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for-profit colleges
Researchers say a new classification system is needed to help students choose colleges that will serve them well. Credit: John O'Boyle for The Hechinger Report

We have had no shortage of striking headlines about college enrollment trends during the Covid-19 pandemic. Among the most alarming stories have been reports showing a decrease in overall college enrollment and a much steeper decline in community college enrollment.

But enrollment at for-profit colleges has been on the rise — increasing 5.3% from fall 2019 to fall 2020.  

That growth is concerning when we consider what happened following the Great Recession.  Those years also saw a surge in the number of students attending for-profit colleges, but those students were more likely to drop out, end up with low-wage jobs and find themselves unable to repay their student loans.

Between 2007 and 2011, Black and Hispanic undergraduate enrollment at for-profit four-year colleges nearly doubled. But Black and Hispanic graduation rates at for-profit institutions were roughly 30 percentage points lower than at nonprofit institutions. And more often than not, for-profit institutions failed to deliver adequate outcomes for their students

Related: Colleges provide misleading information about their costs

We analyzed College Scorecard data and found that students from the lowest-income households who entered for-profit institutions in 2007 or 2008 were earning less than $25,000 per year, on average, as of 2015. That’s significantly less than students who attended public or private nonprofit colleges. With that earning disparity, unsurprisingly, low-income students who graduated from for-profit colleges had a harder time paying off their loans than low-income students who attended nonprofit colleges. Among the for-profit students who began paying off their student loans between 2009 and 2014, fewer than 25% were able to begin paying down their loan principal within three years.

This week, we partnered with the nonprofit Third Way to release a report that proposes a new classification system to understand how well colleges and universities serve their students. We grouped more than 1,500 institutions into four categories based on their net tuition prices and their students’ ability to repay their loans; high-price, low-quality institutions are at one end of the spectrum, and low-price, high-quality colleges are at the other end.

No student should be worse off after going to college than if they had never attended at all.

High-price, low-quality institutions charge above-average prices for below-average outcomes and represent the worst offenders in higher education. We classified 12% of private nonprofit four-year colleges and 2.5% of public four-year colleges as high-price, low-quality institutions — and nearly 80% of for-profit four-year colleges as high-price, low-quality institutions.

Simply put, this is an equity issue. For-profit colleges — which are overrepresented among high-price, low-quality institutions — are significantly more likely to recruit and enroll students of color and low-income students, raising the stakes for how well they serve those populations. The Covid-19 pandemic has exacerbated equity gaps in higher education in devastating ways, and we cannot afford to sit idly by. Federal policymakers need to act to protect low-income students and students of color from high-price, low-quality schools.

Related: Is California saving higher education?

This new classification system can be a tool to hold all institutions — nonprofit, for-profit or public — accountable for how well they serve their students. The federal government could restrict access to Title IV financial aid for high-price, low-quality institutions that do not improve over time and invest more in low-price, high-quality institutions, many of which are public four-year schools that may face funding cuts as states grapple with the aftereffects of the Covid-19 pandemic. Policymakers could also use the system to reinstate or re-imagine accountability measures, like the gainful employment rule, designed to make sure colleges don’t leave students in a worse position than before they enrolled.

This classification system could also help students choose colleges from which they are most likely to graduate and earn a stable living. To improve transparency for students and families, we propose formally identifying high-price, low-quality institutions with an “HPLQ” flag in the College Scorecard and other consumer-facing tools.

Higher education can improve students’ lives in profound ways. But the benefits of going to college are not experienced universally. And although high-price, low-quality institutions increase access by enrolling a disproportionate share of low-income students and students of color, these colleges frequently deliver access to poor outcomes and crippling debt.

No student should be worse off after going to college than if they had never attended at all. Policymakers must take bold action to improve transparency for prospective college students and enhance accountability for the high-price, low-quality institutions doing more harm than good.

Justin Ortagus is assistant professor of Higher Education Administration & Policy at the University of Florida, and Rodney Hughes is assistant professor of Higher Education at West Virginia University.

This story about for-profit colleges was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.

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