A report released Monday by a Nebraska advocacy organization calls for examination of the practices and performance measures of the state’s for-profit colleges offering degrees and certificates in everything from technical fields to hair design.
For-profit colleges, which operate as businesses offering vocational or career instruction to primarily nontraditional students at tuition rates well above most public institutions, have come under fire for practices the U.S. Department of Education said have defrauded students.
Nebraska Appleseed, the author of the report, said while enrollment rates at the state’s for-profit colleges are dropping -- only about 6,000 students are estimated to be taking classes at places like ITT Technical Institute, Kaplan University and others this year -- more information is needed to determine whether the colleges operating in the state are “engaging in problematic practices that have been discovered in other areas of the U.S.”
“Appleseed has worked on anti-poverty issues for a number of years and has increasingly focused on adult access to education and skills as a way to move people out of poverty,” said James Goddard, the group’s justice director. “We wanted to take a look at the for-profit industry to see if it’s working for students or not, particularly low-income students.”
In the report, Nebraska Appleseed calls for an interim study to be completed by the Legislature next year, although Goddard said the group has not approached any senator about introducing a proposed study.
The Legislature will begin its 60-day session Jan. 6.
If a study is done, lawmakers should focus on gathering facts about performance measures for the state’s for-profit colleges, examine barriers for students of color and low-income students in accessing public postsecondary education and how to establish minimum standards for regulating for-profit colleges, Nebraska Appleseed said.
“We know there are other states that have had problems and national trends that are problematic, but in looking at Nebraska, our conclusion was there needs to be more publicly available information on performance measures,” Goddard said.
Those measures include recruitment strategies used by the colleges as well as student support services, quality of instruction, graduation and retention rates, credit transfer information, career placement rates and post-graduate earnings.
According to Nebraska Appleseed, students at Nebraska’s for-profit colleges “generally pay more for their education, come from lower-income and minority backgrounds, and default on their student loans at a relatively high rate.”
Tuition costs at Nebraska’s for-profit colleges are nearly seven times higher than that of community colleges, the report says, and twice as high as the state’s public college and university system.
Higher tuition costs -- which provide the revenue for-profit colleges use to operate -- cause more students to take out federal loans or Pell grants to attend college. The Washington Post reported that since 2010, some $3.2 billion in federal student aid has been used to attend for-profit colleges across the country.
Federal lawmakers have vowed to study the issue, while President Barack Obama said he will work to eliminate a loophole allowing for-profit colleges to receive more than 90 percent of their revenue from federal sources.
State resources are also used to pay tuition at for-profit schools, the Nebraska Appleseed study found.
Nearly $1.8 million, or roughly 11 percent, of the Nebraska Opportunity Grant funds used in 2014-15 were paid to for-profit schools in the state. The grant fund is replenished from Nebraska Lottery revenue.
Although Nebraska Opportunity Grant funds have increased, they have not kept pace with the number of qualifying students, the state’s Coordinating Commission for Postsecondary Education has said, which puts added strain on the organization to award funds that will help students obtain a college degree.
“With the number of eligible but unfunded students increasing it is all the more important to ensure that NOG funds are used wisely, and support programs that demonstrate consistent and positive outcomes for students,” the report states.
The default rate for loans taken out to attend Nebraska's for-profit schools is 11.8 percent, while the state as a whole has an 8 percent default rate.
For-profit colleges also tend to enroll more non-white students than public or private colleges and universities, the report found. In Nebraska, black students make up more than 17 percent of the for-profit college enrollment, compared to 5.5 percent of students in the public university and college systems.
Overall, 28 percent of students enrolled at for-profit colleges in Nebraska are nonwhite.
“Based on these numbers there appears to be a racial and ethnic gap between for-profit education and the rest of higher education,” the report states. “If for-profit schools in Nebraska are causing the same poor student outcomes as have been associated with for-profit schools nationwide, minority groups are likely being disproportionately impacted.”