Report: Cost gap between for-profit, public colleges

Students stand in the back row of a filled chemistry class at the California State University East Bay in Hayward, Calif., Wednesday, Sept. 23, 2009. Over 50 students were on a waiting list for the class. It isn't just tuition hikes driving up the cost of college. In cash-strapped California and around the country, deep budget cuts are trapping more college students in a kind of enrollment purgatory, where they're in school but can't get seats in the courses they need to move toward a degree. The likely result: more time in college. (AP Photo/Eric Risberg)
August 7, 2012 1:58:32 PM PDT
Among the findings of a U.S. Senate committee's recently released investigation of the nation's for-profit college industry is a stark assessment of the huge gap between what it costs to get a degree or certificate from a career college and the price tag of a comparable program at a public college or university in California.

The two-year investigation [PDF] by the U.S. Senate Health, Education, Labor and Pensions Committee took a sweeping look at 30 for-profit education institutions nationwide, combing through financial statements, internal company documents and other data to create a picture of a sector that it says fails to provide adequate return on investment for students and taxpayers.

Republicans on the committee criticized the report as biased, as did organizations representing the for-profit sector. Steve Gunderson, president of the Association of Private Sector Colleges and Universities, said in a statement that the report "twists the facts to fit a narrative."

The high price of tuition was one piece of the committee's report. Overall, the investigation found that bachelor's degree programs at career colleges cost 20 percent more, on average, than comparable programs at flagship public universities.?

Associate degree programs at for-profits averaged four times the price tag of community college programs.

In California, a medical assistant diploma at the for-profit Heald College in Fresno costs $22,275. A comparable program at Fresno City College costs $1,650, according to the Senate report.?An associate degree in paralegal studies at the for-profit Everest College in Ontario costs $41,149, compared with $2,392 for the same degree at Santa Ana College.

Both Heald and Everest are owned by Santa Ana-based Corinthian Colleges Inc.

At American Career College in Anaheim, the medical assistant program costs $17,068 ? more than eight times the cost at Orange Coast College, where a certificate of achievement in medical assisting would cost $2,046.

Sometimes, those costs are not fully disclosed or easily understood by students who take on loans to foot the bills, the report claimed.

For-profit colleges reaped $32 billion in federal financial aid last year. Meanwhile, more than half of students who enrolled in a for-pro?t college in 2008-09 left without a degree by the middle of 2010. The report claims that high-priced degrees, high withdrawal rates, poor job placement services and questionable academic rigor combine to leave students saddled with formidable debt.

Michelle Leggitt, 38, chose to go to Heald College's Roseville campus in fall 2011 for a degree in medical office administration ? a two-year program that costs an estimated $30,000 in tuition alone. She opted for Heald rather than the local community college because she thought Heald offered a quicker, more efficient way to earn an associate degree.

"I don't have the education behind me. I have the work experience behind me," Leggitt said. "I wanted to get a degree to be able to show my kids, it doesn't matter how old you are, you can still go to school."

Leggitt ended up withdrawing from the program because of personal issues, as well as an ongoing disagreement with the college administration. She's not sure how much she owes the school.

Another former Heald student, Sandra Mu?iz, filed a class-action lawsuit against Corinthian Colleges Inc. in February 2011, accusing the company of fraud, breach of contract, and violations of California's Unfair Competition Law, False Advertisement Law and Consumers Legal Remedies Act.

According to the complaint, Mu?iz enrolled at Heald's Rancho Cordova campus in 2007. After completing a business skills program certificate in 2008, she couldn't find work, so she went back to Heald for the paralegal program.

She withdrew from that program, dissatisfied because there were no assignments or homework. She transferred to Heald's Roseville campus to study criminal justice. Overall, she took out $19,000 in loans, the complaint states.

The lawsuit contends that Corinthian deceives students about the true cost of attendance by quoting tuition rates for only part of a full degree program, not disclosing hidden administrative fees and omitting attendance costs from college websites.

Corinthian spokesman Kent Jenkins Jr. said that the allegations in the complaint were "simply wrong" and that Corinthian clearly discloses the costs of its programs.

U.S. District Judge David O. Carter last year denied a motion by Corinthian to force the case into arbitration. Corinthian is?appealing that motion in the 9th U.S. Circuit Court of Appeals, according to court records.

Jenkins said the for-profit programs cost more because they are not getting the state and local subsidies that community colleges receive. For-profits pass that cost along to students, who choose to pay the price because they can get their degree or certificate faster than they could at a public institution, Jenkins said.

"People come to us not because they're being fooled or being exploited, but because they make a very informed and intelligent choice," he said.

He also cited data [PDF] from the National Center for Education Statistics showing that nationwide, 62 percent of students at two-year for-profit colleges graduated with a degree or certificate, compared with 23 percent of students at two-year public institutions. The data looked at students who completed programs within 150 percent of the time necessary to complete the degree requirements according to the college's catalog.

Debbie Cochrane, research director for The Institute for College Access and Success, said the comparison isn't quite apples to apples because most career college graduates get short-term certificates, while most community college graduates get degrees. Plus, the figures don't include transfers, which are a big part of community colleges' mission.

For-profit college students also leave with more debt. More than 1 out of 5 for-profit college students default on student loan debt within three years, compared with 1 out of 11 students at public and nonpro?t colleges, the Senate committee report said.

Cochrane pointed to the for-profit college sector's spending on marketing and recruitment to help explain why some students end up choosing career colleges over less expensive options.

"I think a big reason why students will opt to go to a for-profit college rather than a lower-cost public or nonprofit option is that the for-profits do a bang-up job with getting students in the door and enrolled in the classes, and they do it because their bottom line depends on it," Cochrane said.

The Senate committee's report found that some for-profit colleges spend more on marketing and advertising than they do on instruction. The 30 institutions the investigation dug into spent an average of $2,622 per student on marketing.

"Whereas a student who may go to a college fair and may take a brochure from a community college, they may put their phone number into a for-profit college website and get dozens and dozens of calls until they sign up," Cochrane said.

Story courtesy of our media partners at California Watch (A Project of the Center for Investigative Reporting)


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