For-Profit vs. Non-Profit and Public Schools

On December 7, 2011, The United States Government Accountability Office (GAO) released a report on For Profit Colleges entitled “POSTSECONDARY EDUCATION—Student Outcomes Vary at For-Profit, Nonprofit, and Public Schools.”The GAO wanted to shed light on the quality of the education provided by for-profit colleges versus non-profit or public colleges.The GAO used graduation rates, pass rates on licensing exams, employment outcomes, and student loan default rates because it is hard to quantify and measure the quality of an education.According to the GAO report, the data indicates that for-profit schools enroll a higher proportion of low-income, minority, and nontraditional students who tend to have less positive educational outcomes.

Regarding employment outcomes, the GAO report found that students who started at for profit colleges has similar earnings for their profession but higher rates of unemployment versus students who started at nonprofit and public schools.

Regarding the level of student loan debt, the GAO report found that students who received a bachelor’s degree from for-profit colleges took out more student loans and generally had higher student load debt.For example, for 2007-2008, low income students’ borrowing was greater at for-profit schools (99%) than at nonprofit and public schools (83% and 72%, respectively).

Regarding student loan default rates, the GAO report found that for-profit schools have higher default rates than 4-year public schools and the results are mixed when comparing for-profit schools to other types of schools. Another ongoing study reported that for-profit schools had a higher proportion of students default on their student loans than 4-year nonprofit schools and 2-year nonprofit and public schools.

Regarding pass rates on licensing exams, the GAO report found that graduates of for-profit schools profits generally had lower pass rates for Registered Nurses (RN), Licensed Practical Nurses (LPN), Radiographers, Emergency Medical Technicians (EMT), Paramedics, Surgical Technologists, Massage Therapists, Lawyers, and Cosmetologists on the 9 of the 10 licensing exams reviewed.

The federal government provided $132 billion in grants and loans to students under federal student aid programs in 2009-2010, according to the GAO report.The GAO noted that “relatively little information is available about the quality of education being provided by these schools.” Considering the amount of tax dollars at stake, the Federal Government has a clear interest in preventing fraud and ensuring that students’ financial aid is dispersed to for-profit colleges that provide a quality education.

SOURCE: http://www.gao.gov/assets/590/586738.pdf