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December 3 2019

Two Truths and a Lie: For-Profit Colleges and Universities

by Inez Feltscher Stepman

For-profit colleges and universities have been under fire. Presidential candidate Elizabeth Warren, for example, has accused them of “delivering a poor education primarily to students of color,” and has called for them to be excluded from student loan programs.

But are outcomes at these schools really much different than those at traditional colleges?

Can you guess which of these three statements about for-profit colleges and universities is not true?

  1. For-profit colleges serve a population of students who are often left out of traditional four-year universities.
  2. For-profit colleges have worse debt-to-earnings ratios – that is, their students are more indebted in comparison to their future prospects after graduating – and generally compare unfavorably to traditional community college or four-year options.
  3. Traditional universities may make enormous sums of money by granting degrees to students and still be considered nonprofit.

Let’s see how you did!

  1. TRUTH! For-profit colleges are often a good, flexible option for students who cannot make traditional university schedules work with other aspects of their lives, such as work or family. For-profits serve higher populations of minority, low-income, and high-risk students than traditional institutions, and students are twice as likely to have families of their own to take care of.
  2. LIE! For-profit colleges and universities actually fall in between public and private universities on many metrics, including debt-to-earnings ratios. Twenty-six percent of the graduates from public universities had debt ratios higher than the 12 percent standard promulgated by Obama administration regulations, while 39 percent of graduates from four-year private universities were in the same “red zone.” Meanwhile, 35 percent of graduates from for-profit universities fall in the same category, making it hard to argue that for-profit schools are somehow outside of the norm for degree-granting institutions across the board. It’s definitely true that the cost of college is far too expensive and generates too much debt in the United States, but to single out for-profits as the root of this generalized problem is wrong.
  3. TRUTH! Just because a university is structured as a non-profit doesn’t mean it’s not making money by granting degrees. In fact, traditional universities often have huge endowments and highly-paid governing staff. Harvard University leads the pack with its $36 billion endowment, followed closely by Yale, the University of Texas system, and Stanford. University presidents at traditional, nonprofit institutions are routinely paid salaries of one to nearly five million dollars. Just because a company is structured as a nonprofit rather than for-profit doesn’t eliminate greed as a possible motive. All degree-granting institutions should be treated similarly, and judged only by whether or not they are actually providing value to their students instead of by their corporate structure.




Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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