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Can For-Profit Schools Take the Place of Community Colleges?

Apr 25, 2012 Jennifer Williamson, Distance Columnist | 0 Comments

In a sense, both for-profit and community colleges are government-funded. But whereas community colleges get the majority of their funding directly through government grants, for-profit schools are primarily funded through federal loans granted to their students.

In often cash-strapped local and state-level economies, this has left online community colleges vulnerable to significant funding cuts from state and local government sources. For-profit colleges, which depend on more regular federal funding sources, are stepping in to fill the gaps.

Both online colleges and community colleges typically serve the same student market: low-income students and adult enrollees more focused on gaining job skills and valuable credentials than on the traditional college experience. But can one replace the other—and is the growing importance of for-profit schools a good thing or a bad thing for students? Here’s a look at a few of the issues.

Group of Students

It isn't easy picking the right school. And while community colleges have their benefits, they can often be difficult to get into because of dwindling budgets.

For-profit schools cost more

In 2010, the average tuition for for-profit colleges was $14,000 per year—as opposed to $2,500 per year at community colleges. That’s a pretty large tuition bill for a student base that’s predominantly low-income. Students at for-profit schools tend to default on their loans at a much higher rate than those at community college as well—and it’s likely that the large tuition bills play a big role in that.

For-profits are profit-motivated

At a 2010 congressional hearing, hedge fund manager Stephen Eisman, famous for having predicted the crash of the housing market, referred to for-profit colleges as “marketing machines masquerading as colleges.” This marks a significant problem in the for-profit model that community colleges don’t face.

While it’s also true that there are many for-profit schools who are dedicated to their students and do not engage in questionable practices, the profit motive is undeniable—and all for-profit schools face an intense pressure to make shareholders happy. At some schools, this means some practices and procedures put in place are there mainly to increase the college’s revenue—regardless of whether they help or even actively hurt students. Some for-profit schools have been shown to be less than honest to students regarding graduation rates, transfer credits, graduating salary expectations, and other issues in order to boost enrollment rates—and have been accused of failing to provide students the proper support once they’re enrolled.

For-profits have a more dependable source of funding—in many states

Many state governments are struggling to pay for services and programs in a difficult economy—and as a result, community colleges in many states have faced reduced funding from government sources. This has resulted in reductions in services at some colleges—including a reduction in more expensive courses in areas such as nursing and engineering. Nonprofit colleges, which get their funding primarily through federal student aid, have more dependable profit streams and can often provide more expensive and job-friendly courses.

It also means for-profits are more financially stable—and have more capacity to accept students. The for-profit industry is growing by approximately 6% per year, versus a 1% growth rate among community colleges. For-profits, as a result, can accept more students—while applicants to community colleges are more likely to be put on waiting lists for reasons having more to do with capacity than admissions decisions.

It isn’t easy picking the right school. And while community colleges have their benefits, they can often be difficult to get into because of dwindling budgets. Still, while for-profit colleges have their benefits as well, there are distinct differences in how they’re run that differ from community colleges. Whether they will come to replace community colleges in serving the majority of the adult and-low income student population remains to be seen—as well as how government regulation of the industry will change the outlook for students.


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