In case you haven’t heard of them, for-profit universities, such as University of Phoenix, ITT Technical Institute, Walden University, Le Cordon Bleu, and many, many others, are higher education institutions run by profit-motivated businesses.

There are many people who, for a variety of reasons, are not able to attend traditional public or private non-profit universities. For them, online universities might seem like a dream come true, as they typically offer open admissions to non-traditional students, are easily accessible regardless of your schedule or location, and provide practical vocational training.

However, many critics have argued that these so-called benefits are not so beneficial after all, and that for-profit online universities actually use their high accessibility to take advantage of their students.

Here are the top 5 reasons why for-profit universities are a huge scam.

They Exist to Make Money, Not to Educate

While there is nothing wrong with wanting to be paid for your work, a problem does arise when an institution or business prioritizes profits over providing a worthwhile service to its consumers.

When everything else is secondary to turning a profit, it is inevitable that the company will take shortcuts that benefit it at the expense of the paying customer. For-profit universities are often guilty of this.

Critics have brought to attention that over half of the revenue made by for-profit institutions are either spent on marketing or extracted as profits, rather than going toward instruction. This shows that, as “for-profit: indicates, that providing quality instruction is a secondary concern to profit margins.

Sub-Par Courses

Due to the great number of for-profit universities in the United States, and the even larger number of courses they offer between them, it is impossible to claim that each and every one of these courses is bad.

However, generally speaking the classes given through online for-profit universities are sub-par. Many of them suffer from the same problems, such as uninterested or unqualified instructors, a prevalence of unengaging busywork, and confusing online portals.

Refunds are Basically Non-Existent

It is a common criticism of these universities that they stop caring about you as soon as they have your money in pocket. This is made all the more evident by very strict refund policies--mainly that they do not give refunds, even for classes that haven’t started yet.

When looking at online reviews and testimonials of for-profit universities, there are countless horror stories of students being denied refunds for classes that they never took, or having their request for a refund accepted but never followed through on.

Students Accrue Massive Debt

As a side effect of their emphasis on making money, the majority of students of for-profit universities leave (with or without a degree) with massive amounts of debt.

While this is not unique to for-profit institutions (70% of graduating college students have some amount of debt from student loans) it is notable how many for-profit universities purposefully exploit their students for their own personal gain.

Student loan debt is the most collectible form of debt there is, as it cannot be discharged through bankruptcy. Due to high interest rates, it is often nearly impossible to get out of student debt.

University of Phoenix

As a specific example, let’s take a look at the University of Phoenix. UOPX students owe over $35 billion in student loan debt, which is more than any other US college.

John D. Murphy co-founded the University of Phoenix in 1976, but has disowned the direction that the institution has taken since going public in 1994, calling it a betrayal of the university’s original mission to provide a continued education for working adults.

In his 2013 book, Mission Forsaken: The University of Phoenix Affair with Wall Street, Murphy said that the University of Phoenix has degenerated into a money-making machine that will admit any incoming student so long as they qualify for federally funded student loans.

“The key moment — which Murphy calls the “betrayal” of the University of Phoenix mission — came shortly after he left the company and the company went public. At that point, the company began responding to Wall Street, Murphy says, chasing stock prices and lowering its admissions standards, while jettisoning the academic model that had made it work.” Source: deseretnews.com

Remember, because the majority of UOPX’s revenue does not go toward to the education of its students, the company benefits disproportionately from any federal student loans that its students receive. In 2008 alone, the university received nearly $2.48 billion in student financial funds. This funding was essentially being sent straight from the government into the pockets of the Apollo Group, the UOPX’s holding company.

For-Profit Colleges Prey on Non-Traditional Students

One of the main perceived benefits of for-profit colleges is that they offer open admissions and accept a huge amount of non-traditional and minority students. Although it may seem like this is because they are “being nice,” it’s actually because such institutions prey on people that want to continue their educations but have no other options.

Online for-profit colleges also seem like a good thing--they are fully accessible for people, notably single or stay-at-home parents, who have odd schedules or aren’t able to travel to a physical campus to take courses. However, this easy acceptance of non-traditional students is just another way that for-profit colleges try to take advantage of people.

Veterans

Though stay-at-home parents and disenfranchised minority groups are two of the communities that for-profit colleges take advantage of, veterans may be the single largest group that these institutions prey on.

Going again to University of Phoenix as an example (because they make it so easy for me), the university began annually receiving $1.2 billion of federal money through the GI Bill. In 2014, UOPX had 50,000 veteran students enrolled, which was twice as much as any other university.

You could gather from this that the Apollo Group and UOPX “really cares about veterans” but it is probably more likely that, again, all of this huge federal funding is going straight into their wallets, incentivizing them to enroll as many veterans as possible.

For-profit universities have been criticized by many groups, including the Department of Veterans Affairs. Holly Petraeus of the Consumer Financial Protection Bureau, is one such critic. She wrote:



“This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in and take out private loans, which students often need because the federal grants are insufficient to cover the full cost of tuition and related expenses.

“One of the most egregious reports of questionable marketing involved a college recruiter who visited a Marine barracks at Camp Lejeune, N.C. As the PBS program “Frontline” reported, the recruiter signed up Marines with serious brain injuries. The fact that some of them couldn’t remember what courses they were taking was immaterial, as long as they signed on the dotted line.” Source: www.nytimes.com

GI benefits were a godsend for for-profit universities, as according to law no more than 90% of college revenue must come from federal student loans. They have to get their money from somewhere!

Low Graduation Rates

It should come as no surprise that many for-profit universities have low graduation rates, as in order to remain in attendance students have to pay and absurd amount of money, and have little support from the universities themselves.

Before leaving the University of Phoenix, Murphy said that their four-year graduation rate was at 65%, akin to most public and non-profit private colleges. In 2013, USA Today noted that the University of Phoenix’s student loan default rate (26%) had surpassed its graduation rate (17%). In 2010, it was found that the university’s online graduation rate had fallen to only 5%.

Many universities that received huge amounts of money from Pell Grants had low graduation rates as well. Some institutions have even been known to provide falsified graduation rates or withhold them altogether, which really isn’t a great sign.

For-Profits vs Community Colleges

Some have noted that that for-profit colleges actually show greater graduation rates than community colleges, while others have argued that these statistics are misleading. Even if the graduation rates of for-profit schools are comparable to that of community colleges (which again, is contentious) we still need to consider the cost and benefits of each option.

Community colleges are much less likely to result in heaps of debt than for-profit universities. Additionally, it is fairly common for students to take prerequisite classes at community colleges before transferring to public or private non-profit universities, which may affect the graduation rate statistics for community colleges.

In many cases, credits from for-profit universities are not recognized by more legitimate schools, making transfering impossible. Even more worrying, oftentimes entire degrees from for-profit schools are not recognized by other universities or professional fields.

For-Profit Degrees Are Virtually Worthless

For-profit colleges such as University of Phoenix have been called “pay for degree” schools, the implication being that anyone can get a degree there, provided they’re willing to shell out enough money. Some former students of for-profit colleges have remarked that they felt like they went to the flea market and bought themselves a degree.

National vs Regional Accreditation

The majority of for-profit schools are nationally accredited institutions rather than regionally accredited. Most non-profit schools, on the other hand, are regionally accredited.

Though national accreditation sounds good if you don’t know what it is, the standards for national accreditation are actually lower than for regional, and most regionally-accredited schools won’t accept credits from for-profit schools.

Worse still, entire degrees from nationally accredited for-profit schools may not be considered valid by regionally accredited schools, meaning that students who received degrees at for-profit schools don’t have the option of pursuing a graduate degree at a traditional university. In the same vein, certain professions that either require or prioritize applicants with relevant degrees may likewise not recognize degrees from for-profit schools.

All in all, this means that even those students who do graduate from these for-profit schools may find that their degrees are, for all intents and purposes, worthless.

Are all For-Profit Universities Garbage?

For-profit universities cannot be wholly generalized to that degree, but the fact remains that the overwhelming majority of them are garbage schools that practice shady business practices and aggressive recruitment.

It’s true that for-profit universities admit more minorities and veterans, and (in the case of online for-profits specifically) allow for ease of attendance. Though in certain cases this could offer disenfranchised groups opportunities they otherwise would not have, it is more often true that these universities are simply preying on marginalized communities to turn a profit at their expense.

Are Any of Them Worthwhile?

Between all the for-profit universities out there, there are probably some good ones hidden in there. And there are likely many capable instructors that care about what they are teaching. The important thing is that you do the proper research, read reviews and student testimonials, and question how these schools will benefit you before signing up.

In most cases, community colleges can fill the same role of for-profit universities. They are great for learning skills when you don’t necessarily want or need a full degree right away. And at a fraction of the cost, too.

There are also countless online resources that make for-profit online schools useless. For one, many esteemed universities offer free online courses on a huge variety of subjects. Just Google “free online courses,” and you’ll see just how many options there are. Do your research before signing up, and you should be good.



And of course, you can still learn anything you need to know from YouTube.

The Decline of For-Profit Universities

As mentioned earlier, when everything else is secondary to making profits, it is inevitable that a company will stop considering what is best for the customer. While these sorts of business tactics work well for the company in the short term, it is likewise inevitable that consumers will take notice of the poor service and get fed up with it. With the possible exclusion huge monopolistic companies (ones that “are too big to fail”), like Google, Amazon, Comcast, and so on, this is one way that businesses fail in the long-term.

For-profit universities have been under fire since 2010, when their business practices and shady tactics came under scrutiny. Attendance to such universities have fallen every year since, as more and more prospective students become aware of the limited utility and high costs that they offer.

This drastically decreased enrollment has caused many longstanding for-profits to close for good. Time will tell if for-profits will survive, and how they will change to do so.

The Blurring of For-Profit and Non-Profit Colleges

In order to survive, some for-profit universities have transitioned to non-profit status, while others have been acquired by non-profit institutions.

As a direct result of the decline of for-profit institutions, we are also now seeing a blurring between for-profit and non-profit colleges, which has its fair share of critics as well. Moving forward, we will see how these hybrids are received by the public, and what additional regulations are put in place to keep them in check.

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