Education, From The Capitol To The Classroom

For-Profit Colleges: Game-Changers Or 'Diploma Mills'?

For-profit colleges have a lot of accusatory fingers pointing in their direction, mostly from politicians and commentators looking for someone to blame for soaring levels of student debt.

But are for-profits indeed fatally flawed ‘diploma mills’? Or convenient scapegoats?

In Indiana, this debate has special significance. The state’s student default rate is one of the nation’s highest — and Congress has singled out for-profit universities as a source for these high rates.

Top Five Federal Student Loan Default Rates
1. Arizona 15.96%
2. Arkansas 11.74%
3. Indiana 11.61%
4. Iowa 11.56%
5. Colorado 11.55%

Nationally, the discussion over whether for-profit degrees are affordable — or even worth the cost — is far from over.

‘Mixed’ Results?

The Government Accountability Office released a report on for-profit colleges last month.

Its findings? For-profit colleges are a “mixed bag.”

The GAO enrolled “undercover” students in online, for-profit college courses. The report found instructors in some colleges held students to appropriate standards. But in other colleges, students were able to easily skirt the obligations their online instructors laid out.

“One student submitted photos of celebrities and political figures in lieu of essay question responses but still earned a passing grade,” the GAO reported.

Kevin Carey with non-partisan think tank Education Sector summed up the report:

Some of the for-profits expelled GAO investigators posing as students for cutting class, skipping assignments, and turning in plagiarized or deliberately bad work. Others let the behavior slide and happily cashed the tuition checks. Given that some big for-profits get 90 percent of their revenue from federal financial aid programs, and many students at for-profits are academically and economically at-risk, this kind of scrutiny is entirely appropriate and the percentage of for-profit colleges with lax or nonexistent standards is far too high.

These criticisms have been repeated by for-profit colleges’ biggest skeptics, who tend to lean left politically. From the Center for American Progress, a liberal think tank:

Many for-profit colleges have been abusing the trust students place in them by misrepresenting the educational services they offer and overcharging for substandard educational experiences. As a result, their students end up with high student loan debt and such bleak job prospects that they cannot hope to pay their debts.

Reasons For Wariness, Reasons For Hope

But are criticisms of for-profit ed a tad too hyperbolic? Education Sector’s Carey continues:

HOWEVER — does anyone seriously think that the problems of skipping class and turning in plagiarized work are isolated in the for-profit sector?

Studies show that many students learn little or nothing in four years of traditional college… The heightened federal scrutiny of for-profits over the last few years has been entirely warranted but the time has come to start asking these same questions about other colleges, too.

Andrew Kelly, a research fellow at the conservative American Enterprise Institute, writes in The Atlantic “for-profit colleges are on the ropes,” but argues there are still things they do better than their public sector counterparts. For example:

For-profits have shown a knack for getting students over the finish line in their two-year programs. Though graduates of two-year programs at for-profits are saddled with far more debt than their community college peers and default at higher rates, those who attend full-time are also much more likely to finish their degree in three years.

The latest data… reveal that about 57 percent of first-time, full time two-year degree seeking students who started at a for-profit in 2005 finished within 150 percent of normal time. The analogous figure for public community colleges? Under 21 percent.

President Obama says we need 5 million more community college degrees. The for-profits clearly know something about how to get there.

CORRECTION: A previous version of this story identified WGU Indiana — a state-sponsored partnership with Western Governors University — as a for-profit university. While it is an online university (like many for-profits), Western Governors University and WGU Indiana are not-for-profit organizations. (Nov. 25, 2:00 p.m.)


  • gwalker

    WGU and WGU Indiana are not-for-profit.

    • StateImpact Indiana

      AHH! Yikes. Good call. We’ll change the post to reflect.

    • StateImpact Indiana


  • David Cornwell

    I’m not totally against for-profit colleges. However we need to always remember that the bottom line for them are the stockholders. They use tempting enticements and misleading advertising to hook students into enrolling. And the promises they make are totally unrealistic, especially in the present economic environment. When money is the motive, look for scandal to eventually develop.

  • Slowlightening

    Okay, so students can finish degrees faster at for-profit institutes. Why doesn’t the article ask why that is? Is it because classes are held at better hours? Or is it because classes require significantly less work? Why doesn’t the article talk about how much these for profits have donated in campaign money and to whom? Many of the recipients of those donations are now lobbying the federal government to soften its approach to for-profits (source: PBS doc). This article fails to ask some important questions.

    If the individuals running post-secondary institutes have “profit” as their primary goal, decisions will inevitably be made differently than if the goal were, say, education. Have politicians and the media lost the ability to think critically about the potential consequences of this shifted focus?

  • Nazani14

    Pay close attention to the colleges that are courting your high school senior! My kid wanted to go into computer graphics, so Full Sail and for-profit art schools were calling her constantly, sending her catalogs the size of an old Sears catalog, and promising me that they could get her all kinds of scholarships, even though our family is well off. I soon put a stop to this- any art department that will admit a student without having to submit a portfolio first is a scam. Good schools have students competing to get in- no salesman will call!
    Read the online student reviews of the schools. Full Sail counted a student as “hired in their field” if a film production major ended up working at Blockbuster.

    • Landon Parks

      Yeah. Art’s degrees suck. Film degrees suck even more. No matter what university you get your filmmaking degree at – you’ll be flipping burgers. Film is not a ‘let me check your degree’ type industry. You either have provable talent or you know someone. No one will ask you for your film degree.

      BTW: Full Sail is the way it is because its a trade school. It’s not a university like we typically think of a university.

  • Mountain Leaves

    I worked at a for profit school. Hated it the whole time. Admissions lying to students. Dean’s changing failing grades behind my back. Being urged to push people through. It’s a dirty industry. Now I see their billboards on the highway trying to attract returning military veterans. It’s disgusting. Glad I don’t work there anymore.

    • CherriB

      Hi, Mountain Leaves, I graduated Mount Holyoke College, BA, ’01, and am now in the dissertation phase, PhD at Walden University, online. I am, in fact, in one of the first online graduate student independent study labs, three quarters, as well. I work as rigorously as I did at Mount Holyoke, said to be second only to Harvard in writing assignments. I am earning online because I like the freedom of choice. All of my professors in this program have required a very high standard of skills from students. Having written this, perhaps because of my Mount Holyoke background I demand more of myself and the instructors than a student who earned all degrees online, perhaps.

  • Christi Toomer

    One more way private industry can go after government money…tools….and the student gets screwed royally in the process.

  • Arthur Aficionado

    I’ve read recent articles that indicate many Ivy League schools are overpriced relative to their value. Whether public or private, isn’t this just a case of ‘buyer beware’ ?

  • Anonymous

    Few legitimate scholars set out to become online professors. Almost all are people who failed to secure real positions at legitimate universities and were forced to find some sort of employment–usually part-time–with an online, for-profit degree mill. Some are entirely unqualified secondary teachers looking to make an extra buck on the side teaching university-level courses. Others are “so-called” professionals who claim to actually work in the field (what qualifies a so-called working professional to teach at a university level?). In every case, an online education is viewed as a cheesy short-cut, rather than a valid way of obtaining a college education–taught by part-timers who failed to pass the essential professional vetting necessary to create a world-class faculty of distinction at a major, legitimate university. Sure, a few “graduates” with online degrees may succeed, but people without any college degrees sometimes succeed too. Ultimately, your degree will only get you so far–you have to prove your abilities through your actions and results. If you were poorly educated, the likelihood of getting good results is reduced considerably.

    • Sfromana

      Where do you get this information? Few legitimate scholars become online professors? So now you are vilifying online learning? Stanford has online learning. Will that change your tune? Berkeley has online learning. Online learning is effective and flattens the earth. If it weren’t for online learning, remote areas of the world would have no access because they lack brick and mortar infrastructures. Military families would have no hope because they relocate so much. Also, most schools don’t want “legitimate scholars” because they dedicate themselves to publishing and R&D and are not hands-on practitioners: accountants, HR directors, head project managers. These instructors are part-time because they are working full time, in the real world. I don’t know about you, but if I have to do a business plan, I certainly don’t want an academic. So, that being said, I suggest you be careful about offering sweeping generalizations and look at each school regardless if for-profit or non-profit.

      • Anonymous

        Whoops! Talk about sweeping generalizations and unfounded nonsense! On one hand you tout online education at Stanford and Berkeley while on the other hand you vilify “academics” for not living in the real world, not hands on practitioners? So which is it? Is online education at Stanford a good thing? Or a bad thing? Furthermore, you clearly have no access to the faculty at either Berkeley or Stanford, otherwise you’d know that in addition to all their teaching, researching and writing, they’re also directly involved in practicing what they teach in the so-called real world. Yikes, I’ve rarely encountered someone so profoundly ignorant of the actual workings of higher education. Spouting unfounded generalizations about “academics” is no way to pursue your point, though it may persuade the very gullible. When you’ve straightened out your outrageously convoluted thinking, get back to me…

      • CherriB

        SFROMANA ~ yes! Harvard and Yale as well, and Purdue, and many, many first tier colleges and universities now have online courses. Online, from my limited perspective, represents a future for educating globally. And something else, not-for-profits have to earn a profit, though it is rolled back into more education programs. Thanks for your comments, especially about making sweeping generalizations.

    • CherriB

      Dear vcponsardin, there seems to be a great deal of confirmation bias in your statements, and they are quite broad in scope. You wrote, “Few legitimate scholars set out to become online professors.” Really? What defines a legitimate scholar from your perspective? How many equal “few”? Your categories are quite narrow.

      You also wrote, “…-you have to prove your abilities through your actions and results.” I agree; however, I do not agree with your last statement. A student learns what student wants and needs to, though sometimes the K-12th grades may not have prepared students sufficiently in critical thinking skills, objectivity, plagiarism, writing, and in the math and sciences.

      • Anonymous

        Given that your first paragraph is utter nonsense, an extended answer would be futile. Are you expecting concrete numbers? Why? How would that change your mind? It wouldn’t–regardless of my evidence. So any answer I give you would be pointless. Your simple mind is made up. Nonetheless, I will offer this: I have been a professor for nearly four decades at three major research universities and I have never encountered a PhD student who told me he/she wanted to be an online professor. Never. And I most likely never will. So I will alter my statement to a more emphatic–”No legitimate scholar ever sets out to become an online professor.” As for your last statement–a university is not for remedial learning. Online “colleges” and community colleges might serve that function. But never will a major research university. I reject your implication that major schools like Stanford and Harvard must provide remedial education to those brainless students who are too stupid to gain admission legitimately. A top-flight education isn’t for everyone–and it shouldn’t be. Online education seems to be fulfilling a wonderful niche–offering college degrees to those who can’t otherwise qualify to get a college degree. The value of those degrees, however, is what is the real issue. What point is there in getting an “online” commercial pilot’s license if no airline will hire you? What’s the value of an online MD degree? I would never trust a person with an online degree to do anything beyond bagging my groceries. And I pity the poor businesses who have to resort to hiring such fools.

        • Vintagered

          My statement is for VCPONSARDIN. You sir are an arrogant, pompous ass!

        • Larry

          Someone said that education is the only thing that many people want the least amount of for their money. For-profit colleges cater to this clientel. After all, the customer is always right. What employer would take these degrees seriously?

  • Dude

    Just as a side note people should be clear about the nomenclature. The difference is between “for-profit” and “not-for-profit” schools as discussed in the article. “Private” universities are generally thought of as those schools not considered “State” schools (though, in general, both are classified as “not-for-profit”).

  • Edith Linn, Ph.D.

    I’ve taught at a for-profit institution (Berkeley College) for 4 years, after working at a state university. In my experience at BOTH institutions, many students are ill prepared for college level work and some plagiarize, cheat, and make lame excuses.
    At my for-profit college, the professors have advanced degrees, but we are not threatened with termination if we don’t push out a journal article every year. Instead, we devote enormous amounts of time to improving our curriculum, working one-on-one with struggling students, and yes, sometimes allowing weaker student to re-do an assignment on which they “messed up.” At this school, we can readily detect and reject plagiarized work, since it’s copied from the Internet; our students don’t have the money to buy term papers or parents who can write their papers for them.
    While some for-profit schools are deceptive and exploitive, I wish the “left-leaning” critics at the Center for American Progress could meet the faculty here. We are deeply committed to reducing the educational chasm that separates the poor from the privileged. Every one of our graduating students is a small victory for social mobility and social justice.

  • Anonymous

    The other thing people tend to forget in articles about the pros and cons of online college degrees is the simple fact that what often lands you a job (especially your first job) is not the degree, but the letter of recommendation. And who writes that recommendation is one of the most important factors. A recommendation from some part-time online teacher with no reputation or status in his or her field and who’s never met you in person, is going to carry significantly less weight than a letter from an actual full-time professor from a major university with a well-known national reputation and who’s worked with you in person. When an employer has to choose between two applicants–one with a no-name recommendation from an online degree mill and the other written by an established expert from a major university, guess who’s going to get the job?

    • Sfromana

      1) you have to get into this Ivory Tower school 2) you have to have to be able to go full time, quit your job and relocate
      The majority of the population is not in this 1%. The reality is that there is a huge population of non-traditional students that seek adult learning that allows them to get their degree without the football team and dormitory life. They are older and don’t have the “luxury” most mid to upper class people had after high school. HR recruiters look FIRST at experience and other companies worked at. Letters of recommendation? since when? I would much prefer someone who learned the right Project Mgmt software than a letter from a stodgy professor who knows nothing from the real world. Now, if the letter were from a CEO or head project manager with actual practical details of this persons skills, then yes! Letters of recommendation always come after a person has been interviewed and is one of two or three in line for the job. The letter is a cherry on the top, but did not get the person in the door in the first place. Yes, if you can go to Stanford and put that on your resume, absolutely. Again, this is not representative of the rest of the population. So, getting the skills is #1.

      • Anonymous

        Yup. You do have to be smart and get good grades in high school to get into the best universities. I’ll agree with that. Adult learning is also great. That’s what community colleges are for. And now, apparently, that’s what online colleges are for. Go for it–I wholeheartedly agree. And good luck getting those job-securing recommendations! Unfortunately, you’re still spouting lies and BS about higher education–that only the very wealthy can get in. Nonsense. You clearly have no connection to any of these major universities, otherwise you wouldn’t spout such unfounded “pop” nonsense. Yes, tuition is sky high. Yes, the cost of college is putting many families out of reach. But that has nothing to do with admissions. Major universities seek out the best and brightest students regardless of their personal wealth and in many instances find them substantial scholarships, fellowships, work/study grants, etc. to get them through four years. Please education yourself about higher education before spewing the same old Fox News BS.

        • Jo

          Maybe. But there is systemic bias against non-traditional students (age, military status, and georgraphy).. You sound like a nice guy. Go do something great and convince your school to honor DANTES and admit more veterans if the institution does not already!

          • Anonymous

            Nonsense. There is no systematic bias against older students or vets. Cite your evidence. Let’s not fall back on baseless nonsense. I have served on many admissions committees over my career (35 years thus far) and I have NEVER encountered anyone who systematically denied admission to our university on the basis of anything other than low grades, weak test scores or poor letters of recommendations. Period. Please stop spreading such lies.

    • Sfromana

      I must also add that there is a chasm bw the haves and have-nots. The “reputable” schools do not offer alternatives for those who did not have the opportunity to follow the traditional route straight from highschool, with career coaches and tutors that help them write their applications. They are working to support their families. They postpone school because they had no choice. They continue to not have access to these schools. If more traditional schools would adjust to their population, then there would be more equal opportunity.

      • Anonymous

        Sounds like a lot of sour grapes–someone who failed to get into a top school and is now complaining. Yet you also sound like someone who is secretly envious of the top major universities. After all, if online education is so much better in so many ways as you seem to be arguing, then why do you care one bit about what the top legitimate universities do or charge? Hmm? If online education is your thing–do it. I couldn’t care less…

    • Jo

      Very interesting, last year I took an online course taught by a Presidential Scholar from a ranked brick and mortar school. He “sucked.” Before earning a graduate degree from this prestigious school I earned a degree from the University of Phoenix. Every online course instructor was better than this guy and the three other online classes I took from this renowned institution. Funny when I tell people I have a degree from this school they are impressed. However they are not impressed about the Phoenix degree where the instruction was better. Who knew?

  • Seneca1

    I worked for a for-profit college located in New York State – basically, they are totally driven to get students in the door, run them into Financial Aid and pack the classes. The tuition rate per credit hour was in the same range as a nearby nationally recognized university. The ONLY reason that they are continuing to run this highly profitable scam is that they have a really good lobbying arm and support from the right wing, which hates the idea that gov’t supported universities ( one of which I attended some decades back ), they see as yet another gov’t program to be eliminated privatized in their zeal to peel away all the functions of gov’t back, save for those that will continue to funnel money to their largest contributors. For all the defenders of these “for-profit” schools, I would ask the question – if they are such a good thing, then why are their admission depts. nealry as large as the faculty/admin staff, why do they only hire instructors on a contract basis, with NO tenure available, and most notably, why are they so attractive to investment groups ? I can tell you why – because they can suckle off the gov’t teat for student loans.

  • Trena G

    Diploma mills.

  • Mac

    They are ALL “for-profit” colleges! The difference is that while the University of Phoenix pays taxes on its profits, Harvard ($27 bn endowment a few years ago) does not.

    The “non-profits”distribute THEIR earnings via new departments (“Gender Studies”), ever-lighter work-loads, lavishly-compensated administrative positions and rich retirement packages.

    The “for-profits” distribute earnings via dividends to shareholders.

    Both make out like bandits, both screw the miserably indebted students — but, at least, one of the two types contributes to society by paying taxes!

    Let’s tax ALL institutions of “higher learning.” Let’s use the tax revenues, for the most part, to pay-down existing student debt so that the younger generation isn’t (altogether) ruined.

    Let’s also make ALL such institutions co-liable for student default on loans. THAT will control costs and focus attention on “real life” in a hurry!

    It’s time we returned some of the extortionate costs of higher education funded by the public TO the public! And, the best way is to impose taxes — and use these to help break student debt slavery!


    A For Profit College will enroll anyone with the tuition money. Enroll at Devry and you will never complete a three year degree in three years, it will take about five years of tuition before they will even think of handing you a diploma!

  • Jim Fetter

    For-profit colleges are what 3rd world nations are all about, I thought America was better than that, I stand corrected, we arn’t!
    And we will be sorry for it in the long run when millions of students are unemployed and oweing thousands they can’t pay back.
    Those who support the retired population should be educated enough to keep America strong, not be on welefare struggling to survive themselves, otherwise social security will go bankrupt and the whole nation will collapse 100 times worse than it is now, hide and watch!

  • Cheryl

    I’m ashamed to admit that for a brief period of time I worked for a for profit. The admissions department included “counselors” who were pressured to produce a minimum number of new enrollees every month. Counselors worked the phone from leads culled through online inquiries and the numbers you may have noticed in TV and radio commercials. It’s all about sales. It’s all about selling the dream using very misleading techniques and half-truths. It’s not about education.

    The real problem is cost vs. income. Let’s say a newly degreed and certified Medical Assistant gets a job in a market saturated with both Medical Assistants and LPNs. He or she begins a $10.00/hour entry level healthcare job but will be required to pay back $22,000 to $30,000 in loans. Those students who drop-out after only a semester or two because they didn’t have the academic chops or discipline to remain motivated are saddled with educational loans that will follow them forever if they can’t pay them back.

    For-profit colleges and would-be universities should be the last option for anyone who yearns for education and professional career opportunities.

  • Anonymous

    People used to complain about college students getting all of their knowledge from books. But now getting all of your knowledge online from the Internet is somehow better?! You’ve GOT to be kidding me…

  • Alex

    This is really about a “sub-prime college degree”. It is the same business model sub-prime mortgage providers like Countrywide or the “payday loan” business that charges higher interest than a loan shark. It targets the most vulnerable people in society. Selling something that they can’t really afford and pushing a loan that they probably can’t repay. The for-profit college industry might as well be called the sub-prime student loan racket.

    So why not go to a community college? Many for-profit programs are available at community colleges for a fraction of the price. But community college students say they are having trouble finding seats in their desired classes due to overcrowding. Due to budget cuts, the nation’s biggest community college system in California will turn away more than 350,000 students next year.

    Documents, obtained by a Senate oversight committee, show the high-pressure recruiting tactics employed by for-profit schools to increase enrollment numbers and the profits that come from federal student-aid dollars. A new rule would withdraw federal funds from programs whose students have high debt to income ratios and who default on their loans in large numbers. About one-quarter of students who took out federal loans to attend for-profit colleges defaulted within three years of starting repayment, according to a new federal analysis. The three-year default rate for public colleges is now about 11 percent, up from about 10 percent in the previous report. The rate for private nonprofit colleges is about 8 percent, up from about 7 percent.

    – 11 % of higher education students in the country attend for-profit schools, yet they account for 26 percent of federal student loans and 44 percent of student loan defaults.
    – up to ninety percent of “for profit” revenue is from U.S. taxpayers, through the Pell Grants, Stafford Loans, and other federal assistance used by their students. Examples: Kaplan and the University of Phoenix.
    – CEO’s of for-profit colleges receive up to 26 times the amount of pay of a normal university head.
    Per 60 Minutes:
    “Over the past two years, career colleges and lending institutions that benefit from government-backed student loans handed out more than a million dollars in campaign contributions to members of the House Education Committee. Half of that money went to the committee’s two ranking members: Chairman John Boehner of Ohio and Buck McKeon of California. Both declined requests for interviews.

About StateImpact

StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
Learn More »