Featured Articles

test

Details

Published on Monday, 19 December 2011 02:08

Written by Super User

test post

“Online Universities” Examined

E. J. Lepke

 

A much-discussed issue among the Occupy Wall Street protesters, their international counterparts and supporters is student loan debt. Many are demanding that their governments forgive these debts, as they are a major hindrance to large segment of students and graduates in being able to afford cost-of-living expenses, establish credit and attain assets, especially in an economy where job prospects in professional fields can be uncertain and most new jobs that have been created are in the low-paying service sector. Here in the U.S., the national total of student loan debt is close to $550 billion, according to Reuters writer Felix Salmon, coming somewhat close to the $690 billion total in national credit card debt. There are several reasons as to why such a massive amount of debt has been incurred, why the cost of tuition keeps going up and why students are increasingly going into default, and arguments over why banks are forgiven and students are not, or over “personal responsibility” and other value-based arguments could go on for eternity with no resolution, I'd like to bring up an important factor in this issue that usually goes unmentioned: For-profit universities.

For-profit colleges are not the same as private colleges, such as the Ivy Leagues and religious colleges that are often run like non-profit organizations. Often they are misleadingly referred to as “online universities,” as they were recently described to me in a random survey call from a PR firm. For-profit schools are run much like private businesses but are still eligible to receive federal Pell grants and loan funds. Devry, Kaplan, and Phoenix Universities are among the biggest and most-advertised schools in the industry. Only around 10% of college students are enrolled in for-profits, yet these companies hold more than half of the nation's default student loans, according to a year-long investigation led by Senator Tom Harkin (D-IA). According to a report from the Education Trust, over a six-year period Phoenix University had a graduation rate of 9%, while other popular for-profits such as Lincoln College, Kaplan and Bridgepoint have a withdrawal rate hovering around 70%. This is partially because for-profits attract “high-risk” students, who tend to be low-income and work full-time. More than half are black and Hispanic, which hints at an even bigger issue of societal inequality when it comes to economics and traditional education. Many critics allege that low graduation rates are the fault of the schools themselves. Sen. Harkin's report questions their methods and budget for recruitment (around 31% for Marketing and Recruiting versus 50.2% on Education spending). Students have complained they've been misled about the schools' accreditation, on-site training and post-graduate job placement.

Recent new Federal regulations have been imposed on for-profit universities, but the proposed restrictions have been softened by intensive lobbying ($12 million worth) since 2010. The new rules would block federal funds to a for-profit if 35% or more of their students are still paying back the original loan amount three years after leaving, but this wouldn't even effectively happen until 2015.

What about students who already believe they've been ripped off by these institutions? Currently there is a lawsuit pending against the Education Management Corporation, 40% of which is owned by Goldman-Sachs. Past lawsuits have forced other companies to pay large settlements, but lawsuits alone aren't going to change their conduct in the long run, and likely won't fully reimburse past students or place them in the jobs they were promised.