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The Third Degree
For-profit colleges provide an alternative to traditional postsecondary education. But are they filling an educational gap or taking advantage of vulnerable students?


The busy MATC professor in his even busier office.
Photo by Adam Ryan Morris

Michael Rosen peers over the top of his glasses, which sit beneath a furrowed brow, and apologizes for ignoring the reporter who just stepped into his office. “Sorry, I’m just responding to emails,” says the president of the American Federation of Teachers Local 212. “These students both got screwed.”

He doesn’t go into specifics. But amid an office filled with clutter, a clue to his charges rests in one poster’s conspicuous message: “Stop For-Profit College Scams.”

Rosen is an economics professor at Milwaukee Area Technical College. His Downtown office sits in an obscure brick building on West Juneau Avenue. The room overflows with news clippings, stacks of manila file folders and pro-Democratic literature, a hint that while Rosen may be temporarily oblivious to the occasional visitor, he keeps close tabs on the world around him.

Lately, Rosen has held a particular interest in that poster’s subject, and he’s heard from a steady stream of the “scammed” and “screwed.” He got serious about the cause a few years ago, when an institution called Everest College wanted to open its doors in Milwaukee, prompting him to look a little closer at this local for-profit college foray.

Such schools, also called proprietary schools, are operated by companies seeking a profit. This differs from public universities like the University of Wisconsin-Milwaukee and private schools like Marquette University, which function as nonprofit organizations, meaning any surplus revenue is reinvested into their institutions. With for-profit schools, a portion of revenue is distributed to owners and shareholders as profit – in some cases up to 37 percent. That number comes from a U.S. Senate report released in July 2012, which details an investigation of 30 for-profit college companies. The report also found these companies benefited from $32 billion in taxpayer money in the 2009-10 school year and generated $3.2 billion in pretax profits in 2009.

Rosen believes that cash comes at the
expense of students who don’t get what they bargain for. “For-profit colleges promise students the world,” Rosen says. “Meanwhile, stockholders and CEOs are making out like bandits by charging exorbitant costs to students who aren’t sophisticated about tuition or enrolling in college.”

When Everest first popped up on Milwaukee’s radar, Rosen wasn’t such an informed partisan. He was simply baffled that a “technical college” without roots in Milwaukee would want to set up shop just blocks away from his MATC classroom. So he Googled Corinthian Colleges, Everest’s parent company, and was stunned by the results. “I saw all the lawsuits,” he says.

Just one example: In 2007, Corinthian paid $6.5 million in a California settlement over allegations that the company exaggerated how many students found employment, and embellished the starting salaries of those who did, to encourage enrollment by potential students.

“I just started finding this stuff,” Rosen says. “It became really clear to me that this was a group preying on low-income students.”

The poor dropout rates, low postgraduation job-placement rates and high amounts of postgrad debt alarm Rosen and his fellow for-profit college critics. The Wisconsin Educational Approval Board (EAB) – which oversees these schools in the state – estimates that the average student graduating from a for-profit school has $22,169 in debt. During the 2010-11 school year, 18,644 students dropped out in Wisconsin alone.

As for Everest, “They were trying to set up by MATC,” Rosen believes, “not only to prey on low-income students, but to redirect students at MATC who might not get into their programs right away.”

Whatever Everest’s plan was, it didn’t succeed. In September 2012 – less than two years after Everest’s Milwaukee base camp opened – Corinthian announced the campus would close. The campus’ dismal job-placement rate of 6 percent played a role in what Kent Jenkins Jr., Corinthian’s vice president of public affairs communications, calls an “unprecedented situation.”

Rosen could remove one for-profit college from his list of concerns.

“I felt validated,” Rosen admits. “But I also felt a certain sense of indignation that so many people had been manipulated and exploited, and I thought that was tragic. This shouldn’t happen.”

But for all of Rosen’s issues with Everest, it was far from the only for-profit college in town. David Dies, the executive secretary of the EAB, estimates there are about 40 in the Milwaukee area alone – for now, anyway, because Everest isn’t the only school leaving. The University of Phoenix is closing its Brookfield campus, Sanford-Brown is closing its West Allis location, and Kaplan College is closing its campus on Pleasant Avenue.

The colleges cite similar reasons for closing. Mark Spencer, a spokesman for Sanford-Brown, says the campus stopped enrolling new students at the end of June 2012 but will “teach out” its current students, an exit strategy that allows those enrolled to finish their programs. “Our team made this difficult decision after evaluating a number of factors, including the performance of the campus and expected student outcomes,” he wrote in an email.

It’s another dose of validation for Rosen. But if his goal is the disappearance of for-profit colleges, he won’t be retiring that slogan-bearing poster anytime soon.




1 Comments
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Jay_Warner Posted: 1/18/2013 6:04:07 PM
 0   13    

Yes, there is a lot of "waste" in our post-secondary educational system. but that by no means gets for-profit schools off the hook. Students fork over sizable dollars plus sign for student loans that cost them nothing up front, on the promise that they will receive something of value in the months ahead. Suppose that a school had to return 33% of the tuition funds if a student dropped out. 33% is about the highest profit margin reported in the article. Suppose that a student who failed to get a job related to the area of interest within 6 months of completion would receive a refund of 25%. Enrolling in another school for further education with 70% transfer credits could count as 'successful completion.' Then we'll apply these rules to non-profit as well as for-profit schools. WE'll need to tighten up the definitions of 'drop out,' 'part time,' and 'graduation,' as well. Not every school aims to place their graduates in employed positions, but if the school's educational objectives are spelled out and explained to potential enrollees, there will be far fewer unhappy students. "Evening" ("nontraditional") students generally _are_ different than "traditional" (18-22 yrs. old, direct from HS) students. The older students are more focused in their aims and more stressed by work & family. And they tolerate much less guff and blather from instructors. Some local non-profit schools, with their instructors, have learned how to teach and work with them well. For-profit schools cannot claim a distinction on that basis.
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