Massachusetts Daily Collegian

Report shows for-profit institutions to be abusive, exploitative

By Hannah Sparks

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Flickr/Matt Grant

The phoenix, a mythological bird that bursts into flames only to be reborn from the ashes, is a symbol of regeneration. Perhaps this inspirational image is something the flailing University of Phoenix should focus on in order to regain its reputation following its October decision to close 115 of its locations nationwide after a drop in enrollment and profits. The jig may be up for the University of Phoenix and other for-profit institutions of higher education, however, as the various abusive and exploitative practices of these companies are held up to the light and scrutinized.

For-profit colleges were but a blip on the higher education radar until the 1970s, when University of Phoenix founder John Sperling started the first class, later expanding to include online courses as early as 1989. At the time, these schools were revolutionary in their ability to suit the flexible schedules of working adults, and reaching other “non-traditional” students. Though proponents of for-profit education argue that this flexibility is still an important benefit of for-profit institutions, critics argue that those institutions are inherently exploitative.

Over the summer, the Health, Education, Labor and Pension Committee (HELP), released a report titled “For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success.” The report, spearheaded by Iowa Senator Tom Harkin, the chairman of the committee, contains statistics that expose some of the unethical practices of for-profit universities.

Across the board, degrees from for-profit colleges or universities cost more than they do anywhere else. Most shockingly, the cost of a two-year associate’s degree from a for-profit institution costs about four times more than one from a comparable community college ($35,000 versus $8,300, respectively). Students at for-profit institutions also graduate with more debt and account for almost half of all student loan defaults. While 96 percent of students at for-profit colleges take out loans, only 48 percent of public college and 13 percent of community college students do.

Additionally, the retention rates at these institutions are generally low, with only 20 percent of attendees graduating in four years. This may have something to do with the fact that the average amount spent on instruction per student at a for-profit was just over $2,000 in 2009, less than a third of that spent on students at public universities. Despite these figures, between 1998 and 2008, enrollment at for-profit institutions grew by 225 percent, whereas in the same period, enrollment at other institutions grew by only 31 percent.

This is probably because in 2009, the for-profit higher education industry spent over $4 billion on marketing, recruiting and admissions staff, about a billion more than that spent on instruction. In 2010, over 35,000 recruiters were hired by 30 for-profit companies, while the industry as a whole employed only about 3,500 career services staff. To make matters worse, the average pay for the CEO of one of these companies is over $7 million.

Well, at least we know where their priorities are.

The continued growth of the industry, despite its more expensive costs and low returns in regards to graduations rates, suggests some deceptive marketing and recruitment practices. According to an article by Michael Stratford for the Chronicle of Higher Education, the companies “created a ‘boiler-room sales atmosphere’ for their recruiters, who were trained to capitalize on prospective students’ fear and emotions.”

Running a school as a business can only mean bad news for potential students. Tuition hikes at for-profit colleges are primarily motivated by the desire for higher profits, not for higher quality instruction. Stratford says “the educational interests of students rarely, if at all, figured into that decision making.” Not only are these schools mostly unconcerned with their student’s success (or lack thereof), they actively prey upon and make huge profits off of the anxieties students face in the economic downturn.

It isn’t just the for-profit companies themselves that are to blame: The report also targets, as the article states, “regulatory problems at the federal and state level,” as well as inefficiencies and cronyism in the accreditation process which allow faulty for-profits to stay afloat. Shoddy business practices affect everyone, not just the students who are being ripped off. Huge amounts of debt hurt the economy, as does the misuse of $30 billion of taxpayer money as well as the federal aid being funneled into these institutions every year.

Finger-pointing abounds, but the report ends by identifying three areas for improvement. The first is greater transparency, including requiring schools to provide more complete data about student enrollment and retention, as well as earnings and employment after graduation. The next suggestion is improved oversight of finances, especially in regards to where federal money is going. The final suggestion calls for greater legal and financial protection for students at these institutions, including an improved complaint process, improved student services and ending the practice of compensating recruiters based upon how many students they can enroll.

Though the ads in which a diverse array of people proudly declare, “I am a Phoenix” may (or may not) be inspiring, they put a shiny, false veneer on the cynical and predatory for-profit education industry. The for-profit system is just one of a number of questionable bricks in the higher education wall. Harkin’s report helps to bring some of its abuses to light, but what is really needed is a systemic reevaluation of the whole wall. Whether or not it needs to be torn down is a different story altogether.

Hannah Sparks is a Collegian columnist. She can be reached at [email protected]


6 Responses to “Report shows for-profit institutions to be abusive, exploitative”

  1. David Hunt 1990 on April 11th, 2013 9:02 am

    If for-profit places are so bad, then let the market take care of them.

    If people didn’t think it was worth it, they wouldn’t go.

    As for non-profits… they’re hotbeds of Leftist indoctrination. So they’re not without their own problems.


  2. Dahn Shaulis on April 11th, 2013 3:56 pm

    To make matters worse, state governments, public service retirement systems, and public school teacher retirement systems are helping Apollo Group (University of Phoenix)by holding institutional shares:

    Holdings as of 12-31-2013 (

    Shares Held Value (in millions)










    TEACHERS ADVISORS INC 112,166 1.900






  3. Paul Haeder on April 11th, 2013 4:17 pm

    It’s the old neoliberal card game — get hundreds of billions from taxes, from the US citizen, to run their businesses. You know, social the COSTS of doing business and privatize the PROFITS. With these for-profit schools, they have bilked the US taxpayer, students, families and their own hubris. They rely on federal and state loans. They are scammers. Any talk about the market will take care is absurd. The market needs regulation. Thieves of Wall Street, High Finance, and Lobby Hell need to be prosecuted. So, that argument is out the window.

    These schools exploit students and faculty. They are not community-rich schools. In fact, U of P wants to do more and more on-line, denuding the human aspect of human relations. To say that the state schools or K-12 are bad is absurd. Faculty at those places, state schools, K12 public schools, even non-profits, they are, hands down, looking out for their students. They are in the teaching profession because it’s not a game or a business. And, thank goodness.

    Does higher education need fixing? Yep, but U of P and privatizing the education system isn’t the way. These people who are higher management do not deserve my tax dollars fronting a college career by a returning war vet. I want that vet’s work to be at a school where he or she is face-to-face with challenging faculty, students and where there is measured success with communities — in the round, not virtual communities.

    U of Phoenix forces curriculum down faculty members’ throats. They pay faculty $5 an hour, if you break down $1015 a course plus mandatory and unpaid orientation hours. If you teach student how to read, write, think, perform, produce, and do it time and time again, that TAKES time.

    Read the words of a U of Phoenix employee —

    Write me with your stories — [email protected]

    Gosh, even middle of the road Frontline of PBS fame has a piece up on for-profits — College, Inc. Ugly people running those for-profits. They don’t even have the heart or language of teachers and holistic education.

    Finally, do these people, David Hunt, still exist? Leftist indoctrination? Really? I have taught in Texas, NM, Arizona, Seattle, Spokane and for the military, in prisons, in alternative high schools, in academies, for the community education programs. I’d have to say the USA needs some countervailing ideas other than red, white and blue, apple pie, and we are number one. I have seen THAT in all the schools I’ve taught at, and not just from students, but staff and administrators and many faculty. So, there ain’t no Fox News indoctrination going on. Just more of the old lies and shamed folk who never get educated!


  4. Anthony Francis on April 11th, 2013 5:40 pm

    Obviously the writer did little or no homewrok and had just ndiscovered sound bites and quotes from information that is full of half truths and partial information.Commmunity Colleges (CC’s),the new darliings of this Administration are clearly not the answer. The cost comparison leaves out one very valuable piece of information. Many if not most CC’S are priced at aproximately 27% of the cost of attendance to the student. The balance is funded from property taxes and block grants received by the State.So while the CC’s provide value to the student, they actually or more costly to the tax payer. If you add in their completion rates, many hover in the low double to high single digits, and value and marketability of training the picutre looks much different. Add to that that many CC’s are “adding” many of the job training type of programs that are traditionally offered in the private sector…. CC’s are beginning to lookmore like Private Sector schools versus the other way around.
    Bottom line?? We need to start doing better and paying more attention with K-12 and stop bowing to the pressures and strains put on our education systems by the Unions.Over 50% of the kids that “graduate” High School and enter Higher Education are not adequately prepared for entry level classes and need some type of remediation. Why are we paying twice? Hold High Schools and the teachers and parents, yes parents accountable for their outcomes to the degree that we can.
    We need dramatic reform of our education system otherwise in 2020 the only thing we’ll lead the world in is high priced, pampered drop outs.


  5. Anthony Francis on April 12th, 2013 9:30 am

    A few things regarding Pauls comments.Since U of P is the only example you used I will assume that you have not lookied in your own community at the Communit rich endeavors of MOST Private Institutions. Many in the for profit sector are small businesses run by families. They not only educate and train the “outcasts” that traditional education has failed, but they are active ,essential and vibrant contributors to the communities that they service. They are held accountable for their results and outcomes. A concept that traditional Academia has fought forever! Talk about billions of dollars being spent with declining outcomes? Neither K-12 or traditional colleges are held accountable for anything other than showing up. Standardized test scores in the basic skills have been in a free fall for over 2 decades now. Our country lags behind some third world countries in basic skills. Is that for profit educations fault. This administration has professed to get us back on top by 2020 by having the highest percentage of adults that have completed higher education, but continues to close down access to higher education. The implementation of denying access to higher education to non high school graduates may be one of the worst pieces of SOCIAL/EDUCATION pieces of public policy ever known to man.

    I do not pretend to think that there are not those that under perform in the for profit sector. I do not advocate doing away with any sector of education. In oreder for us to reach our educational goals of the future, ALL SECTORS of Education MUST do better. ALL SECTORS must be accountable for their outcomes. Funding models must change. Educational systems and goals must change. If we keep putting fresh paint on the same old house we are selling tax payers short but more importantly we are selling our future short. It’s time to stop pointing fingers and join hands to make the hard choices that will restore the prestige to an Education System that at one time was the envy of the world…..


  6. Paul Haeder on April 12th, 2013 11:25 am

    A Francis — We need to hold accountable corporations for off-shoring, outsourcing, and technologically hollowing out good middle income jobs. We need to force corporations to pay destruction taxes — fines, if you will. Like if you and I dumped used motor oil on the UMass president’s lawn, or burned a barrel of shredded student loan forms out on the quad. These corporations have gotten tax dollars for R & D, gotten free labor from universities, have gotten tax breaks, tax give-aways, and plenty of protection money and legislation. So, we have this now — young people who need to be educated. Not teach to the test, not paltry schools that are fighting privatizers and their charter school madness. Really community engaged and directed education with liberal arts, technical arts, and STEM, integrated.

    And, yes, learning how to read the lies of corporations and governments. Critical thinking skills. History on why we have even now paltry protections from corporations shredding safety, shredding human rights, shredding constitutional rights while CEOs and financeers and Wall Street investors skim from the top and the bottom.

    So, it’s integrated re-upping education. Pre-K, decent childcare, single payer health care, real public transportation, old faculty and older workers giving up some of their hours to allow for youth to work, real libraries, public, offering plethora of services. It’s got to be a revolution in our education thinking and doing.

    Community Colleges are OF COURSE one answer. What do you do with remedial students? Toss them out? Have them wash the rich’s SUVs? Right. Maybe. Since it seems the laborers even on campuses like UMass are coming together to fight for dignity, better wages and workplace safety and rights. Maybe we all should be day laborers for a day. Cooks. Maids.

    Seems that the bottom of the 70 percent are the most abused yet they are certainly more gutsy than the vanguard and the middle middling.

    Teach young people to question government, question corporations, and to stand down this unsustainable system that puts more power, money and control in fewer and fewer hands, many of them Ivy League Mal-trained.


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