Is a for-profit college your best choice?

This column originally appeared in The Alpena News on December 9, 2020

During this time of coronavirus, quarantining and work shutdowns, you may be thinking about getting a postsecondary credential that leads to a higher-paying job. While this is often a good idea, you should use caution if you are considering an in-person or online program at a for-profit college.

For-profit colleges are different from public universities and community colleges, which are established and funded by the State of Michigan to provide an education to our state’s residents. They are also different from private nonprofit colleges, which are tax-exempt and established with a social purpose or educational mission. Rather, for-profit colleges are businesses. They are not funded by the state, they are not tax-exempt, nor are they mission-driven, but exist primarily for the same reason as other for-profit companies–to make a profit. And while there is certainly nothing inherently wrong with a business making a profit, when the business is a school, the profit motive leaves less money for quality education or keeping student costs low.

The Michigan League for Public Policy has recently released a report, For-Profit Colleges in Michigan: Path Forward or Dead End?, that found that the degrees and certificates from for-profit colleges often do not have as good value in the job market as those from public or nonprofit private colleges. We looked at the median salaries of students who had begun studies or training at an on-campus or online for-profit college in Michigan, and found that students at only five schools had a median annual salary of $30,000 or higher ten years after beginning the program. We also found that for-profit college students graduated with an average of $39,000 in debt–41% higher than students in public institutions.

For-profit colleges are considerably more expensive than public community colleges, and after all forms of financial aid and scholarships are considered, often more expensive than public universities as well. While private nonprofit colleges sometimes have high tuition “sticker prices,” they often provide institutional financial aid funded by donors and endowments to bring down the out-of-pocket cost to students. Students and public and private nonprofit colleges are also often eligible for state-funded financial aid, which is not available to students attending a for-profit college.

While Michigan does not allow state financial aid to be used at for-profit colleges (a very good policy that protects students and helps to ensure taxpayer dollars are used wisely), federal Pell Grants and financial aid for veterans may be used, and those federal financial aid dollars make up a large portions of the operational costs and profits of for-profit colleges. Because of this, for-profit schools tend to target people in communities with low incomes in which prospective students will likely be eligible for Pell Grants. Students targeted with advertising are often Black or Latinx and often do not have a parent who went to college—and thus may have less familiarity with the considerations that go into choosing a college.

The targeted marketing has resulted in a disproportionate number of Black students at for-profit colleges compared with other kinds of colleges. In 2018, on average 30.6% of the student body at a Michigan for-profit school was Black– at least 20 points greater than that in other types of institutions in the state. Black students comprised an average of 10.7% of students at a four-year private nonprofit institution, 8.8% of students at a two-year public institution and 7.7% of students at a four-year public institution. (Similar information is not available for other racial groups.)

A very large problem with for-profit colleges is their lack of oversight. Every year, in order to receive state funding, the presidents of Michigan’s community colleges and public universities must go before the state Legislature and give an account of how they are spending the state appropriations they receive and how they are delivering a quality education to their students. Nonprofit private colleges don’t have to appear before the Legislature, but they do have to be accountable to their boards of directors, their donors, and the Internal Revenue Service for their finances and their quality of education in order to be tax-exempt and to receive donations.

For-profit colleges, on the other hand, do not have any such oversight. Their stockholders expect them to prioritize profits over quality education or social mission, which is why you don’t hear of donors fundraising for or setting up endowments for for-profit colleges, as is often done for nonprofit and public colleges. This lack of direct oversight has led to at least ten Michigan for-profits being penalized for fraud in recent years.

More information about for-profit colleges in Michigan can be found in the League’s report and in this fact sheet.

In conclusion, if you are considering going to a for-profit college or know someone who is, please get the facts and consider some of the alternative options. If you are looking for a program that takes two years or less that will provide you with a recognized degree or certificate at low cost, one of Michigan’s 28 public community colleges may be the best choice. Community college tuition in Michigan is relatively inexpensive, at an average of $110 per credit hour for in-district students and $183 per credit hour for out-of-district students. If you want to get a four-year degree, you may want to explore Michigan’s many non-profit colleges or public universities to see what is offered and the kinds of financial aid that are available.

If you can, talk with people who have gone to one of the colleges you are considering and get their perspective on whether it was a good decision for them. You can also call the College Advising Hotline provided by the Michigan College Access Network to get help navigating through your options.

You want a credential that can increase your skills and earnings without wiping out your bank account and your future ability to receive financial aid. Please explore your options before signing the dotted line of a for-profit college enrollment form. There are plenty of choices out there!

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