For-Profit vs. Nonprofit Higher Education: Community Colleges Respond

AACC responds to for-profit college report issued today

WASHINGTON, April 1 /PRNewswire-USNewswire/ -- Prospective students and policy makers should take into consideration the source of a commissioned report published today by Corinthian College, a for-profit institution, says the American Association of Community Colleges (AACC)

Several of the findings in the Corinthian report are exaggerated and based on flawed interpretations of federal data about American higher education, note community college leaders. The report is a promotional, not a peer-reviewed academic research study conducted by independent scholars, said Dr. George Boggs, president of AACC.  Sandy Baum, Senior Policy Analyst for the College Board, is quoted in the April 1 issue of Inside Higher Ed as saying "At core, this is advocacy, not research."

The report finds a 6.2 percent increase in full-time equivalent enrollment, and says public two-year institutions have only grown by 1.2 percent. Yet nonprofit community colleges grew by almost 17 percent in the last two years (2007 to 2009), according to a recent AACC survey.

Community colleges enrolled an additional 1.2 million credit students in 2009 compared to 2007 and presently serve more than 12 million students each year.  This represents almost 43% of all U.S. undergraduates.  For-profit institutions served 1.4 million total students in 2007, according to federal data, representing about 8 per cent of all postsecondary students. However, more than one-fifth of all federal Pell grants -- totaling billions of dollars -- are being awarded to students attending for-profit colleges, and those growing numbers have caught the attention of higher education policy makers, Boggs said. As much as 88 percent of the revenue for-profit colleges acquire comes from federal financial aid funds. Combined with the facts that the for-profit college industry has the highest student loan default rates and the highest student debt loads, the numbers are extremely disturbing, notes Boggs.

According to the latest official cohort default rates, for-profit students have a default rate of 12.5%,  compared to 9.9% at community colleges, and 6.7% for the program overall. "While many for-profit colleges offer high quality programs and services, some students are left high and dry by these institutions, lacking the skills and resources they need to compete in the workforce and get better jobs," said Boggs. "That is why students attending for-profit institutions have the highest default rates."

Student debt loads at for-profit institutions are also dramatically higher than at public colleges. Students who received certificates from for-profit colleges carried a median debt load of $8,800 in 2007-8, according to the National Postsecondary Student Aid Study. By contrast, students at public community colleges receiving certificates carried $0 in median debt load. In fact, only one in four certificate students in public community colleges graduated with any debt, compared to 85% in for-profit institutions. Students receiving associate degrees from for-profit institutions carried a debt load of $18,400, in contrast to the $0 carried by students at public institutions. Only one-third of community college associate degree recipients graduated with debt, compared to 97% of students at for-profit colleges.

Most students attending for-profit colleges do graduate with debt. Ninety-eight percent of students who completed courses of study at for-profit two-year colleges had an education loan, compared to 38 percent of those attending public two-year colleges. For-profit colleges use loan proceeds to underwrite corporate profits.  

Amid concerns that students (and federal student aid programs) are being exploited, the Department of Education recently undertook a formal review of many of the regulations impacting the for-profit industry, with an eye to tightening them. The proposed rules are expected to be published later this spring.

"We welcome the federal government's work in this area and hope that new regulations will better protect the interests of students," said Boggs. "Our community colleges provide educational benefits to all Americans. We remain the most diverse, most affordable and most accessible sector of higher education today, and we welcome every student to our doors."

For 90 years, the AACC has been the leading advocate for the nation's community colleges. To learn more, contact Norma Kent at [email protected], or at 202-728-0200. To learn more about the AACC, visit www.aacc.nche.edu.

SOURCE American Association of Community Colleges