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http://higheredwatch.newamerica.net/blogposts/2010/senator_harkin_lays_out_his_case_and_for_the_first_time_identifies_bad_players-41611Senator Harkin Lays Out His Case and, for the First Time, Names Bad Schools
Author(s):Stephen Burd
Published: December 16, 2010
Issues: For-Profit Colleges
Speaking on the Senate floor on Tuesday, Sen. Tom Harkin, the Iowa Democrat who chairs the Health, Education, Labor and Pensions (HELP) Committee, made his strongest case to date about why the federal government needs to strengthen its oversight over the for-profit higher education sector. Throughout the speech, he also singled out, for the first time, several companies that he appears to consider to be among the worst players in the industry.
Assuming that you missed his speech on C-SPAN, and are not a regular reader of the Congressional Record, we thought we’d help out by including an excerpt from the speech here and linking to the full text here. We’ve chosen to highlight this portion of the speech because we believe it shows clearly how the incentives driving the industry have created a “recruit at any cost” mentality that has put students in harm’s way. Under constant pressure from Wall Street to show growth, some of the largest for-profit higher education companies have focused almost exclusively on getting students in the door and signed up for classes and financial aid, even if they know full well that many of these individuals have little chance of succeeding. As a result, a substantial number of students are left deeply in debt but without the training they need to find meaningful employment. Apparently, even companies that have had fairly good reputations in the past have been pumping up their enrollment numbers by "churning" students in the door and out.
Here's what Senator Harkin had to say:
FOR-PROFIT EDUCATION INVESTIGATION
...The HELP Committee held its third and most recent hearing in September, with a focus on answering the question: What is happening to all the students whom these schools are pushing so hard to bring in the door--the ones I just talked about.
Unfortunately, according to information provided by the 30 schools and analyzed by the HELP Committee, it appears these students are not faring very well. At the 30 companies we analyzed, 54 percent of the students who came in the door in the 2008-2009 school year had left without a degree by the following year ... They vanished--54 percent, one out of every two, they left. That number is striking.
We know from the Department of Education that nearly every student at a for-profit college will take out a Federal student loan. Of course, they will get their Pell grants too. That meansmore than half these students are enrolling, being saddled with debt, and dropping out without a degree.
The numbers are even worse when we look specifically at students enrolled in associate's degree programs. This chart will show this. The chart shows the 10 associate's degree programs with the worst outcomes for students, these 10. The column in yellow shows the percentage of students leaving--right here. So here is the institution's total students. Here is the withdrawal rate. This is the withdrawal rate in the first year; in the first year, 84.4 percent of students from Bridgepoint who signed up dropped out in the first year. What do you think happened to their loans? What do you think happened to their Pell grants? Students get those back? Not on your life. Bridgepoint kept them, the money went to their shareholders.
In that program, Bridgepoint, 84 percent, nearly all the 7,900 students they have, left before attaining their associate's degree. I am not talking about a master's degree, I am talking about a 2-year degree. Nearly 70 percent at the second school, Lincoln, with the rest in the 60-percent range. So they had 69 percent who did not finish.
Just among those 10 schools, 375,000 students enrolled in the 2008-2009 school year. Nearly 250,000 dropped out without a degree a year later--250,000. These are staggering numbers.
Behind these numbers are students who are fed up with the lack of help or support from the school. They can no longer justify the level of debt they are taking on because they realize the dream job the recruiter sold them on is not waiting at the end.
I should be clear, these are not the complete dropout rates. More students are actually likely to quit by the time we would actually measure that. These are students who are gone within 1 year, many of whom never even register in the Department of Education's annual enrollment count.
Guess where they are counted, though. They are counted by investors looking to value the company and measure its likely profit. So when I say all these students dropped out, that is just 1 year. How many dropped out the second year? We do not know that.
Let me focus, for a moment, on Bridgepoint. Bridgepoint operates Ashford University and is based, sort of, in Clinton, IA. A group of private equity investors purchased a small Catholic school in 2004, when it had about 375 students. In 2004, this small Catholic school in Clinton, IA, had 375 students. They transformed it into a for-profit school. It now has 67,000 students, a 17,000-percent increase in student population in 6 years, 17,000 percent.
Ashford still operates the small campus in Iowa. About 600 students go there. The other 67,000 take classes online. I, obviously, was very interested to know how the heck they can be doing such a good job for students with that kind of growth. What the data we have collected for our investigation can tell us, for the first time, is they are not doing a very good job for their students.
Eighty-four percent of the students seeking an associate's degree and 63 percent of bachelor's degree-seeking students leave Ashford within 1 year, without finishing their programs.
But look at the growth--17,000 percent growth. This is not terribly surprising because Bridgepoint offers no tutoring or other student services. If a student starts to have difficulties at Ashford online, they have two options: talk to their part-time teacher online or ask the computer avatar, who is the online student resource center.
Should a student succeed in completing a degree at Ashford, they had best not expect a lot of help finding a job. While Bridgepoint employs 1,703 recruiters, they employ just one person to handle career planning. They employ 1,703 recruiters, and one person to handle career planning for the entire student body of 67,000 students. According to a recent study, 60 percent of all community college students need extra help to succeed in school. They need tutoring and classes to make up for what they may not have learned in middle school and high school. For-profit colleges have served a similar population with similar needs. As they often remind us, the for-profit sector serves a group of students that traditionally lack access to higher education. Their students are the ones who are the most vulnerable, the ones who didn't have parents who went to college, who didn't grow up in a fairly wealthy household. And to make it through college, they require a significant support structure that is not available at these for-profit schools.Like Bridgepoint, schools that have large online programs seem to have particularly troubling outcomes. This becomes clear when we look at a large publicly traded school that has both a large online program and a large campus-based program for associate degree-seeking students. I am talking about a 2-year degree. We can see it on this chart.
Career Education Corporation--that is another one of these for-profit schools--has a withdrawal rate of 44 percent on their campus-based programs, and a whopping 69.5 percent in their online programs. Campus-based program withdrawal rate 44 percent; online withdrawal rate 69.5 percent. Something is very wrong here. To me, this suggests these online students are not getting the support they need. It is inexpensive for a school to enroll a student online, but to ensure those students are learning and succeeding would require a major investment that for-profit schools, obviously, are not willing to make.
What these high dropout numbers illustrate is a phenomenon called ``churn.'' That is an industry term for bringing in students, signing them up for loans and Pell grants, and then leaving them to sink or swim. Then they go out the door, and they bring in more. That is what they call churning through the students because so many students at these for-profit schools come in the door and then leave within 4 months, 5 months, 6 months. Many of these students don't even show up in the data the Department of Education collects.
At Bridgepoint, for example, on the first day of classes in the fall of 2009, there were about 48,000 students signed up. Over the next year, recruiters signed up 77,000 additional students. Let's keep these figures in mind. In the fall of 2009, 48,000 students signed up for Bridgepoint
In the next year, they signed up 77,000 additional students. Then at the end of that school year in 2010, there were only 67,000 total students enrolled. That means the school's actual head count for that year was about 125,000 students enrolled at some point. But 58,000 students, nearly half of them, didn't stick around. They were out the door. These are the kinds of things people don't know. This is what our investigation has uncovered by getting the documentation that led us to these figures.The picture is much the same at other for-profit schools. In fact, most schools we analyzed recruit at least the equivalent of their entire starting student population anew each year. That bears repeating. Most of the schools we analyzed recruit at least the equivalent of their entire starting student population anew every year.
This chart describes the University of Phoenix. We have all heard of them. If someone has never heard of them, they don't watch TV or read newspapers or ride a bus or anything else to see all their ads. They do a great job of advertising. At the University of Phoenix, in 2008-2009, the school started the year with 443,000 students. They ended the school year with 470,800 students, so almost a 28,000-student increase, 27,800 to be exact. They grew their enrollment by 27,800. In fact, they actually recruited and enrolled 371,700 new students in that year to get 27,800. Again, these numbers can get a little confusing. Let me try that again.
The University of Phoenix started the school year in 2008 with 443,000 students. They ended the school year with 470,800, a growth of 27,800 students. How did they get 27,800? They recruited 371,700 students just to get that 27,800. That means almost 350,000 students passed through the University of Phoenix in 2009 without anything to show for it. They came in. A lot of them gave them their Pell grants. They turned over their student loans. Then they vanished. The students got the debt and the University of Phoenix got a nice little profit. Actually, a nice big profit.
At another company, EDMC, the marketing and recruiting machine signed up 124,000 new students in the last school year. But they ended up the year with only 19,000 more students than when they started. Recruiters for these schools face the imperative of enrolling large numbers of new students each year to replace those dropping out and eventually reach the point where the number of new students is sufficient to actually cause the enrollment to grow.
That is what the shareholders demand. That is what the hedge funds who own them demand. That is what their equity investors demand. The schools may be very successful as companies, making profits for their investors and their owners and, I might say, huge compensation for their executives and their presidents, but it is hard to say they are successful as educational institutions...
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