For-Profit Colleges: Are They Really Worse Than Some Public Universities?

FILE - In this Nov 24, 2009 file photo, a University of Phoenix billboard is shown in Chandler, Ariz. Two senators say for-pr
FILE - In this Nov 24, 2009 file photo, a University of Phoenix billboard is shown in Chandler, Ariz. Two senators say for-profit colleges are using too much taxpayer money to recruit students. Sen. Tom Harkin, D-Iowa, and Sn. Kay Hagan, D-N.C., introduced a bill Wednesday to prohibit colleges of all kinds from using dollars from federal student assistance programs to pay for advertising. (AP Photo/Matt York, File)

The Harkin report on the evils of for-profit higher education lacks context, writes economist Richard Vedder, director of the Center for College Affordability and Productivity.

It is true that many of the for-profits have high drop-out rates, but are they really any worse than some of our public universities, like the University of Texas at San Antonio or Chicago State University, schools with thousands of students but very low graduation rates? Should we impose some sort of selective admission standards on all schools wanting government handouts? I suspect that if one compiled a list of all institutions where the six-year graduation rate was below, say, 40 percent, a larger number of students would attend public as opposed to for-profit institutions.

The attack on the for-profits is an attack based on ideology, a dislike of capitalism, more than on a comprehensive and objective concern for students. The clearly one-sided nature of Harkin's criticism may be one reason that his report was not issued by all the Democrats on the Senate education committee--my guess is some did not want to be associated with this unbalanced attack.

All open-admissions colleges and universities have high drop-out rates. For-profits' two-year programs graduate more students than community colleges, which recruit from a similar demographic.

Students pay much more at a for-profit than at a community college or state university, the Harkin report stresses. That's because tuition at for-profit colleges isn't subsidized by taxpayers. But while for-profit higher ed may be costly for students -- it depends on how much time they save relative to enrolling at a crowded public alternative - for-profit higher ed can be a bargain for taxpayers, according to a 2010 analysis funded by the for-profit sector. Factoring in student loan subsidies and grants flowing to the for-profit sector, then subtracting taxes paid, the taxpayers are spending less on for-profit higher ed than they spend to subsidize public higher education, the study concludes.

I'd like to see an independent analysis of the question.

If federal loans were linked to community college tuition, many for-profit colleges would go out of business, as would many non-elite private non-profit colleges. That would force public higher education to expand dramatically -- perhaps with a huge expansion of online courses -- or stop trying to educate high-risk students with high failure rates. Even the Harkin report doesn't want that, acknowledging that the for-profit colleges are needed.