For Profit Colleges came about as a way to develop schools, curriculum and instructors that attract students that were not being properly serviced by traditional (sometimes called brick and mortar) colleges and universities. The For Profit designation comes from the fact that these schools are private institutions run by one or more companies as a business model rather than an educational model. They receive little to no support locally or nationally except through Student Financial Aid. These schools provide a much broader online course selection than traditional schools and also schedule more classes at night and over weekends; providing flexible schedules to non-traditional students.
The companies operating For Profit colleges award primarily two-year degrees. They analyze national hiring trends and work with local communities to determine which skills and training are wanted in future employees. This enables the schools to tailor their programs in order to get their students through school and move quickly into a career field that is waiting for them. This is their “bottom-line”; if a For Profit does not provide the education needed to get their students hired, word spreads quickly and the school will see its customer base disappear.
Demographic Of The Students
The students attending For Profit colleges are older than the average student at traditional schools. A report by Ann Morey in the Journal of Higher Education (2001, second edition), states that the average age at a For Profit is 24 with many students being even older. These older students; many of whom have already started families, do not require or even want the recreational facilities or social organizations that are a part of most colleges and universities.
Reduced Costs For The College
This difference in requirements due to an older student body is actually one reason why For Profit schools claim to operate more cheaply. Real estate is not needed for sports stadiums, student housing and many other facilities. The reduced amount of money required for facility maintenance and upgrades as well as annual property taxes, means that the school will not have to pass these expenses on to students in the form of higher tuition and student fees. This provides a more efficient alternative to the already more cost-effective community colleges.
In fact, For Profit colleges have higher completion and graduation rates for their one and two-year programs than traditional colleges and universities. There is a 2011 study though that shows the increase of wages (at least initially) from one of these degrees is countered by the increased debt due to student loan repayment. The completion rate of For Profit students that pursue a four-year program still lags behind the rate of traditional colleges however. Another study from the Government Accountability Office suggests that graduates from For Profit schools pass licensing exams at a lower rate.
Higher Default Rates For The Students
A study by the National Bureau of Economic Research provides details on student demographics that suggest students who attend a For Profit college are more likely to be in either lower paying jobs or are unemployed. They also have a higher amount of personal debt and after graduation are more likely to default on their student loans than their counterparts at public colleges and universities or those who graduate from private schools. Although For Profit schools do typically serve students from lower and lower-middle class families, this does not completely explain the rate differences.
Since For Profit schools offer streamlined courses that cater to technical and vocational programs, they are Nationally Accredited rather than Regionally Accredited. Students at a For Profit college who are considering transferring to a traditional college or university need to be aware that not all of their credits may transfer. Some traditional schools will not accept any credits from a For Profit even if the course content is identical and using the same textbooks.
Regulations To Protect Students
There have been some failures in the For Profit arena. In 2011, two colleges closed down, Business Computer Technology Institute and the Court Reporting Institute. These closures left over 1,000 students with no degree and few options to transfer their credits. The companies running these colleges and thirteen others were accused of violating an extensive number of federal statutes and finally had to close the schools in order to meet the demands of a 2010 Government Accountability Office report.
For Profit Colleges are dedicated to policing themselves and have been very outspoken in removing these schools from operation while making sure they can survive in order to keep providing services to their students. One of the agencies established to do this, the Association of Private Colleges and Universities is in the forefront of working with the Department of Education to establish new student loan procedures so that students can effectively use their financial aid at the colleges they felt best support their needs.
In the end, it is up to students and possibly their parents to determine where the best fit is for them. While For Profit colleges are actively recruiting students seeking a short time in the classroom and going light on some of the traditional academics, they are providing a needed set of degrees, training and skills that are in demand in a very tight economy.
Research Before Making Your Decision
For Profit colleges can be a legitimate choice for those looking to get a higher education. The decision should be taken very seriously, and the school should be researched prior to commitment. Speaking with current students, and graduates can really help to put things into perspective. Are the graduated happy, and how much in an increase of their salary did they after graduation?
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.