The Stimulus and For-Profit Colleges

Two letter writers vigorously defend such schools and the role of career-oriented education in the U.S. economy

Here are responses to the BusinessWeek article from the University of Phoenix and a trade association representing for-profit schools:

From the President of the University of Phoenix

To the Editor:

"For-Profit Colleges: Scooping Up the Stimulus" (News, Mar. 12) opens with the factually incorrect premise that the government's stimulus program will somehow enrich for-profit schools. In fact, the legislation's Pell Grant increase for students serves to replace existing funding for low-income students under the federal Stafford loan program. One form of funding replaces the other. There is no net gain.

The article also explores a philosophical opposition to student recruitment, rendering the hard academic work of almost a million students and alumni—and their committed faculty—irrelevant. It is not the private sector, nor its student-recruitment method, that is responsible for the current state of America's higher education system, which has become increasingly unattainable for more students. And it is not just the private sector that needs to ramp up every available resource to accommodate the massive amount of education and training our nation requires in today's economic environment.

University of Phoenix has become the preeminent laboratory for education innovation. Our for-profit structure has enabled us to revolutionize higher education without taking short cuts, making us more accessible than conventional schools. This is especially true for students who need to work and raise a family while pursuing their degrees. We provide an alternative for working people, with flexible schedules, a combination of online and on-campus courses, small, highly interactive classes and innovative education technologies, all while providing extensive student support services.

We continuously calibrate our curriculum to the current job market, expanding our programs in fast-growing occupations facing resource shortages, such as health care, education, and information technology, and developing new programs in emerging fields, such as green industries and clean technologies.

As the largest institution within the for-profit sector, we take our responsibility to students seriously and have assumed a leadership role in providing greater accountability for student learning and achievement through a comprehensive assessment system. Our Academic Annual Report includes a transparent look at academic quality measures, including student performance and satisfaction, graduation rates, our progress in achieving our mission of accessibility, our diversity and inclusion of underrepresented populations, and our affordability compared with other institutions. We challenge other colleges to do the same.

In terms of outcomes, for-profit schools are required as a matter of accreditation and regulation to provide the same measures of quality as those in the public sector. University of Phoenix has again and again met or exceeded the standards set by our regional and programmatic accrediting bodies as well as the myriad regulatory standards of the 39 states in which we have campuses.

And while our for-profit status makes it possible for us to spend dollars on advertising, the real testament to our marketing success is the number of enrollments generated by referrals from satisfied students and alumni and their employers. They are the most honest arbiters of our academic quality, and they will always be the final arbiters of where they wish to spend their tuition dollars. Shouldn't we be rooting for them?

William J. Pepicello


University of Phoenix


From the President and CEO of Career College Assn.

Higher education in America is changing in response to the changing global economy. "For-Profit Colleges: Scooping Up the Stimulus" misses that story altogether. Public subsidies to state universities and community colleges are shrinking. Class sizes are up, and many institutions are cutting their range of programs. Over half of working adults lack any kind of higher education degree. Our country ranks 10th among industrialized nations in the percentage of young adults with college degrees. President Obama recently made the connection between higher education and economic prosperity a national priority, calling on every adult to seek a year or more of education beyond high school. But even before his speech, hundreds of thousands of working adults were rushing to obtain the post-secondary education and training they never received as they lost jobs or saw their wages drop.

One post-secondary education sector is flourishing, not because of stimulus funding or marketing dollars, but because of its popularity among students and the employers who hire them: market-funded career education, which serves students with flexible scheduling, small classes, immersive education, a focus on job placement from day one, and a determination to treat students like customers, not numbers.

The bottom line: Between academic years 2002 to 2005, career-college enrollments increased an annual average of 16.4%, while community college enrollment and private nonprofit college enrollment each grew by just 2.1%.

Students seek career education because it works, and the results demonstrate that. Nationally accredited career schools have to report auditable outcome data, including graduation and placement rates, and they are very impressive. For instance, the Accrediting Council for Independent Colleges & Schools recently reported that among their 700-plus career schools, retention rates and placement rates both topped 70%. Schools that miss their targets or fail to comply with myriad other rules imposed by the federal and state governments and their accrediting agencies face expulsion from federal and state grant and loan programs. One other point that you would think a business magazine would understand is that academic "starts" are good, but academic "completions" are better. This is why schools focus so much on not just recruitment but retention. Yet the article creates the misimpression that recruitment of students is all that career schools do.

Aside from the potential loss of federal funds eligibility and the reputational damage schools suffer if they do not put maximum effort into ensuring their students receive a quality education, obtain their degrees, and get jobs, a strong financial incentive exists for schools to go the extra mile for the student to "get that sheepskin." Students who complete their schooling provide a better return on investment to themselves, to our economy, and to the schools.

Do some students have legitimate complaints about their education at a career college? Undoubtedly. Just as some students have legitimate complaints about their education at highly selective, private, not-for-profit universities, state universities, and community colleges. However, overall, graduation rates from career colleges are 65%, which compares favorably with state universities (62%) and dwarfs community colleges (39%).

By looking at the facts, and not just focusing on a few critics, people will understand why more than 2.2 million students have chosen career colleges as their path to their American dreams.

Harris Miller

President and CEO

Career College Assn.


Before it's here, it's on the Bloomberg Terminal.