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For-Profit Colleges Pose Questions

Summer 2011 | Archives

High cost, student debt vary greatly between for-profits and public colleges

Graduates As an academic advisor at Metropolitan Community College (MCC), Kimberly Schuchmann sees her fair share of students who were formerly enrolled at a for-profit college.

"All the time, students come in and say, 'I want to come [to MCC] because some of my credits will transfer and because of the low cost,'" she said. "They realized how much they were paying at the for-profit college, and how much more affordable it is at MCC—and they get more choice in classes here."

For-profit colleges are educational institutions that are run by private, profit-seeking companies. Such colleges are run like a business; the company's owner or shareholders expect it to make money. On the other hand, nonprofit colleges like MCC, state colleges and universities receive a portion of their funding from the state, and education is a goal in and of itself.

Recently, the multi-billion-dollar for-profit education industry has come under fire. Critics say that a large chunk of those profits actually come from taxpayers in the form of federal student loans: An average 89 percent of students at for-profits use loans to pay for their education, compared to only 12 percent of community college students. Moreover, the jobs for-profit students obtain after graduation often aren't enough to pay the loans back—some 40 percent of for-profit students defaulted on their loans in 2010.

Graduate The difference in the cost of education is astounding. MCC's tuition rate is $48 per quarter credit hour—four times less than the tuition rate at many Omaha for-profit colleges. In fact, students who attend a for-profit school in Omaha take out at least three times as much in loans as students who attend MCC.

The high level of debt among for-profit students led the U.S. Department of Education in June to require for-profits to demonstrate that their programs are preparing students for "gainful employment"—or risk losing theireligibility to participate in federal education grant and loan programs.

In addition to debt, students at a for-profit college may have trouble transferring their credits to other institutions. MCC will not accept all for-profit credits. Among the health careers, for example, transferring credits is even stricter. If the for-profit program isn't accredited, students may have to retake classes if they are planning to continue their education. Meanwhile, credits at MCC are accepted nationally, and some programs make transferring a completely seamless process.

The other benefit to a community college, Schuchmann said, is the focus on the community. Community colleges are driven by students, not profits. MCC, the second-largest postsecondary institution in Nebraska, has a 37-year-history of working in the community and building relationships with employers to guide students toward careers. "If a student has their degree from MCC, it gives them an edge," Schuchmann said.

MCC President Randy Schmailzl echoed MCC's mission to provide affordable, quality education.

"Metropolitan Community College works hard every day to provide affordable, accessible and convenient education to our students," he said. "Under the leadership of our Board of Governors, we continue to hold the line on property taxes and tuition while working with the State Legislature on an equitable distribution of state aid. These endeavors, along with dedicated faculty and staff, provide educational opportunities for students without undue financial hardship."

Why does accreditation matter?

Accreditation means you are getting a quality education with credits that transfer. Many for-profit colleges have national accreditation rather than more rigorous regional accreditation. MCC is regionally accredited; credits are highly transferrable.

What about financial aid?

Be wary of organizations that charge a fee for financial aid advising. At MCC, there are never fees for advising services.

Should I be worried about debt?

MCC does everything it can to minimize student borrowing. MCC students borrow at least three times less than for-profit students in Omaha.

 
 
 
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