With Congress poised to take up legislation to reauthorize the Higher Education Act this week, proprietary institutions are lobbying furiously against a provision that could put hundreds of for-profit colleges out of business.
Data released by the Department of Education today show that while the official loan-default rate for students of for-profit colleges who entered repayment in 2008 was 11.6 percent, the rate would be more than double that, or 25 percent, under a stricter measurement standard that begins to take effect next year.
Digital-Vending Services International, a company linked to a nonprofit educational group with ties to the U.S. military, has filed a patent-infringement lawsuit against three for-profit online higher-education institutions.
The rapid growth of for-profit colleges over the past decade has been aided by billion-dollar ad campaigns on daytime television, the Internet and highway billboards across the country.
Stanley H. Kaplan started his tutoring business in the basement of his parents’ Brooklyn home in 1938. As standardized tests became a bigger fixture of American education, his company became a national operation, preparing millions of students for the SAT, LSAT, MCATs and other tests.
For-profit college representatives are fighting in federal court for the right to avoid telling students if they are likely to afford their debts after attending school.
Most of the growth in private institution enrollment between 2000 and 2010 occurred among for-profit institutions—their enrollment increased more than 300 percent, from 0.4 to 1.7 million students. Enrollment at private nonprofit institutions increased by 20 percent, from 2.2 to 2.7 million students.
Keri Trimble, a 33-year-old employee at a utility call center, was shopping for an online college so she could take classes at night and on weekends. Trimble rejected Apollo Group Inc. (APOL)’s University of Phoenix, the dominant player in the market for selling Internet degrees to working adults. Instead, she chose Arizona State University’s program, which typically charges almost 30 percent less.
The University of Phoenix spent the most money on Google Adwords -- roughly $170,000 per day -- in the third quarter of 2012, according to a recent report by Wordstream, an online advertising consulting firm, cited by the Daily Mail. Ask.com, Amazon.com, Zappos.com and Hotels.com came in second, third, fourth and fifth, respectively.