Running head: FOR PROFIT TO HURT OR HELP 1

Renee Connelly

CAHE 503

For Profit to Hurt or Help

11 December 2017
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Introduction

Higher Education and attending some form of college is not something that is new to

most Americans (Bastedo, 2016). Attending college has become more common and moving

towards necessary to be successful in American society (Bastedo, 2016). Higher Education is

more common now based on the availability and accessibility of Higher Education to more

Americans (Thelin, 2011). Within the United States there are many options when looking to

further your education. For the purpose of this literature review, the focus will be on private

institutions specifically for profit institutions. Furthermore, the focus will be limited to DeVry

University and University of Phoenix. These institutions are for profit but also have a large

presence in the online sector. For profit universities are located across the United States but also

have a large online presence. For profit schools have been under scrutiny (Thelin, 2011).

Schools that are for profit also have guidelines that public and private schools do not, such as

gainful employment disclosures (devry.edu). Looking at for profit schools examines further

understanding of their tactics and student outcomes. Accreditation, history of for profit schools,

student population, financial aid, graduation outcomes, and types of institutions will all be

covered within this literature review.

History

For profit colleges are not new in the United States (Bastedo,2016). One of the first for

profit schools established in the United States was founded in 1931 by Herman DeVry (Renn,

2013). Like community colleges they were established to provide skills to students looking to

enter the workforce. Vocational training was also a focus of for profit schools before the

emergence of the internet (Renn, 2013).

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Literature Review

For profit institutions are not something new in the United States. Schools have been

looking to make a profit as any business does. Initially for profit institutions were established

mainly to assist students who could not afford or be admitted to a traditional college and were

looking for a career based learning offering a certificate program or Associates degree (Ruch,

2001). More recently for profit schools have made a shift and are focusing on the ability for

students pursue higher education online. According to Thelin, “by 2010 this sector has “changed

the landscape of American higher education” as it had enrolled more than 10 percent of college

students in the United States”. Attending classes online is something that is relatively new and is

based more on the advancement in technology. Taking advantage of attending classes online

allows more students to have the ability to pursue higher education (devry.edu). Thelin further

explains how public institutions are feeling threatened by for profit institutions even though they

are targeting a forgotten population, the non-traditional student. A non-traditional student can be

categorized as a student who is not straight out of high school. Thelin describes a non-traditional

student most often is an adult who is in the work force and returning to school to further their

career. “Distance education and distributed instruction have freed education from being time and

place bound, making it more flexible and attractive to adult learners” (Morey, 2004). Adult

learners are attracted to this since they often are working in addition to pursuing their education.

Flexibility is one keyword students looks for if they have busy lives and it gives them the feeling

that they are in control of their education which allows them to fit it in their lives.
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Accreditation

Accreditation is a topic that comes up often when talking about for profit institutions.

“There are two basic types of educational accreditation, one referred to as "institutional" and the

other referred to as "specialized" or "programmatic." (Dept of Ed., 2017). Institutional

accreditation according to the department of education refers to the school or university holding

accreditation. Specialized accreditation is a program or specialization holding a more specific

type of accreditation. A school that utilizes financial aid needs to hold accreditation (Dept of

Ed., 2017). “Many of these for-profit colleges and universities are seeking recognition by

regional accrediting agencies and several are now fully accredited” (Morey, 2004). Institutional

accreditation can come in different forms including regional and national accreditation (Dept of

Ed, 2017). Regional accreditation is the older accreditation a school can apply for. A lot of

public institutions hold regional accreditation. National accreditation is the newer of the two.

DeVry University holds institutional regional accreditation. They are accredited through

the Higher Learning Commission. DeVry is also a member of the Council for Higher Education.

Moreover, they hold programmatic accreditation. DeVry school of business has obtained, “The

following DeVry University programs have achieved voluntary accreditation from the

Accreditation Council for Business Schools and Programs (ACBSP, www.acbsp.org)”

(devry.edu) for their Associates in Accounting, Bachelors of Science in Business Administration

and Technical Management. They also hold programmatic accreditation in “the Engineering

Technology Accreditation Commission of ABET (ETAC of ABET), www.abet.org” (devry.edu)

this applies to specific engineering degree programs both online and on campus. The third

programmatic accreditation is by, “the Commission on Accreditation for Health Informatics and
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Information Management Education (CAHIIM), www.cahiim.org” (devry.edu) and applies to

their medical degree options.

The University of Phoenix also holds regional accreditation as an institution. They too

are accredited through the Higher Learning Commission. Their website states they have held

continuous accreditation since 1978. For programmatic accreditation they hold four additional

accreditations. “The Accreditation Council for Business Schools and Programs (ACBSP)”

(phoenix.edu). The business school accreditation ranges from their associates and bachelor

degree programs in business and accounting to their doctorate programs in Business

Administration and Management (phoenix.edu). The second program is “The Bachelor of

Science in Nursing and the Master of Science in Nursing programs are accredited by the

Commission on Collegiate Nursing Education (CCNE)” (phoenix.edu). They also have a

counseling program which is campus based on their Utah and Arizona campuses and focuses on

clinical mental health. The accrediting agency is “Counseling and Related Educational Programs

(CACREP®)” (phoenix.edu). Finally, the education accreditation is “the National Council for

Accreditation of Teacher Education (NCATE), a specialized accrediting body. Following a

merger of accreditors, NCATE accreditation is administered by the Council for the Accreditation

of Educator Preparation (CAEP)” (phoenix.edu). In order for the program to be recognized

under the accreditation you must also attend on campus, choosing either the Utah campus or the

Hawaii campus.

In addition to the programmatic accreditation these schools also have obtained certain

state licensures in order to recruit and be recognized as an institution of higher education.

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Student Populations

For profit institutions often attract a non-traditional student. Institutions will look to offer

a more convenient and flexible schedule (phoenix.edu). Students who need to go back to school

and are already in the workplace will commonly first look to a for-profit school since most will

offer an online option as well (Renn, 2013).

For profit institutions according to Thelin are servicing students that most larger and

traditional schools have forgotten about. This means as a result the population of students who

are attending for profit schools will look different (Breneman, 2006). “Students starting at for-

profits are less likely to have obtained their High School diploma, and more likely to have

obtained their GED” (Lang, 2016). If a student is more likely to have a General Education

Diploma or GED this places them in a different category from a high school diploma awarded

student. The GED does have different requirements than a high school diploma in order to

obtain one. Since the requirement level is different students are entering these institutions with

varying levels of knowledge.

“Recently, some for-profit institutions have witnessed rising minority enrollments”

(Morey, 2004). Marginalized students are more likely to utilize financial aid and can also be

more influenced by the marketing of for profit institutions (Morey,2004).

When looking at certificate programs which are associated most often with medical work,

“students starting in certificate programs at for profit institutions are much more likely to be

Black, Hispanic, female, younger, and single at the time they enter college” (Lang, 2016). When

dissecting this statement, you see that they are marginalized populations. The attraction for these

women can be the fact it can be completed all online and time to completion is short compared to

a community college or associates degree.

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Types of Institutions

For profit institutions can be categorized as a private institution that is overseen by a

private organization or corporation. For profit institutions will appeal to a different type of

student. In the United States Ruch, 2001 says, “there are 600 degree granting for profit colleges

and universities”.

DeVry University was established in 1931 and has since conception aimed at being a

leader in innovation and providing the necessary skills students need to succeed. Currently

DeVry is primarily an institution that serves students through online learning, but they do still

have campuses in many states. The students they seek to serve are those who are looking for an

education that fits into their life, commonly a non-traditional student. They have an eight-week

course calendar allowing for students to start earning their degree every eight weeks and

continuously throughout the calendar year allowing students to achieve their degree in less time,

according to the website. DeVry also offers multiple degrees including undergraduate

certificates, associate, bachelors, and master’s degrees. The focus of DeVry University is

healthcare, business, and engineering with technology being the overarching undertone in all

their programming (devry.edu).

University of Phoenix (U of P) was established in 1976. The purpose of the university is

to assist students reach their goals professionally. University of Phoenix also works with students

who are looking to complete their studies online and provide less campus options than DeVry.

“The University of Phoenix (UOP) is the foremost example of this new breed of education

providers. Headquartered in Phoenix, Arizona, it is now the nation’s largest private accredited

university” (Morey, 2004). The target audience that U of P attracts is similar to that of DeVry. U

of P offers classes on a five-week schedule allowing students the ability to start classes whenever
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a new session begins. U of P also offers year-round classes which attracts students wanting or

needing to complete their degree as quickly as possible. U of P offers degrees varying from,

associates, bachelors, masters, and educational doctorate degrees. U of P has a focus on human

services and the helping professions (phoenix.edu).

Financial Aid

Financial aid is a large component when students attend for profit schools. For profit

schools historically are more expensive than public institutions. For profit schools can also offer

additional resources to assist students with the extra cost. Recently for profit institutions

although privately managed are still subject to federal regulations if they are receiving title four

funding. Gainful employment information found on the DeVry University website is now

provided to students that will provide them information about their major with projected growth

in the field and income possibilities.

When students utilize financial aid, it is tracked through the Department of Education.

When students enter higher education, the goal is to graduate. Once a student graduates or

leaves schools they are required based on the master promissory note they signed to repay the

federal student loans they borrowed while attending their institution. Based on figure three, for

profit schools have a large number of students who enter default.

(Hillman, 2014) Figure 3

Distribution of student loan defaults by institutional level and control.

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One of the primary findings is that, even after controlling for several student-level

characteristics, institutional type has a nonrandom relationship with student loan

repayment outcomes. It appears that, even beyond student-level characteristics,

the institution in which a student enrolls has a strong relationship with borrowers’

ability to repay their federal student loan debts. More specifically, borrowers

attending proprietary or private two-year institutions have greater odds of

defaulting when compared against borrowers attending public four-year colleges.

In accordance with the quote from Hillman, 2014 students who attend for profit schools are at

higher risk to default on the loans they receive. Students who attend for profit schools often pay

higher rates for tuition. DeVry University can cost between 487 for certificate and tech path

programs and 609 per credit hour for non-tech path degree options (devry.edu). U of P can cost

410 dollars for lower division and 638 for upper division classes. The higher cost of attendance

will directly affect the amount of student loans a person uses to complete their degree which can

correlate to the higher loan default rate.

Completion/Graduation Rates

Evaluating completion rates at for profit schools can be difficult. Graduation rates are

based on full -time, first time students (IPEDS, 2017), which is not typically the student who will

attend a for profit school. A study completed by Lang and Weinstein shows, “Overall, among the
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1870 students starting in certificate programs, 300 were enrolled as of February 2009 and 430

were unemployed”. The numbers listed account for 730 of the participants. The article also

states that the survey began in 2003-2004.

The article does not expand on the rest of the participants in the study. There is a large number

of students who could have potentially graduated or just left school and are working. In addition,

for profit schools will attract like mentioned in student populations people who are looking to

further skills. If a student has already completed some college they would not be included in this

data even if they do graduate. The time to complete a degree can also be skewed as DeVry and

U of P both offer accelerated course schedules allowing students to complete their degree in a

shorter amount of time.

Bastedo claims, “in the four-year sector, private for profits have, by far, the lowest

bachelor’s degree attainment – only 15 percent of students earn a degree within six years”. This

rate is extremely low. The rate however is in line with what is published by US News DeVry

University has a graduation rate of 18%. The graduation rate at University of Phoenix is not

published.

Lang and Weinstein also looked at once a degree or certificate was complete did the

graduates have a higher return on their investment. The data presented within the article did not

find that to be true.

Earning Potential

People enter school to increase their earning potential. Employers will put in job

descriptions a desired education level. For profit Institutions are the same. They want their

students to have the best outcome after their investment. Students who were studied and pursuing

certificate programs resulted in, “Income in 2009 is approximately $5500 lower for students
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starting at for-profit institutions than for students starting at not-for-profit/public institutions”

(Lang, 2016). Students are receiving the same credentials are earnings significantly less than

their public institution graduates.

DeVry university boasts according to Morey, 2004, “DeVry measures itself by its job-

placement rates and has an employment assistance program that places 93% of its students

within 6 months of graduation”. Institutions can use this data to attract students which can be

misleading. A student can gain employment after graduation but if they are making less money

than their counterparts was the degree investment the best value for the student.

Income was also surveyed students completing an associate’s degree. Their income in

2009 is approximately $3000 less than the income of students starting at not-for-profit/public

programs, statistically significant at the 5% level (Lang, 2016). Associates degree are something

than can span across multiple subjects. The article does not specify which degree programs it

surveyed. The difference could potentially be based on the type of program offerings at different

institution types.

The research shows that on both levels students who attend for profit institutions earn

less. The research did not elaborate as to why. The degree programs students are seeking could

potentially be the reason for the income discrepancy. Local institutions like community colleges

can be more in sync with the local job market. For profit schools commonly are not as

connected to the local community and can result in disconnect for students when looking at their

local job market.

Another possibility could be the brand recognition. For profit schools are well known but

still can have a reputation based on their accreditation and level of student preparedness. If an

employer is not familiar with the level of work an institution requires students to complete it
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could result in lower starting income. Furthermore, students who attend these schools can have

less experience with negations during an interview and will accept an offer that other students

may not.

Gainful Employment

Gainful employment is something that most public and not for profit schools engage in.

The gainful employment act was introduced after several for profit schools were sued for being

deceptive with their employment and earning potential given to incoming students (Bastedo,

2016). Furthermore, Bastedo touches on how students who attends these for profit schools are

less likely to receive a call back from employers even when holding the same degree as their

public school or selective private school peer. Both University of Phoenix and DeVry are

required to post on their website but also send students the gainful employment disclosures.

DeVry posts this on the website, “Important Information about the educational debt, earnings,

and completion rates of students who attended DeVry programs can be found below.

Employment rates provided are those required by state or accrediting agencies for select student

populations as noted in parentheses” (devry.edu). The University then lists each degree program

and when you click on the link it shows you the length of program, cost including books, fees,

and optional room and board. Further down the page it talks about the student borrowing rate

and potential job outcomes with the degree.

University of Phoenix offers similar disclosures. Their disclosure states:

“We believe that students and families should be prepared financially for college

and understand gainful employment opportunities before starting any program. So

we want to ensure you have the information you need to make an informed choice
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—things like what it will cost, the skills you'll learn through your chosen degree

program, and the types of occupations the program prepares you for.”

The website then allows you to choose your zip code which will provide a state specific

disclosure. Once in the disclosure you will see the program length in weeks. Program costs

including books and fees, student borrowing in which they have numbers about debt the average

student leaves with and the typical amount a student earns post-graduation. The final piece of

information they disclose is the percentage of students who are employed based on state

requirements and the fields in which they found employment.

The gainful employment disclosures if used correctly are a tool that students can utilize

when looking at places to attend and assist them in making an informed decision. Gainful

disclosure further gives students an expectation of current outcomes within their desired field. It

also provides leverage for students on interviews for starting salary. The gainful disclosure

although can be viewed negatively is simply a tool informing students of their decision and

providing them with realistic expectations upon completion of their degree.

Implications for Practice

When looking at universities it is important to keep in mind the reason you are pursuing

higher education. Students can go to college for a variety of reasons, including higher earning

potential, gain professional skills and knowledge, or to receive a promotion in their current

position. For profit institutions are something that have been growing as technology has grown

in the United States (Bastedo, 2016). For profit institutions are not slowing in growth, and as

student affairs professionals we need to recognize the needs of our students and the trends in

Higher Education. Students are evolving and coming in with different needs than before.

Schools need to take notice of what for profit schools are doing and look to emulate that through
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hybrid offerings, online course options, and other distance learning. Flexibility and convenience

are something that students are looking for a university to possess. Adult learners specifically

are looking to pick and choose what options they take from a school as not all are relevant to

them (Arnett, 2017). Moving forward if schools want to compete they need to look internally to

see what changes they can make but also externally to the needs of students.

Conclusion

Thus, for profit institutions are a convenient way for people to achieve their educational

goals. For profit institutions can be an asset to many people but it is important that students are

informed and understand the benefits and potential risks when enrolling with these institutions.

Lang, 2016 says this:

Much of the policy debate surrounding for-profit colleges has involved claims that

for-profit colleges leave students with very high debt levels and poor employment

outcomes. Basic summary statistics presented in this paper indeed show that post-

college income is significantly lower for students starting at for-profit institutions.

However, it is also very clear that those who start at for-profit institutions are less

well prepared for college, had lower levels of pre-college academic performance,

and face other significant obstacles to college and post-college success.

For profit institutions have tapped into a market that many schools did not want to work with.

Adult learners are becoming a larger population within the higher education realm. If a student

chooses to attend a for profit institution it is imperative they do a lot of research about the school

and understand the outcome. Students can be fully successful when attending classes online as

long as they are putting in the work necessary to achieve the desired outcome.
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References

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Breneman, D. W., Pusser, B., & Turner, S. E. (2006). Earnings from learning: the rise of for-
profit universities. Albany, NY: State University of New York Press.

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https://www2.ed.gov/admins/finaid/accred/accreditation.html#Overview

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colleges/devry-chicago-10727