For-profit universities are a scam

2013-04-18 Update: Check out this article about the Strayer University scandal.

I’m frustrated with DeVry University, Kaplan University, Walden University, Ashford University, Colorado Technical University, Strayer University, University of Phoenix, Capella University, American Intercontinental University and other businesses. I do not encourage anyone to enroll in these “schools”.

Here’s how for-profit “schools” make money: They get students to enroll and help them get government-funded financial aide. The thing about financial aide is that the check gets sent directly to the “school”. The “school” deposits the check. There are no refunds. The student only has to attend one day of classes for this to be legit. So, after the first class students are worked hard in hopes they quit. It is much less expensive and much more profitable to teach a class where everyone has dropped out, especially if instructors are paid by the student. If by week 2 there are no students, you don’t have to pay the instructor anything.

This is not new. In the 1970s there was a big scandal when it was discovered that a number of schools were doing this. 30 years later regulations have been relaxed enough that the scam artists are back and they are back in a big way!

Any business that does this is stealing educational dollars away from students that could be attending actual schools.

What makes this so sick is that they attract poor and middle-class kids that want to make a better life for themselves. Instead they end up having to pay back a big loan to the government. If they are frustrated that they got nothing for their money, they don’t pay back the loan and enter the circle of doom one ends up in when you have a bad credit rating. Either way an innocent person that wanted a better life becomes trapped in the cycle of poverty.

The claim that these schools are “accredited” is a scam too. Any of these schools that claim to be accredited have found some loophole that lets them claim accreditation. For example, one school bought a university that went bankrupt. Accreditation lasts 10 years. Your entire university can burn down in year 2 and you still have 8 years of accreditation. If a for-profit buys a university that was accredited within 10 years of going bankrupt, the for-profit can claim it is accredited for the remaining years. Other for-profits have used lessor accreditations to be able to make this claim.

Sadly these for-profit schools are making big profits and divert a lot of that money into marketing. Good advertising can make a pig look like a prince.

If you are looking for a technical education I recommend looking into the 2-year programs in your area. Depending on where you are in the U.S. they are called community colleges, county colleges, or junior colleges. There are also non-degree programs online that are free or low cost.

If you do attend a school, whether for-profit or not, ask for a written document that shows their completion rate and per-pupil spending. Completion rate is the percent of students that graduate. A for-profit school has an inventive to get people to pay but then fail out. A for-profit school is “successful” if it is making a profit. A non-profit school judges itself on how well it teaches. It should pride itself on being able to see that the people that are accepted are guided through to graduation. “Per-pupil spending” means how much money is spent on each pupil. If you pay $20,000 and only $5,000 is spent on education, where is the other $15,000 going? It is going into the pockets of the executives that are running this scam.

Here are some articles you may find useful: - Students at For-Profit Colleges Earn Less, Study Says - Online Universities: Government Cracks Down on For-Profit Schools

Here’s a quote from the second article:

A motion filed in federal court claims that the school “concocted a scheme to fraudulently inflate revenues and boost profitability by exploiting well-intentioned and often lower-income students, including veterans of the U.S. armed forces, who were hoping to improve their qualifications and employment prospects,” adding that “students often withdrew early or failed to complete degree programs.”

Posted by Tom Limoncelli in Academic study of SA

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