Allan Kirby · Follow
5 min read · Sep 22, 2019
Like other investments, ensure you get a quality return on invest with your education.
Investing in an Education takes a lot of time effort and Money
Investing in an education is an investment in yourself, and as I always say, “follow your passion but take the time to really understand the type of education you’re investing in”. This is the case with all forms of education, from short certificate programs to long term 4 year and graduate programs. The time, effort and investment is going to be incredibly high so if you decide to attend school you need to ensure that the effort is worth the cost. Would you want to get an education that leaves you with a lifetime debt and no job prospects? Even if it’s a program you are passionate about, you may think otherwise if you’re still saddled with debt many years later and holding off marrying or buying a home.
So knowing that you need to be careful with your education, one of your top priorities is to ensure you select a quality program that will produce the desired result. This means you will also need to be very vigilant with the type of institution you deal with, especially when it comes to for-profit institutions For-profit are usually owned and run by private companies with a focus on profits and a requirement to answer to investors and shareholders.
“For-profits can be very flexible and adaptive in niche markets such as IT”
I have actually had the pleasure of taking courses through for-profit organizations so I can say I have some experience with these organizations and I do see a benefit in using them. Why, because they help fill a void that universities and community colleges cannot. They offer very industry specific, high intensity short programs lasting no more than 2 weeks in length. Their prices are extremely high but they fill a high in demand niche, which in my case is the IT sector and subject matter such as (ITIL, PMP, Prince2, SAP, Oracle). The for-profit provide programs that need to keep up with the fast paced IT field, which can be hard for some universities to do. I recently took SAP Activate and it was a good intense three day course with a highly skilled and certified instructor.
I have seen the benefits of for-profit organizations in the field of IT. This cannot be said for the broader field of education, in fact more often than not, for-profit schools have been miserable failures. This has been highlighted by many school closures that have left students with nothing but high debt, worthless credentials and no recourse to their situation. For example:
- Corinthian Colleges, Inc, 2015 affecting 16,000 students in the USA and 2300 students and approximately 500 staff in Ontario, Canada.
- ITT in 2016, affecting over 43,000 students at 130 campuses and 8,000 employees.
- Education Corporation of America in 2018 affecting 19,000 students at 130 campuses which ran Virginia College, Brightwood College, Brightwood Career Institute, Ecotech Institute, and Golf Academy of America.
Issues with For-Profit
Even though I wish the sample size was larger, I found The Center for Responsible learning research on former for-profit students very compelling, in fact one key finding explains that:
“The participants often found the educational experience at for-profit colleges to be superficial and frustrating. A number of participants dropped out when they: determined that the amount of debt and time they were investing was “not worth it,” ran out of financial aid, experienced a life emergency, or discovered that promises of gainful employment upon graduation were unlikely to materialize.”
Basically for-profits have been known to use deceptive marketing techniques and focus on the bottom line, which can lessen the quality of education and student results. This is highlighted by the litany of litigation brought against private for-profit schools such as Corinthian Colleges, Inc. which are known to target “at risk” groups, which may lack the understanding of the consequences of attending such schools until it’s too late. This targeting of “at risk” groups along with, high debt, low job prospects may be attributing to the high loan defaults found with former students who attended for-profit schools.
The good news is that high profile closures, litigation and research have helped highlight the problems and weakness of for-profit schools, in fact the issues over the last number of years could be taking a toll on for-profile which is reflected by the numbers:
- The number of 4 year for-profit schools between 2013–14 to 2017–18 has decreased from 769 to 499, 95% of school closures can be attributed to for-profit schools, not a good number to be proud of.
- Enrollments have decreased significantly over the years as well. University of Phoenix is a perfect example, From a high of 470,000 in 2009 to just 142,000 in 2016 or almost a 70% reduction during this period of time.(1) Even ITT, before it closed, saw a reduction in new enrollments of 21.6% and overall total reduction of 16.4%, that was almost 8,000 fewer students!.
- “Private for-profit institutions reported average tuition and required fees of $16,200 for 2017– 18, which represents a decrease of approximately 2 percent when compared with the inflation-adjusted figure from 2015–16.”
“There is a general concern for-profit Colleges are taking advantage of Veterans”
Veterans and For Profit Colleges
One concern I have is that for-profit colleges are apparently targeting military veterans. They may be doing this because there is a loophole with regard to the 90/10 rule. This is a rule approved by congress in 1992 that stipulates for-profit schools need to have 10% of their revenues come from private tuition in order to be eligible to receive federal assistance. The loophole is the G.I. bill, which provides prepaid education funding to military service personal is considered private funds. Therefore, for-profit can target this group, flush with funds and an ability to pay for tuition required to ensure federal assistance. As I was formerly with the military, I do hope this is not the case. We should always take great care with our former soldiers and ensure they are successful after the sacrifices they made during their years of service.
Look, it’s not all bad with for-profit, especially with some of the short IT courses I have taken. Looking at the longer term for-profit programs (2+ years), they have generally failed many students over the years and have left people with high debt, low job prospects and worse of all, credentials that are not recognized or have no value in the private sector. Remember, it’s your money and its your future. Protect it and be vigilant when looking at for-profit colleges, you will find greater value in public and not for profit institutions when looking at longer term diploma’s.
This is a MySmallBank.com blog written by Allan Kirby, who writes and produces Personal Finance articles and videos.
