote self-sufficiency. In addition, I must prove that the instructors are subject-matter-experts who can teach.

Regional accreditation evaluates the entire educational organization in terms of its mission, allocation of resources, student learning and teaching effectiveness, social responsibility and service to its community. Most career colleges forgo the latter two criterion. Education level of instructors is different. Subject-matter-experts are required to teach career-focused courses at career colleges--education is secondary to experience, but they must be educated in teaching techniques. Regional accreditation prefers higher degrees in the subject matter.

Clarification 3:
"Certainly, not all for-profit colleges are low quality, but most tend to be quite expensive. Those which lack regional accreditation tend to be both."

Cost...yes, some for-profit colleges are $10K more per year than the UofM (similar to the cost at non-profit colleges like Hamlin), but some are less than $2000 more per year. You must remember something, however, tax dollars do not fund for-profit and non-profit colleges.

Quality...Thank you for acknowledging that at least some colleges produce quality results, although I think you assume the worst rather than the best. If I examine the data on the government's own web site, I see good and bad results in all sectors. I can tell you, for example, that my college has one of the lowest loan default rates in the nation, one of the highest retention rates, one of the highest graduation rates and one of the highest placement rates. Good results and nationally accredited.

The last time I looked, online Capella University was regionally accredited, while brick and mortar St Thomas was not.

Elkins, St. Thomas and Capella University are both accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools (HLC), along with the University of Minnesota, Macalester College and many other schools in the region. Most for-profit schools with regional accreditation are accredited by HLC, which has recently been in the news for denying accreditation to a group of investors trying to purchase a failing private nonprofit school and turning it into a for-profit institution.

I'm all for publicizing scam artists, and there are certainly plenty in the education biz, but I don't think the profit status is necessarily the line to draw in the sand.

There are many trade schools that provide an excellent education leading to highly rewarding careers for people that don't fit into a liberal arts college path. Many, maybe most of these trade schools are not accredited, but the quality of their product his high none the less.

Conversely, I speak from experience when I say that many, maybe most, public universities and colleges are just as avaricious as any for profit enterprise when it comes to the bottom line.

I must also mention that son #3 has taken general ed. classes at Inver Hills, and the credit cost is right up there with the U of M, so I guess the question of what is affordable is subject to debate as well.

Amy Nelson's got some good points, but is obfuscating the truth on one central claim.

The claim "tax dollars do not fund for-profit schools" is flat out false. The largest for-profit college chains like University of Phoenix and Career Education Corp. report that over 80% of their revenue comes from Federal Title IV money (Pell Grants and FFEL loans). From Apollo Group's (U of Phoenix's parent company) (APOL:AMEX) latest SEC 10-K form:

"University of Phoenix represented approximately 95% of our fiscal year 2009 total consolidated net revenue and University of Phoenix generated 86% of its cash basis revenue for eligible tuition and fees during fiscal year 2009 from the receipt of Title IV financial aid program funds..."

Taxpayer funds are paying for nearly 9 out of every 10 dollars in revenue. Unfortunately, not even HALF that makes it into the classroom. About 1/4 of for-profit revenue goes to marketing costs. Only around 40% of revenue goes to educational expenses.
Apollo Group spent 40.3% of revenue on “Instructional Costs and Services” in FY 2009. Career Education Corporation (owner of Brown College) spent only 38.3% of its revenue on “Educational Services and Facilities” in FY 2008. Compare this to MnSCU, which spends 63-65% (depending on the year) on "Instruction and Academic Support."

She can argue that this is student aid, not direct assistance, but this is a purely semantic distinction. It's all revenue.

Second, her point about accreditation is well-taken. The Higher Learning Commission of the North Central Association (which accredits Inver Hills CC and U of Phoenix, as well as Century College, where I work), was busted down by the Dept of Ed for not being rigorous in its examination of educational quality at for-profit schools. In fact HLC is ON PROBATION with the Dept of Ed while they change their protocols. This is all in the HELP committee's report.