Students are returning to for-profit colleges

For-profit colleges have figured how to woo younger students. Declining enrollment persists at public community college.

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Proof Points

Graphic by Jill Barshay. Data source: National Student Clearinghouse Research Center, Term Enrollment Estimates Fall 2014, Table 1

Here’s a puzzle. Enrollment continued to decline at public community colleges this 2014-15 academic year, but not so much at private, for-profit ones. Of course, the for-profit colleges offer not only two-year degrees, but also four-year and graduate ones too. But they’re both drawing from a similar pool of older, low-income students. So you’d expect these two types of institutions to experience similar trends.

The number of students at public community colleges has been declining for two good reasons. The first is demographics. Thanks to declining birth rates more than 20 years ago, the population of high school graduates has been steadily shrinking since 2010. That’s a smaller pool for colleges to draw from. The second is the economy. As businesses rebounded after the 2008 recession, so did hiring. Students older than 24 years, in particular, who make up almost 40 percent of community college students, are finding jobs and leaving school.

Add those two trends together and it’s easy to see why public two-year college enrollments fell 3.5 percent in the fall of 2014, compared with a year earlier, according to the National Student Clearinghouse Research Center. That’s after two previous years of decline of 3.3 percent and 3.6 percent, respectively.

What’s startling is that for-profit universities have halted their enrollment declines. They’re both recruiting more new students and hanging on to more of the ones they have. According to the same National Student Clearinghouse data, the number of enrolled students at for-profits dropped only 0.4 percent in the fall of 2014, compared to a year earlier. That’s a dramatic improvement from the previous year’s decline of 9.7 percent.

The data show that for-profit colleges are particularly getting better at reaching out to younger students. The number of younger students enrolled at for-profits rose 2.8 percent, while the number of students older than 24 years fell 1.2 percent.  Overall, more than 80 percent of students at for-profits are still older than 24.

Recent earnings reports from these for-profit companies reinforce that enrollment is stabilizing at many institutions. For example, in Strayer Education’s annual earnings report, released Feb. 6, the company said it is losing fewer students and expects declining enrollments to reverse and “turn positive” in the first half of 2015. Capella University, an online college, called 2014 a “strong” year with rising revenues, profits and student enrollments. DeVry is still losing students at its main DeVry University, but reported a 27 percent increase in students at its Chamberlain College of Nursing at the start of its January, 2015, winter session, compared with a year earlier. Not all for-profits are seeing turnarounds. Apollo Education Group, the for-profit giant, is still losing students in droves. Its most recent quarterly earnings report, released in January, said that student enrollment fell 14% at the University of Phoenix, its main brand.

That for-profits overall have stemmed the outflow of students better than public community colleges have speaks a lot to their marketing prowess.  Not only are they defying demographic and economic trends, they’re managing to overcome bad press about saddling students with high debts and offering few professional prospects. They’re also overcoming their own price tag. The average annual tuition this academic year at a for-profit college is $15,230, compared with $3,347 at a community college, according to the College Board.

I asked James Rosenbaum, a sociologist at Northwestern University who studies low-income students in their 20s and 30s, why so many opt for the more expensive for-profit when there’s a cheaper public community college next door.

Advertising is one reason. “Unfortunately, the for-profits do it better,” Rosenbaum said. In particular, they’re promoting the earning potential from sub-baccalaureate degrees, which for-profits offer along with four-year and graduate degrees. Many community colleges, by contrast, tout the opportunity to transfer to a four-year college.

But Rosenbaum also said that many for-profits have developed good counseling departments that help students not only with their academic goals, but also with their economic and social problems. “The for-profits get it,” he said. “They put resources into counselors and they’re much better at retaining students than community colleges.” 

Perhaps community colleges could learn a thing or two from their for-profit competitors.

This article also appeared here


Jill Barshay

Jill Barshay is a contributing editor who writes the weekly “Proof Points” column about education research and data. She taught algebra to ninth graders for… See Archive

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