DeVry University Lawsuit Again Shows Downside of For-Profit Colleges
What you need to know about for-profit schools
By Donna Rosato
January 28, 2016
It’s getting harder to make the case that going to a for-profit college pays off. For many students, it could turn out to be a very poor financial investment.
The latest evidence came Wednesday, when the Federal Trade Commission announced a lawsuit against DeVry University, one of the largest for-profit colleges, with tens of thousands of students enrolled at 55 campuses in 18 states. The FTC alleges that DeVry University advertisements deceived consumers about the likelihood that graduates would find jobs in their fields of study and would earn more than those graduating with bachelor’s degrees from other colleges or universities.
On Tuesday, a major whistleblower lawsuit filed last year against ITT Technical Institute, another for-profit institution with more than 100 campuses around the country, was revealed to the public. In that case, ITT’s former dean of academic affairs alleges that the school repeatedly defrauded taxpayers by taking billions of dollars in federal student aid while systematically deceiving students and violating federal regulations.
In December, the Obama Administration announced it might cancel up to $30 million in loans for former students of Corinthian College who say they were defrauded by the school. Corinthian filed for bankruptcy in May.
And that’s just in the past month. Dozens of for-profit schools have been targets of government investigations and lawsuits from students. These schools typically offer career-focused certificate programs such as massage therapy or associate degrees in fields such as nursing.
The problems are so pervasive that in 2014 the Department of Education created an interagency task force for federal agencies and state attorneys general to oversee for-profit colleges. The Education Department also put in place new regulations last July to prod for-profit schools into improving outcomes for students or risk losing access to federal student aid.
“None of the recent allegations were surprising. We’ve heard them over and over again at different schools and different companies,” says Stephen Burd, senior policy analyst of the Education Policy Program at New America, a nonpartisan public-policy institute. “We’re finally seeing action and heading in the right direction looking closely at this industry.”
An Education at What Cost?
All this raises the question: Should you ever consider going to a for-profit college such as DeVry University? These schools promise a fast track to a well-paying job and appeal to students who might not otherwise go to college. The programs offered are flexible, with classes at night, online, and year-around. And they profess to offer targeted training at jobs in demand.
Just 12 percent of all college students are enrolled at for-profits, according to The Education Trust, an education-advocacy group, but for-profit colleges target a vulnerable population and disproportionately attract low-income and minority students. The increased scrutiny has pushed down enrollments but the schools still have access to billions of dollars in financial aid.
“For too long, students across the country have experienced fraud and abuse at the hands of many unscrupulous for-profit colleges,” says Suzanne Martindale, a staff attorney at Consumers Union, the policy and advocacy arm of Consumer Reports, who focuses on education debt issues. “But this is only the beginning. Greater oversight of the industry is crucial moving forward, to prevent future students from suffering the same fate.”
False Promises and Red Flags
If you are considering a for-profit college, here’s what you need to know.
- It’s an expensive way to earn a degree.Tuition and fees for the 2015-2016 school year average $15,610 at for-profit schools vs. $3,345 at a public two-year school and $9,410 for students at public four-year colleges, according to the College Board. Out-of-state students paid $23,893 at public four-year schools and $32,405 at private ones.
- Graduation rates are much lower. Just 32 percent of students at for-profit colleges graduated within six years compared with 57 percent at a four-year public colleges and 66 percent at private nonprofit colleges, according to the National Center for Education Statistics.
- Graduates struggle to find jobs. Even if graduates get jobs, the work isn’t well paid. Nearly three-quarters of students who graduate from for-profit colleges earn less than high-school dropouts, according to data released in the fall on 5,000 career for-profit college programs from the Department of Education. That compares to 32 percent of graduates from public schools.
- Borrowers default rates are high. Students at for-profits account for 31 percent of all student loans but nearly half of defaults, the Department of Education says.
How to Evaluate a For-Profit School
Not all for-profit schools are bad. But you literally need to do your homework before going this route. TheNational Association for College Admission Counseling offers this advice:
Look for regional accreditation. Accreditation is no guarantee of the quality of a school. National accreditation groups such as Accrediting Commission for Career Schools and Colleges and Accrediting Council for Independent Colleges and Schools have not been successful in finding where students are being abused and many board members are from for-profit schools, says Burd. Regional agencies do a better job, he says. Check for credentials at the Department of Education’s Database of Accredited Postsecondary Institutions and Programs. But it’s important to check whether a particular program has the accreditation you’d need, especially if the job you’re training for requires a state license, says Martindale.
Understand the costs. Most for-profit schools charge higher tuition than comparable programs at community colleges and public universities yet their students carry significantly more debt. Comparison shop before you enroll and consider less expensive programs at community colleges and public schools.
Check for complaints. A simple Google search with the school name and “complaint” or “lawsuit” is a start. You can check for formal complaints with your local Better Business Bureau and through theConsumer Financial Protection Bureau’s Paying for College site.
Beware a hard sell. School recruiters often pressure students into enrolling. Take the time to do the above and if you get the hard sell, that’s a red flag you should go elsewhere. “If a school is making a slick sales pitch, promising you a quick and easy path to a high-paying job, think twice,” says Martindale.