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For-Profit Colleges Concern Congress

Editor's note: During this discussion, a caller talked about his experience as a student at National University. For clarification, National University is a private, non-profit school.

For-Profit Colleges Concern Congress
The Government Accountability Office report on 15 for-profit colleges earlier this month found that all 15 misled students and four engaged in fraudulent behavior. We look at the role of for-profit colleges in the U.S. educational system; the findings of the report and what questions students should be asking when they enroll.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. As financially-stressed public universities cut back on enrollments and private, nonprofit colleges get more expensive and selective, a for-profit university may be the last option for many people who want a college diploma. These colleges tend to cater to non-traditional students and offer specific, often vocational degrees and certificates. But an ongoing congressional investigation has uncovered some disturbing issues about for-profit universities. The investigation alleges that the recruitment is sometimes fraudulent, the educational claims are sometimes exaggerated and government numbers indicate that the student loan default rate doubles for students who attend for-profit universities. Joining us to discuss the need for, and the risks of, for-profit colleges and universities are my guests. Kelly Field, she is a Washington reporter for the Chronicle of Higher Education. And, Kelly, good morning.

KELLY FIELD (Reporter, Chronicle of Higher Education): Good morning.


CAVANAUGH: Joanna Acocella is senior vice president of External Affairs for the University of Phoenix. And good morning, Joanna. Welcome to These Days.

JOANNA ACOCELLA (Senior Vice President of External Affairs, University of Phoenix): Good morning, Maureen. Thanks for having me on.

CAVANAUGH: We invite our listeners to join the conversation. Have you attended a for-profit school like Kaplan College, ITT, University of Phoenix? What was your experience? What role do you think these schools play in our education system? Give us a call with your questions and your comments. The number is 1-888-895-5727, that’s 1-888-895-KPBS. Kelly, let’s establish first of all, what the for-profits are. I gave a little snapshot in my introduction but we’re not talking about all private colleges, are we?

FIELD: No, we’re not. I mean, for-profits are just what they sound like. They’re colleges that exist to make a profit. Some of the education is done on campuses, some is done online. But in either case, the colleges are for-profit, which distinguishes them from public colleges and private, nonprofit institutions.

CAVANAUGH: Now what kinds of courses and degrees are usually offered at the for-profit schools?


FIELD: Well, a lot of the programs are career oriented so they focus on preparing you for technical programs, you know, like nursing or IT programs but there are also bachelor degrees, graduate degrees. For-profit colleges offer the full spectrum of degrees.

CAVANAUGH: And are the degrees accepted?

FIELD: Well, the degrees are – as long as the institution’s accredited then the degree is legitimate. The – There are two types of accreditation, national and regional accreditation, and sometimes students who attend nationally accredited for-profit colleges may not be able to have their credits transfer to a regionally accredited college, which is what public college is and private, nonprofit colleges are.

CAVANAUGH: Now the investigation that I was referring to, the Congressional Government Accountabilities Office report on for-profit colleges contained accounts of how some for-profit colleges were recruiting students with fraudulent information and false claims. What was the essence of that report as you see it, Kelly?

FIELD: Well, in essence, they found that, you know, across all the colleges they investigated, that recruiters and financial aid administrators were making deceptive or otherwise questionable statements to applicants. In four cases, they found that the recruiters and admissions officers had encouraged students to falsify their financial aid forms and misled them about college costs, accreditation status and grad jobs for replacement rates. They showed some of the videos, the undercover videos, that they’d taken during this investigation at a recent Senate hearing on the topic.

CAVANAUGH: Now why did the Government Accountability Office start looking into for-profit colleges?

FIELD: Well, this is something that Senator Harkin, the chairman of the Senate Education Committee, had asked the GAO to do. Typically, they, you know, do these things in response to a request from members of congress.

CAVANAUGH: Oh, okay. But was it because most of them receive federal funds?

FIELD: Well, that is the concern of lawmakers. You know, these institutions are heavily dependent on federal financial aid, more so than public colleges and private, nonprofit colleges. And so they want to make sure that the taxpayer dollars are being spent wisely and also that students aren’t, you know, graduating heavily in debt and with degrees that don’t enable them to get jobs.

CAVANAUGH: Now the types of problems uncovered by this investigation centered—is it fair to say centered—on the idea of getting some sort of funding from the government? Getting a loan and maybe fudging the details of what you needed to get that loan?

FIELD: Well, that was part of it. I mean, there were a couple of cases where the recruiters encouraged students to falsify their financial aid forms. So there was one that encouraged a student not to report $250,000 in savings. Another one suggested that they claim 3 dependents when they had none, so it was a way of, you know, getting financial aid when they really wouldn’t have been eligible. But other ones had to do with the recruiters providing misleading information exaggerating earnings, you know, guaranteeing jobs after graduation, inflating graduation rates, that sort of thing.

CAVANAUGH: And what under – and what for-profit colleges was this investigation looking at? I mean, were these small colleges or were some of the national ones involved as well?

FIELD: This is a mix of publicly traded and private for-profits and some of the biggest players were investigated for this report.

CAVANAUGH: Okay, I’ve been speaking with Kelly Field, in fact I am continuing to speak with Kelly Field. She’s Washington reporter for the Chronicle of Higher Education. We’re taking your calls about for-profit colleges. 1-888-895-5727. And I want to bring Joanna Acocella into the conversation, as I said, senior vice president of External Affairs for the University of Phoenix. Now I know that the University of Phoenix is one of the largest for-profit colleges in the country. I’d like to hear how you respond to the inquiries of this investigation of Senator Harkin’s committee about questionable practices in the for-profit realm.

ACOCELLA: Well, you know, Maureen, Congress is asking questions and they should be, questions that are very similar to what you’re asking here today and what I assume your listeners are asking themselves as well. You know, to us that even one of our students has not been served well would be of great concern, and we take these instances to heart. We are looking into the matters that have been raised. We’re engaging in conversations and we’ve asked the GAO for additional information. And we’re doing some work internally to ensure that everyone is living up to the standards and the policies that we expect. We can’t defend the indefensible.


ACOCELLA: In any company of our size there may be some mistakes and at our school that’s simply – it’s not who we are and we’d like to take a look and have folks judge us on how we’re handing those situations.

CAVANAUGH: Now I believe that you’re probably referencing a video taken by ABC News of a University of Phoenix recruiter giving a perspective student false information. Joanna, I’m wondering, are recruiters pressed too – do you think they press too hard to get students to come onboard at University of Phoenix and other schools?

ACOCELLA: You know, you reference a particular situation and I should say that in that case, although it was a fairly complex situation where we talk about the educational programs to become a teacher, which is different in each and every state, that wasn’t handled the way that we would like it to be handled. And that recruiter is no longer with the University of Phoenix. It is not up to our standards, it is not our policy or our mission to encourage people to enroll in programs that they’re not prepared for, that they’re not interested in or that aren’t going to serve them well in their future endeavors. We’ve taken the steps of communicating individually with everyone who works in a counseling role, in a student-facing role, to reiterate for them our values and our mission and how we go about it. It’s also important to note that we’ve announced recently that in order to ensure that we have an appropriate counseling culture in all of our student-facing engagement that we have removed any compensation tied to recruitment from the pay scale of those individuals.

CAVANAUGH: I see. We’re taking your calls at 1-888-895-5727. And let’s go to the phones right now. David is calling from Mission Bay. And good morning, David. Welcome to These Days.

DAVID (Caller, Mission Bay): Good morning. Yeah, I was up in – from 2000 to 2003 was an instructor at ITT Technical Institute up in one of their LA campuses. And your guest from University of Phoenix was talking about the recruiting practices, I had a large number of students who were very unqualified. The math (audio dropout) at our program was essentially a freshman college level algebra class. The students that were not prepared for it, which was probably about half of them, were sent to a class called Prep Math. I know this because I had taught this and you had some students in there that kind of got it, some that, I mean, they should’ve been at a public community college taking, you know, a full semester of remedial math instead of one week of this Prep Math class. Now this Prep Math class is, as the recruiters would recruit students, you know, up to the starting day of class, this class would just keep getting filled up. We’d get students into it, you know, just days before classes were to start.


DAVID: At the end of that, they were prepared for the college level math.

CAVANAUGH: Right, David…

DAVID: And they were just putting them through, and that’s just one. I could go on and on but I guess…

CAVANAUGH: Well, I appreciate the call. Let’s discuss what you have said, David. And I want to know, Kelly, the larger question of perhaps people being unprepared for college, being accepted at for-profit colleges, are people, Kelly, in your experience, do you know if people are turned away if they want to go to a for-profit college?

FIELD: Well, most for-profits have open enrollment policies so most anyone can go. To receive federal student aid, you need to either have a high school diploma or the equivalent or you have to pass a test called an Ability to Benefit Test. This is a way of protecting taxpayer dollars. There was another recent government report that found that a few – a couple cases where for-profit college or test administrators were helping students cheat on these Ability to Benefit Test. There’s no – You know, we don’t know whether that’s a widespread practice or not. It was really limited to a couple of cases but it did raise some doubts in the minds of some lawmakers about the legitimacy of these tests.

CAVANAUGH: Joanna, how does the University of Phoenix handle students who enroll who may not be really ready for college?

ACOCELLA: You know, that’s a great question. And, David, while I can’t speak to ITT, I agree with you, that that’s an inappropriate practice and something that we certainly wouldn’t encourage. At the University of Phoenix we’ve got a couple of things that we are doing, I think, to address that problem in particular. Listen, we know that a lot of students are coming out of the K-12 system unprepared for the rigors of a post-secondary education these days. We also know that a lot of students who are coming back to go to school are not in their 20s, they’re in their 30s, 40s, 50s, and they’re balancing multiple demands on their time and it may have been a long time since they were in a classroom environment, whether online or on ground. And so they really have some special needs. There’s two different things that we do specifically at the University of Phoenix. Number one is that we’ve instituted a three-week course called University Orientation. It’s free of charge. All of the costs associated with the program are absorbed by the institution and not by the student. We’re trying to get folks to understand just what it means to go through a rigorous post-secondary environment while balancing the other needs in their life. Are they academically prepared? Is their family prepared for the sacrifices that will need to be made? Are they comfortable that they’re in the right program at the right school? And what we’re finding in this program is that some folks are self-selecting out. At the end of three weeks, they’re determining that it’s more than they can handle. In other cases, we’re counseling folks not to enroll full time. But whatever the result may be, at the end of three weeks there has been no cost to the student so they’ve gotten an opportunity to really get a test of flavor what life is going to be like without having any grant aid or student loan aid or even dipping into their own savings, which I think is important.

CAVANAUGH: Let’s take – Oh, I’m sorry. Joanna, you wanted to say something else?

ACOCELLA: I was just going to say, I think the second thing to remember is that at the University of Phoenix, we don’t see remediation as a point in time. Too often in the past, when we look at students who need additional help, we give them a course or folks in the community suggest that they need to go through summer school or an additional prep year. We look at that as something that our students need assistance all throughout their career at the University of Phoenix. And whether that’s additional personal counseling, whether that’s the availability of tutors, whether that’s online tools that are available, we don’t see remediation for our students as a point in time box to be checked.

CAVANAUGH: I want to take another call. We are taking your calls at 1-888-895-5727 or you can go online and comment, Harry is calling us from O.B. Good morning, Harry. Welcome to These Days.

HARRY (Caller, Ocean Beach): Thank you very much. Good morning. I was calling to kind of defend the private colleges. I’m not affiliated with any but I did go to National University to obtain my professional multiple subject teaching credential for elementary school. And while there, I looked at the possibility and then eventually got my master’s while in the same program. It just made sense timewise, and I wanted to say that the curriculum was – I didn’t – I wasn’t just buying my degree. The work was hard, it was effective, and I had originally applied or, you know, tried with San Diego State and to let you know, to get your teaching credential, you already have to have your bachelor’s degree so I knew what was going on. I inquired at San Diego State University and they were so – so negative, so down, so, God, it was almost as though they were being paid to discourage you. And the way they had things set up it would take, you know, years and they were very rigid in their schedules.


HARRY: And I finally told them, I said, you know what, you guys are the reason why University of Phoenix and National University are doing so well and will be successful. It’s almost as if you don’t want me to enroll. And I knew about the expense. That was really, for me…


HARRY: …the only issue. But, you know, there’s payoff. You know, you pay for your education one way or another. So, you know…



CAVANAUGH: Harry, let me ask you two quick questions. Are you working in your field?

HARRY: I was. This was back in ’99 and 2000…


HARRY: …and I was for a couple of years but that was – afterwards, there was a number of teacher layoffs.

CAVANAUGH: Yeah, right.

HARRY: There was a glut of instructors but I don’t regret having my master’s so…

CAVANAUGH: Do you have a huge student loan you have to pay off?

HARRY: Well, huge is subjective.


HARRY: I still…

CAVANAUGH: Is it large enough?

HARRY: I still have it. My payments are reasonable. You know, interest rates are like at 2% for student loans.


HARRY: And I’ve never defaulted on a student loan and I don’t plan to. But, again, that was a decision I made going in.


HARRY: And, in fact, if I can comment really quickly, on an earlier comment, someone said that they were told to omit their $250,000 savings. If you’ve got $250,000 in savings, what are you doing applying for student loans?


HARRY: You know?

CAVANAUGH: I understand. Thank you. And, Harry, thank you so much for all of your comments. I want to ask Kelly first of all, the idea of these large student loans that people are left with, I mean, obviously people can be left with large student loans these days no matter what college or university they go to. But the default rate seems to be much higher for for-profits. Tell us about that.

FIELD: Yes, it is. I mean, it’s consistently higher across time. The Education Department probably typically looks at how many – what percentage of borrowers that graduated in a particular year default within two years. And the most recent numbers for that’s about 12% for borrowers who attended for-profit colleges versus 6.2 for those who went to public college and 4.1% who attended private colleges. The gap widens and the numbers go up when you look at students three years out. And we had done a recent investigation here at the Chronicle where we looked at loans that went into repayment 15 years ago and how many had defaulted by sector and we found that 2 in every 5 loans made to students who went to two year for-profits had defaulted over that 15 year period. And…

CAVANAUGH: Any reason – Kelly, excuse me.


CAVANAUGH: Any reason why the defaults are higher for for-profit colleges and universities?

FIELD: Well, they’re – you know, one of the reasons could be higher dropout rates. You know, students that drop out are more likely to default on their loans. For-profit colleges often cite demographics as a factor. You know, for-profits tend to have a higher percentage of ‘first in their family’ students, independent students, low income students, so they have more risk factors. So it’s probably a combination of factors.

CAVANAUGH: I’m wondering, Joanna, is the University of Phoenix on the hook at all if a student defaults on a federal student loan?

ACOCELLA: On a federal student loan, that relationship is between the individual student and the…


ACOCELLA: …and the federal government, too, who’s actually made that loan. But I’ll tell you what, I mean, one of the things that I think is critically important here is, you know, it doesn’t serve anyone well when students are struggling to make student loan payments. And I think in an economic environment like we’re in now, we’re certainly seeing students from all walks of life even from those families that I think would’ve considered themselves very comfortable and, you know, in an economic sense who are struggling to balance everything with the way the economy is going. You know, individual students take out loans so that they can better themselves and their futures by going to school and after graduating they show that they’re likely to earn more money to help them pay them off. But sometimes they do default, students of all backgrounds. We are one of the few institutions of higher learning that has a pretty active and aggressive student financial assistance program to help teach financial responsibility before those loans are taken out. And, in fact, some of the new programs that we have in place we’re showing significant declines in the dollar figures that students are borrowing when we’re providing them with additional counseling up front about what it means to carry a student loan and to really get them to understand the financial impact of that over their lifetime.

CAVANAUGH: Let’s take another call. Heidi is on the line from UTC. Good morning, Heidi. Welcome to These Days.

HEIDI (Caller, University Towne Center): Yeah, good morning, ladies. I’m one of the unfortunate cases. I am a – I should say that my decision go to a private school was the worst I have ever made, and that is even considering the fact that I am working in my field. I went to Brooks Institute of Photography and they’re owned by the College Education Corporation. And I was recruited really hard. It was really intense. I signed up for the loans but I was following my dream and I spent the next three years as a walking dollar sign. It was the least student friendly experience of my life. Trying to deal with financial aid was a nightmare. Trying to deal with the registrar was a nightmare. The hours for the labs were just like it wasn’t even made for the students.


HEIDI: So I graduated and I’m about $100,000 in debt and I am one of the lucky ones that is able to pay my monthly bills. So I just think it’s a crisis that’s going to happen, you know, and people my age, another ten years when we’re trying to buy homes and we can’t because all of our extra money, every last dime, is going to those student loans that we can’t do anything about.

CAVANAUGH: Heidi, thanks…

HEIDI: So it just breaks my heart to be in my field and be devastated about it.

CAVANAUGH: Well, Heidi, I appreciate the call. Thank you so much for it. I’m wondering, if I can get both of you, Kelly and Joanna, to comment on why you think the for-profit colleges and universities are expanding the way they are. Kelly, first you, what need do these universities fill?

FIELD: Well, I think they provide a lot of – they’re very responsive to working adults. You know, they tend to offer a lot of night courses and flexible scheduling that accommodates students that are working. And they also tend to be really responsive to workforce demand so I think these are two of the things that are fueling the growth. There’s also, you know, as this caller mentioned, very aggressive recruiting that’s contributing to the enrollment growth that you’ll hear, you know, stories about people getting dozens of calls right after they fill out a form online. So it’s probably a combination.

CAVANAUGH: Joanna, does this – does the growth of for-profit colleges and universities say anything about our public universities and private nonprofits?

ACOCELLA: I think what the growth shows is something that’s indicative of the entire post-secondary community and, first and foremost it’s that we have the president who has challenged us to regain our status as a nation with the highest number of college graduates. And I think all of us in the higher ed community want to, you know, actively do our part to get there, and I think it takes institutions of all types. However, and certainly your listeners in California are well aware of this, budget constraints and other items that are coming up are cutting back on seats and opportunities at some of the publicly supported colleges and universities. I think Kelly is right when she speaks to flexible scheduling for those who work full time but still want to advance their career. For those folks who have families and need to be taught in a more conveniently located facility or an online capability, I think those are some of the factors. The Education Secretary, Arne Duncan, has stated that proprietary universities play a vital role in training young people and adults for jobs and that they’re critical to helping this nation meet the president’s goals for 2020. And I think that we all are going to need to work together and I think as times change we’ll see shifting folks from one type of institution to another. Each individual deserves the opportunity to make the choice for what works for them, financially, logistically, in terms of the education that they want. It breaks my heart to hear stories like Heidi, folks who have done nothing wrong who are trying their best, who are making progress in their field, and to know that they’re struggling with student loan debt. And I think we all have an opportunity and an obligation to do better.

CAVANAUGH: Well, Kelly, since the field of for-profit colleges and universities is increasing, it brings me to my last question for you and it comes from Senator Tom Harkin’s committee about for-profit universities. A person who was involved in the accreditation process was basically testifying before the committee and saying that their – his agency is about accreditation but it’s not about searching out fraud or fraudulent practices of these colleges and universities. So my question to you, Kelly, is do we know whose job that is?

FIELD: Well, it’s really probably the Education Department’s job. It’s an oversight responsibility. Accreditors, there’s a triad of oversight for for-profit education state – state regulators, federal regulators and accreditors. And accreditors are sort of at the front end and they receive the college reports on various things and they have to go verify it. But they don’t go out there, you know, in between accreditation reviews to check and make sure that nobody is committing fraud. They, you know, those colleges report their standards and they make sure that the standards are legitimate but they don’t do undercover investigations and that sort of thing.

CAVANAUGH: So is there any indication the U.S. Department of Education is going to step up its investigation and monitoring of for-profits?

FIELD: Yes. Actually the department sent a letter to Senator Harkin recently saying that they’d planned to do just that, asking for a doubling of the department’s enforcement budget so that it could hire 50 more employees to help oversee for-profit colleges and other institutions as well.

CAVANAUGH: Kelly, I want to thank you so much.

FIELD: Thank you.

CAVANAUGH: I’ve been speaking with Kelly Field. She’s Washington reporter for the Chronicle of Higher Education. And Joanna Acocella, senior vice president of external affairs at the University of Phoenix. Joanna, thank you for being on the program.

ACOCELLA: Thanks for having me, Maureen.

CAVANAUGH: If you’d like to comment, please go online, Coming up, prepping for preschool, that’s as These Days continues here on KPBS.