5 Reasons You Should Avoid For-Profit Colleges at All Costs

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

for profit colleges
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Early in my career, I was an admissions counselor for an art school. Since I wanted to become a college professor, working behind the scenes sounded wonderful.

What I didn’t know was that this school was a for-profit college. I also didn’t understand why that mattered. It only took a few days on the job to figure that out — and to realize why my dream of this job was very, very wrong.

What are for-profit colleges?

There are many ways for-profit colleges differ from nonprofit colleges and universities.

To start, for-profit schools are private businesses. Since they’re a business first and foremost, they’ll market to you heavily as soon as they get your information. For-profit colleges spent $4.2 billion on marketing, recruiting, and admissions in 2009 alone — according to ProPublica.

After working at one, this doesn’t surprise me. It didn’t take me long to understand how different these colleges are. When I thought I’d be trained to help students, instead I was given a stack of papers with phone numbers to call.

My job consisted of cold calling all day every day, except for when I was interviewing and enrolling students.

I wanted to make the best of a bad situation, but when I realized these practices were predatory, it was impossible for me to stay. I left the job after three months.

Why you should avoid for-profit schools

You could say my experience was just one, that it shouldn’t be applied to all for-profit education experiences, and you’d be right. However, there are a few alarming facts about this industry as a whole. And they’re not what you’re likely to be told during your interview process with a for-profit school.

1. They cost more than traditional colleges

For-profits may sound like a good option for someone who doesn’t have the time or money to attend a four-year college or university. However, the price tag could set you back far more.

Tuition and fees for a public two-year, in-district school are $3,520, according to CollegeBoard. For a public four-year, in-state school it’s $9,650. And for a for-profit college — it’s $16,000.

Still think your local four-year college is too expensive?

You can look at the costs overall for an even better understanding of how expensive for-profit colleges are. ProPublica shares the average cost of an associate’s degree in 2012 at a for-profit university was $35,000. For an associate’s degree at a comparable community college? Only $8,300.

2. They spend less on your education

If you’re going to spend more, you should receive a higher quality education, right? Unfortunately, it doesn’t always work out that way.

According to ProPublica, the average for-profit college spent $2,050 per student on instruction in 2009. But a public college spent $7,329 per student.

How does the student fare in this scenario? Not well. According to a study of 30 for-profit colleges, 54 percent of students who were enrolled in 2008-09 had dropped out by mid-2010. Students aiming for a two-year degree fared even worse, with a 64 percent dropout rate.

3. You might earn less than before

So for-profit schools cost more than most other schools and less is spent on students’ instruction. But what happens after you graduate?

According to recent data, you might actually earn less than you did before you attend a for-profit school. Fortune reported:

“Researchers out of George Washington University and the U.S. Department of the Treasury looked at income and debt data from about 1.4 million students to determine the effects on those graduating from for-profit universities…They found that ‘on average associate’s and bachelor’s degree students experience a decline in earnings after attendance, relative to their own earnings in years prior to attendance,’ according to a summary of the report published by the National Bureau of Economic Research.”

No one goes to college with the intent of earning less afterward. So how is it possible that this investment goes so negative with some for-profit college graduates?

4. Their job placement statistics aren’t what they seem

Because the job placement rates for-profit colleges advertise are not always accurate. These numbers are often inflated and don’t necessarily include work found in your field.

If you decided to get a for-profit education for a degree in massage therapy, but end up working at Home Depot, then that could count as a “placement.”

Sound crazy? Read a few of the stories in this article by New America to find out just how prevalent this is.

5. Your school might close and credit transfers might be hard

Let’s say you’re already attending a for-profit school and, all of a sudden, your school closes.

With for-profit colleges, this is not infrequent. In fact, in the fall of 2016, one of the best-known for-profit colleges, ITT Technical Institute, closed its doors. And now various other well-known for-profit schools are under investigation.

The good news is, students with federal loans might be eligible for student loan forgiveness if their school closes. But this doesn’t apply to those who’ve already completed their programs.

Students whose schools are still open might also find that their credits don’t transfer to other universities the way they hoped. This is an issue if they intend to seek a transfer or a higher degree later. This is an area the government is starting to crack down on to protect prospective students.

Community college might be a better option

Many prospective students see for-profit colleges as a more flexible way to earn a degree. And that’s exactly what for-profit schools want you to think.

However, even if you’re a working parent or don’t have the GPA to get into a four-year public university, you don’t have to turn to a for-profit education.

Look at your local community college. There’s a good chance it’ll be cheaper, offer night classes, and allow you to attend part-time if necessary. Not only might you get a better education, you might also find better results after graduation.

When you consider the facts, it’s clear that community college might be a better option than for-profit colleges. Even the cost of tuition alone is a good reason.

Need a student loan?

Here are our top student loan lenders of 2020!
LenderVariable APREligibility 
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

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.

(1)All rates shown include the auto-pay discount.  The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 11/4/2019. Variable interest rates may increase after consummation.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.
  3. Aggregate loan limits apply.
  4. Lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest interest rate offered on the Discover Undergraduate Loan and highest interest rates offered on Discover student loans, including Undergraduate, Graduate, Health Professions, Law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable Margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 2.250% as of October 1, 2019. Discover Student Loans will adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Please visit discover.com/student-loans/interest-rates for more information about interest rates.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

4 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).

  1.  Rates are as of July 1, 2019 and include auto-pay discount. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment. Variable rates may increase after consummation.

5 Important Disclosures for Citizens.

Citizens Disclosures

Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2019, the one-month LIBOR rate is 1.70%. Variable interest rates range from 2.80% – 11.06% (2.80% – 10.91% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.

Please Note: International Students are not eligible for the multi-year approval feature.

2.84%
10.97%
1
Undergraduate, Graduate, and Parents

Visit College Ave

2.87% – 10.75%*,2Undergraduate and Graduate

Visit SallieMae

2.80%
11.37%
3
Undergraduate and Graduate

Visit Discover

3.52% – 9.50%4Undergraduate and Graduate

Visit CommonBond

2.80% – 11.06%5Undergraduate and Graduate

VISIT CITIZENS

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Published in Student Loans