Public Agenda
PUBLIC AGENDA PRESS RELEASE
EMBARGOED FOR PUBLICATION UNTIL FEBRUARY 10, 2014 AT 12:01 AM ET

For-Profit Colleges Have Some Strengths, But Are They Worth the Cost?

Students and employers applaud for-profits on some counts, deeply skeptical on others, according to new research

DATE OF RELEASE: Monday, February 10th, 2014


NEW YORK CITY -- Many students and employers remain unconvinced about the value of a for-profit college education, according to new research from Public Agenda. While for-profit students are largely satisfied with the quality of their schools, many consider the financial burden of these schools high, and it is unclear to them whether that cost will pay off.

Both currently enrolled undergraduates and alumni of for-profits praise their schools on many counts, including having caring instructors, efficient programs and small class sizes. Yet they're anxious about the cost of their education. Alumni in particular are skeptical about the value of their degree, with 32 percent saying their degree "really wasn't worth it." (Thirty-seven percent say their degree was "well worth it"; 30 percent say it "remains to be seen.") "We acknowledge that we spoke with for-profit alumni during a down job market, which may have an effect on their perspective. In fact, for-profit alumni who are working for pay are twice as likely to say their degree is worth it, compared to those who are unemployed" said Carolin Hagelskamp, director of research at Public Agenda and lead author of the report. "Nevertheless, it is certainly the case in this study that many graduates from for-profit schools put some blame on their schools for not adequately preparing them for the job market."

Data from employers regarding their attitudes toward for-profit schools don't offer much to assuage this anxiety. Many employers perceive no differences between for-profit and public sector institutions. However, among those who do see a difference, most view public schools as superior on a number of counts. In focus groups that accompanied the survey research, employers tended to favor traditional institutions, with many saying that they'd prefer to hire a candidate from a reputable state school versus one from a for-profit school.

For-profit colleges serve about 13 percent of the undergraduate population and dominate higher education advertising. In policy circles, the sector has come under intense scrutiny for aggressive recruitment practices, low graduation and high student loan default rates, and inadequate preparation for students in the labor market. At the same time, the sector is lauded for being a source of innovation, increasing access for nontraditional students, and responding quickly to labor market demands. "The for-profit sector warrants scrutiny, particularly on questions of cost and student recruitment, but it's also clear that these colleges are responding skillfully to the needs of a significant number of America’s students," said Will Friedman, president of Public Agenda.

The research was funded by The Kresge Foundation. Findings are summarized in the new report, "Profiting Higher Education? What Students, Alumni and Employers Think About For-Profit Colleges," and are based on representative surveys with employers, current for-profit undergraduates, for-profit alumni, and prospective students between the ages of 18 and 55. The report also includes findings from focus groups with employers and adult prospective students.

The attitudes of each of these groups paint a mixed picture of for-profit colleges, with some strengths and a number of important cautions and criticisms. Specifically:

Current students are optimistic, yet concerned about their financial burden. Undergraduates at for-profit colleges say their schools allow them to efficiently complete their programs. They also praise their schools for giving effective guidance so they can stay on track (91 percent say this), having caring instructors (87 percent) and keeping class size small (85 percent). Current undergraduates are optimistic that their certificates or degrees will greatly improve their chances of finding good jobs. Still, 65 percent of these currently enrolled students consider their schools expensive and nearly half (47 percent) say they worry "a lot" about taking on too much debt.

In a parallel study with community college students, Public Agenda found that current for-profit students and their counterparts in community college are equally satisfied with their schools on many quality measures and optimistic about the future payback of their degrees. At the same time, community college students have fewer financial concerns than for-profit undergraduates. Thirty-four percent of community college students said they worry a lot about taking on too much debt and just 3 in 10 consider their schools expensive.

Alumni are less positive about the value of their education than current students. Although not quite as often as current undergraduates, alumni of for-profit colleges also praise their schools on many measures, including giving effective guidance (74 percent say this), having caring instructors (77 percent) and keeping class size small (81 percent). They are more pessimistic about the value of their degree. Just 37 percent of for-profit alumni say their degree was worth the price. And 4 in 10 say their schools were more concerned about making money than about educating students (only 20 percent of current for-profit students feel this way).

Prospective students considering for-profit colleges have distinct priorities. Adult prospective students who are considering a for-profit college are more likely to say that qualities like the availability of online classes, accelerated programs and hands-on support services are absolutely essential when they are choosing a school.
"The research doesn’t establish whether there is a causal relationship between these individuals’ priorities and the schools they are favoring,” said Hagelskamp. "However, these findings, combined with the satisfaction we see among current for-profit undergraduates, certainly raise an important question that warrants further digging: Are for-profits better than public institutions at serving the needs of some students?"


Employers are still on the sidelines. About half of the employers surveyed see few differences between for-profit and not-for-profit colleges. The other half typically view public institutions as superior on a number of counts. For example, 41 percent say public universities do a better job preparing students to work at their organizations. At the same time, employers lack knowledge of for-profit schools. Seventy-six percent haven’t heard or don’t know much about local for-profit schools in their own metropolitan area and 50 percent don’t have an opinion about large national for-profits like the University of Phoenix or DeVry. But nearly nine in ten (87 percent) are familiar with and opinionated about their region’s public universities.

Students Are Unfamiliar with the Term "For-Profit College" – Even When They're Attending One

The research also reveals a startling lack of awareness among students about the concept of for-profit colleges, especially in contrast to the energetic debate about the sector among experts, policymakers and the media. In fact, though the words "for-profit college" are commonplace among the headlines in educational and mainstream media outlets, many students who are attending or graduated from a for-profit school say "nothing comes to mind" when they hear the term. Over half of adult prospective students considering attending a for-profit school say the same. Furthermore, a full 65 percent of current for-profit students and 63 percent of for-profit alumni are unsure whether their school is for-profit or not. Incoming Students Not Well-Informed About College Choices Leaders in higher education, the federal government and philanthropy invest time and effort to make comparative information about colleges more easily accessible and engaging so that students can make informed – and presumably better – decisions about their education. However, this research boosts findings from an earlier companion report indicating that these efforts are not connecting with students.

Students from for-profit schools – who often come from economically vulnerable populations – are not comparative shoppers. Many are selecting schools without having weighed different options. Just 39 percent of for-profit undergraduates and 32 percent of for-profit alumni had considered more than one school before they enrolled at their current institutions. Students are even less likely to compare for-profit with not-for-profit schools before enrolling, with just 20 percent of for-profit undergraduates and 11 percent of alumni having considered a not-for-profit college. The authors of the report note that parallel research with community college students suggests that "comparative shopping" is uncommon among other types of college students as well. Many students seem to be drawn to either for-profit or not-for-profit schools, though rarely to both.

"I think sometimes policymakers have this idealistic vision of students sitting down with spreadsheets, comparing colleges across columns and columns of data. But the reality is that most students in this research are not really making comparisons at all. They rely on recommendations from friends and families and hear about schools through ads or because they pass by the schools on the street," said Hagelskamp.

Among adult prospective students, 64 percent say they have learned about colleges from TV commercials, billboards and other advertisements. Among prospective students who are specifically considering a for-profit college in their search, 75 percent say they learned about colleges through advertisements. The research also suggests that incoming students may not understand how existing data about average student debt and the jobs and salaries of typical graduates relate to their college searches. Even though current for-profit students worry about debt, 61 percent do not know how much debt the average student from their school graduates with. With the benefit of hindsight, for-profit alumni say this information is valuable. Seven in 10 alumni say students should pay a "great deal" of attention to student debt data before enrolling, and 72 percent recommend incoming students pay attention to the types of jobs and salaries graduates typically get before enrolling. The research indicates that these alumni's insights still need to be bestowed on prospective students.

"If we're really concerned about helping prospective students make well-informed decisions about college, we need to confront the realities from this research, meet these students where they are and figure out what we can do to make their selection habits more discerning so that each student picks a college that is the best match for his or her needs," Hagelskamp said.

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More Information

Survey findings, charts and graphics are available at http://www.publicagenda.org/pages/profiting-higher-education.

This publication concludes a series of three reports on critical issues and populations in higher education. The ongoing project was funded by The Kresge Foundation. Other reports in the series include "Not Yet Sold: What Employers and Community College Students Think About Online Education" and "Is College Worth it For Me? How Adults Without Degrees Think About Going (Back) to School."

About the Research

This research is based on representative surveys of the following groups:
  • 197 undergraduate students currently enrolled in certificate or degree programs at for-profit colleges, including less than two-year, two-year and four-year programs
  • 249 alumni of for-profit colleges who have completed certificate and undergraduate degree programs since 2006
  • 803 adults without degrees who are considering enrolling in college in the next 24 months to earn postsecondary credentials
  • 656 human resources professionals (employers)
These surveys were informed by an extensive literature review as well as qualitative data collected through focus groups with employers and adult prospective students. More detail on this study’s sampling and methodology can be found at http://www.publicagenda.org/pages/profiting-higher-education-methodology.

About Public Agenda

Public Agenda is a nonprofit organization that helps diverse leaders and citizens navigate complex, divisive issues. Through nonpartisan research and engagement, it provides people with the insights and support they need to arrive at workable solutions on critical issues, regardless of their differences. Since 1975, Public Agenda has helped foster progress on higher education affordability, achievement gaps, community college completion, use of technology and innovation, and other higher education issues. Find Public Agenda online at PublicAgenda.org, on Facebook at facebook.com/PublicAgenda and on Twitter at @PublicAgenda.

About The Kresge Foundation

The Kresge Foundation is a $3 billion private, national foundation that works to expand opportunities in America’s cities. The foundation does this through grantmaking and investing in arts and culture, education, environment, health, human services, community development and our place-based efforts in Detroit. Fostering greater access to and success in postsecondary education for low-income, minority and first-generation college students is the focus of Kresge’s Education grantmaking. For more information, visit kresge.org or follow @kresgedu.