Profits, Pell Grants, and College Degrees

Do for-profit businesses have a legitimate role in ensuring more Americans secure that college degree that is quickly becoming a non-negotiable in today’s economy?  With commercials for the University of Phoenix and Kaplan University on what seems like a constant loop on television, it is a question few ask.  We seem to assume, in today’s day and age, that for-profit institutions of higher education are a permanent part of the landscape, quickly becoming no different than distinguishing between public and private colleges.

Discussions of academic quality, growth, and such was left to the regional accreditation bodies.  Yes, we’ve targeted the diploma mills who exchanged checks for diplomas.  But if a for-profit could convince a team higher ed officials (most from traditional NFPs) that they had a legitimate plan, they were in business.  Some focused on a particular state or geographic region.  Others, like Phoenix, went national.  And some have focused exclusively on online education (though, interestingly, it can be more difficult to get accreditation from the online authorizing body than from a regional accreditor).

Yesterday, though, Bob Shireman — U.S. deputy undersecretary for education — changed the game.  As reported here by Inside Higher Education, Shireman took issue with growing enrollments at for-profits, increased profit margins at such institutions, and a flawed regulatory process that doesn’t necessarily protect the rights and needs of the student.  He even went so far as to suggest that higher education could be headed the way of Wall Street, with some gaming the system.

Shireman’s comments have been a long time coming.  A champion of affordable education for low-income students and a strident opponent of unnecessary college loan debt, Shireman has long been a leading advocate for the consumer — the adults or young adults who are seeking to better their lives with postsecondary degrees.  And he knows better than most that the approval systems for college approval — at the federal, regional, and state level — are seldom focused on academic quality or return on investment.  Instead, they are often the playground of lobbyists, lawyers, and consultants.  (And that is true for for-profit and not-for-profit institutions alike.)

Over the past year, Shireman and company fought hard to increase funding for Pell grants and make college generally more affordable for all.  Those outside of the system expect that these additional dollars are likely going to State U and local community colleges.  But Shireman pointed out a funny thing has happened between intent and execution.  Corinthian Colleges’ revenue from Pell grants has increased 38 percent in the first three quarters of the fiscal year.  DeVry has seen their share jump 42 percent.  Similar gains have been posted by ITT, Strayer, and others.

His remarks touched on the three legs of the higher ed stool — the feds, the states, and the regional accreditors — to work together to ensure quality and efficiency.  But after spending some time in the for-profit higher ed field years ago, Eduflack would like to add one more box to check on the ol’ forms.  That box is ROI.

With Pell grant dollars increasing even in difficult budget times, we should all be committed to ensuring that these precious dollars are actually yielding return on investment.  If the objective is to break down financial barriers and get more kids into college, then the ultimate goal should be to ensure that those kids are actually leaving school with a degree in hand.  The experience of higher ed is important, but leaving school halfway through is a lost opportunity for both the student and the Pell grant system. 

We shouldn’t have an issue with Corinthian and DeVry and the rest if they are enrolling more students and more students are thus earning an accredited college degree.  We should, though, take major issue with colleges and universities who are reaping huge financial benefits from the system, but aren’t actually educating the customers they are serving.  And at the end of the day, that education is measured by degree completion.

This is not just an issue for for-profits, it should be true for any institution operating in the postsecondary space.  Doesn’t matter if you are a NFP research university, state college, community college, private liberal arts school, or a career college, a degree is a degree.  Students enroll in college to earn a degree.  They earn a degree to secure a job.  When they secure a job, they can then pay off those student loans and generally contribute to the economy and society.  And so is the circle of college life, as those loans are repaid and the money given to the next generation of students.

Last month the American Enterprise Institute released a new report showing that just over half of Hispanic students earn a bachelor’s degree six years after enrollment.  That means nearly half of all Hispanic students who go on to college spend their money, family funds, scholarships, grants, and loans on an education that never offers the ultimate ROI.  They may finish up with some great stories, good friends, and wealth of experiences, but what does it mean without the degree?

If Shireman and company really want to change the way higher education does business and ensure that the interests of the customer — the student — are truly addressed, they would find a way for at least one of the stool’s three legs to factor in graduation rates as part of their evaluation and approval process.  Those schools that take Pell grants should make sure that Pell students are graduating with degrees.  If they aren’t, why not?  And if they aren’t, should we really allow them to increase their profit from these federal grants, if they are failing to live up to the expectation that such grants (and loans) are intended to help students earn college degrees?

One thought on “Profits, Pell Grants, and College Degrees

  1. There are definitely major problems with the current setup. You mention that close to half of Hispanic students graduate without a degree. That statistic pales in comparison to the graduation rates of some of these places. As an English teacher, I posted graduation rates of top schools and compared them to local schools in Arizona. Aside from the fact that Arizona State ensures that barely over half of its students graduate and community colleges are only preparing 1/4 to 1/3 of their students to graduate or transfer, University of Phoenix only has a 12% graduation/transfer rate for students who go in person and only 5% for their online courses. I understand that some of their courses are for students who just want remediation or a little extra outside help, but there needs to be a line drawn. I don’t understand how they can have any accreditation at all.

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