Post-ITT, Are For-Profit Colleges Worth It?

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If nothing else, the recent demise of ITT Technical Institute would seem a decisive referendum on the state of for-profit education. The reputation-challenged network of technical colleges went up in a (proverbial) plume of smoke in August after the U.S. government banned it from enrolling students who use federal financial aid, citing findings that ITT failed to deliver on its promises. Last month, the institute abruptly ceased all academic operations at its more than 130 campuses across the country, leaving some 40,000 students in limbo.

The news was the largest sign yet that the tide has turned for the for-profit education sector, which had enjoyed huge growth after the Great Recession only to see enrollment numbers plummet in recent years amid a slew of bad press, class-action lawsuits, and government sanctions. Critics of for-profit schools have long accused them of engaging in predatory recruitment practices, convincing high-risk candidates to take out costly loans, and charging inordinate tuitions—all while failing to equip students with the basic skills they need to find gainful employment.

For some aspiring tech workers, the recent controversy around for-profit schools may present an especially close-to-home quandary. Many of these institutes claim to offer a fast track to degrees in engineering, IT, computer science, or other related fields, which can be an appealing prospect for older workers looking to change careers or those who do not have stellar academic records.

But experts caution that the for-profit route is very much a “buyer beware” situation. This is not to say that every for-profit college is horrendous or that students across the board gain no benefits from attending them. Even so, the sector operates under a fundamentally different organizational structure that forces it to produce quantity over quality. Unlike their counterparts in the nonprofit and public sector, for-profit schools are engineered for, well, profit: many are publicly traded companies, beholden to shareholders and quarterly gains like any other corporation. In short, they are different animals.

“For-profit colleges can be good in the same way that tigers can be gentle and loving,” Bob Shireman, an education policy expert and senior fellow at the Century Foundation, told Dice Insights. “You have to be very careful, because their genetic makeup is very different from a house cat.”

Raw Numbers

If the statistics are any indication, students would be wise to heed Shireman’s warning. Reams of studies show that for-profit colleges don’t measure up to traditional four-year schools in almost every performance metric. Graduates from for-profit colleges make less money on average than those who attend traditional colleges and universities, and they also default on student loans at higher rates. The latest report from the U.S. Department of Education shows that, while for-profit college students make up only 27 percent of all borrowers of federal student loans, they account for 35 percent of defaults, as CNN Money reported.

It gets worse. According to the DOE’s “College Scorecard,” about 40 percent of students who attend for-profit colleges never graduate, and those who do earn less than $30,000 a year on average. Even more troubling, many for-profit alumni find that they are no better off than if they hadn’t attended college at all: One recent study published in the National Bureau of Economic Research found that, on average, students who enrolled in for-profit colleges earned less than they did before they attended, even years after the fact.

Taken together, these indicators should serve as a collective red flag for would-be students, according to Walter Ochinko, policy director of Veterans Education Success, a Washington-based group that works to curb deceptive college recruitment tactics aimed at veterans.

“I’m sure there are some for-profit colleges out there that are okay, though I can’t say which ones,” Ochinko said. “But the industry itself is sort of under a cloud because of the predatory behavior of some of the publicly traded for-profits. ITT was one of them.”

In fact, the ITT debacle is only the latest in a string of recent high-profile blows for the industry. Last year, Corinthian Colleges closed its last remaining campuses after a series of legal battles and a $30 million fine from the U.S. Department of Education. And in January, the Federal Trade Commission sued DeVry University, charging that its advertisements misled students about their chances of finding a job after they graduated.

Ochinko, who has spent more than 40 years producing reports for the federal government, recently led a two-year investigation into the factors contributing to student loan debt for veterans. His organization speaks with veterans who hope to make the leap to a career in the tech industry after their military service ends. Some found the relative ease of getting into a for-profit college appealing, even after learning about the challenges faced by entry-level jobseekers with for-profit degrees, which are often not taken seriously by employers.

“We heard from one veteran who went to ITT and left after about a year and a half,” Ochinko recalled. “When he started looking for jobs, he was told, ‘We don’t hire from ITT Tech because their students aren’t qualified.’”

Apples to Oranges?

For-profit schools do have their defenders, however. Neal McCluskey, director of the Center for Educational Freedom at the Cato Institute, a libertarian think tank, says for-profit colleges get a bad rap in the broader world of higher education because they are unfairly compared to public and private institutions, even though they tend to serve different student populations.

“I think it’s really important to understand that the for-profit schools are working with the students who have the most challenges,” McCluskey said. “Their students tend to be older. They’re less likely to come from a college prep track, and more likely to stem from low-income families or be low-income themselves. Once you look at all that information, you say, ‘Well, we shouldn’t be surprised that the completion rates are low.”

But where does that leave nontraditional students who are looking to further their careers in tech but may not have the time, resources, or academic record to gain acceptance into a degree program at public or private school?

“Unfortunately, the system puts folks like that in a real bind,” McCluskey said. “We have all the incentives go to a traditional four-year college or university, so we’ve essentially set up an incredibly expensive signaling system where if you go to Harvard—or even if you can just prove that you’ve gotten into Harvard—that says a huge amount. It doesn’t necessarily mean you’ve learned a whole lot, but the assumption is that you’re a cut above.”

It’s a hierarchal system, McCluskey added, that perpetuates a bias among hiring managers who give preference to applicants from schools they know and trust. And most often, for-profit schools don’t make the cut. “There’s a strata of schools that just by you graduating from there you have a pretty powerful signal,” he said. “It’s the US News top colleges. It’s state flagship schools that people recognize. After that, you just get dicier and dicier.”

Boot Dreams

In recent years, coding academies—or coding boot camps—have emerged as an interesting alternative to traditional postsecondary education. These intensive programs promise to turn students into employable computer developers in as little as eight to 12 weeks, and for a fraction of the cost of a four-year education.

The demand for skilled programmers and the rapid pace at which technology advances has made the appeal of such programs obvious, not just for entry-level students, but also for seasoned pros looking to grow their skillset. The federal government has also taken notice. Last year, the Obama administration announced a pilot program to foster partnerships between coding academies and traditional colleges and universities. Part of the goal is to see if such programs deliver on the claims they make about learning.

But coding boot camps are not without their own controversy. Schools like Full Stack Academy, Flatiron School, and Dev Bootcamp boast stellar hiring rates and premium training from professional developers, but they operate with little regulatory oversight and haven’t been around long enough to develop solid track records.

The value of a commuter science degree has been the topic of some debate for a while now, but the need for training is pretty much uncontroversial. If you can’t afford the traditional avenues of a four-year education, many experts say you’re still better off starting with computer programming courses at your local community college. No matter what you choose, a little research goes a long way.

“The bottom line with any of this stuff is you have to do your due diligence,” Ochinko said. “Make sure you’re getting what you pay for.”

Image Credit: Brian A Jackson/Shutterstock.com

Comments

4 Responses to “Post-ITT, Are For-Profit Colleges Worth It?”

October 06, 2016 at 6:49 am, Joe said:

A fair and balanced article. Although I would point out a few things about the “non-profit”, “traditional” college and university system:

“Elite” institutions have massive war chests (aka endowments) and are extremely profitable.
Many “non-elite” institutions admit marginal candidates and have low graduation rates, but still have a role to play in allowing people to attend college and advance themselves (and many do succeed, although the press doesn’t report on this).
The traditional system suffers from bloat, stifling bureaucracies and extravagant facilities that drive up their costs but add nothing to the education mission.

Technological change and the need for retraining has to be met and capitalism is the best way to do it. The traditional system is broken also and needs competition desperately.

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October 06, 2016 at 3:37 pm, Mark said:

The major issue I had with my brief attendance at ITT was the lack of accreditation. The curriculum and training staff were proper for the industry (computer sciences). However, none of my completed courses were accepted by ANY other college or University I attended. And, for the amount of money I paid and what was also billed to the Veterans Administration I should have been able to walk into any academic facility and have it honored. Frankly, I am glad to see their doors are closed. I only feel bad for those who were teachers and who were doing their best to help the students. The rest were, and now proven to be greedy vultures bilking the system of the poorly run US government.

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October 07, 2016 at 11:41 am, JT said:

I attended and graduated from ITT Tech with AAS and BS technology degrees about 8 years apart. That was in the last quarter of the 20th century, so it was a while ago. I enjoyed the time and I had to put in the work to get the degrees. The staff was dedicated to the education of students. From a cost perspective, I paid about $22K in total for my degrees – about 8 years apart. I was fortunate to receive generous tuition reimbursement assistance from a solid employer with solid benefits that significantly reduced the out of pocket expense for the BS degree. I worked several jobs and took a modest student loan to pay for the AAS degree. My parents and family members chipped in when circumstance dictated the occasional cash call.

I am grateful (and now, apparently also fortunate) for the time I spent at ITT. The degrees I earned helped me craft a career I desired but did not clearly see in my youth. My salary surpassed the $100K mark for many years and broke the $200K mark several times, but I can’t say that was due to any specific benefit of attending ITT other than the BS degree seemed to mitigate the lack of degree as perennial impediment to hiring – and advancement. I learned a great deal at ITT and while there I learned how electronic and some mechanical objects, devices, and systems work, how to fix them, and from my perspective, best of all, I learned how to learn how to make them. My ITT education also helped me learn these things outside the classroom and apply them in a job setting. The training I received prepared me well and served me well – to an extent. Those days are gone – apparently long gone. I’m thinking about removing the record from my profiles, bios, and resumes or resorting to dating my degrees in the hopes of somehow blunting the blight and shame of an ITT education.

Despite my good experience with ITT, I hate what ESI did to ITT Tech (formerly Sams) and what ITT became under ITTESI. I am angry beyond polite expression by ITTESI’s avarice visited upon students. Don’t get me wrong, profit is not inherently bad; however, people with rapacious motivations and sketchy intentions (inhabiting corporations) are bad. At one point several years ago I heard so many ITT nightmares from students and instructors alike that I could scarcely believe it was same institution I attended.

That said, my advice is to use all available methods to avoid for-profit institutions like the now defunct ITT. There are many community colleges and districts that can provide a solid well rounded education that in the long run may provide better results. Most students won’t be experts when they graduate; however, if students know how to learn new skills and solve problems, then it is reasonable to expect growth and maturation with experience. Without aptitude and training or experience, no school will prepare one for the job market.

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March 09, 2017 at 1:01 pm, Cori said:

Although I finished my degree at DeVry at a time that was before the lawsuit I will admit that the school was expensive. However for profit schools do offer some situations that public schools have. DeVry for example took the fact that I already had one college degree so I didn’t have to complete any “general” classes I could jump right into the degree classes. Anyone can do this, go to a Junior or community college, get that AA degree and then move onto the Bachelor’s at another institution.

My current employer was having issues finding temporary employees that he felt had the proper qualifications for help desk jobs. Most agencies were sending over “customer service” candidates. They went to job fairs at DeVry and found the entry level IT graduates that needed a way to get their “foot in the door”.

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