September 2010 figures from the U.S. Department of Education show that 11.6 percent of students at for-profit colleges default on their student loans, compared to 4 percent for those at private schools and 6 percent at public schools. Industry spokespeople say that's due, in part, to the fact their students tend to be lower-income.
"There's some truth to that," says Ben Miller, a policy analyst at Education Sector, a nonprofit educational research center in Washington, D.C. However, he says, even if "they are offering a high-quality program, if it costs too much" the student won't be able to get a job that pays enough to let them repay the loan.
Figures from outside observers show for-profits charge the highest premium for certificate programs, and less of a premium for two-year associate degrees; they come closest to the cost of not-for-profits for four-year bachelor degree programs.
According to the College Board figures for the 2010-2011 school year, tuition and fees averaged $13,935 at for-profit schools, $2,713 at public two-year schools, and $7,605 for in-state students at public four-year schools. (Out-of-state tuition at four-year public schools averaged $19,595, with tuition at private not-for-profit schools averaging $27,293.)
An August 2010 Government Accountability Office (GAO) report found that a certificate program in computer-aided drafting would cost $13,495 at a for-profit school, compared to $520 at one community college. It also found a certificate in Web page design could cost as much as $21,250 at a for-profit, compared to as little as $2,037 at one public school.
How to increase the odds for success with a for-profit school
In response to such reports, for-profit schools have posted online tools to help students estimate their costs and taken other steps to assure ethical practices. Kaplan University, for example, puts students through a detailed introductory process before they incur any charges. The government has also proposed a "gainful employment" rule limiting students' access to federal loans if previous graduates of their programs fail to meet benchmarks for repaying their loans, or for limiting their loan debt to a certain percentage of their income.
To increase the chances of a worthwhile education, students (and their employers) should choose only schools that have the most prestigious levels of accreditation, meaning they are members of the nation's six top regional accrediting agencies rather than from national, industry-based, and lesser regional agencies. The top regional accreditation agencies are the Middle States Association of Colleges and Schools (MSA), the New England Association of Schools and Colleges, the North Central Association of Colleges and Schools, Northwest Commission on Colleges and Universities, the Southern Association of Colleges and Schools, and the Western Association of Schools and Colleges. Accreditation from these agencies means the school has met the highest educational standards, and credits earned from it can be transferred to most other schools.
Of the major for-profit colleges, Capella, DeVry, Kaplan, University of Phoenix, and Walden are accredited by the North Central Association of Colleges and Schools. ITT Tech is accredited by the Accrediting Council for Independent Colleges and Schools, a less prestigious national agency that mostly accredits smaller schools providing primarily job-related training.