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

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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 
1.25% – 9.44%*,1Undergraduate and Graduate

Visit SallieMae

1.24% – 11.98%2Undergraduate, Graduate, and Parents

Visit College Ave

1.24% – 11.44%3Undergraduate, Graduate, and Parents

Visit Earnest

1.24% – 11.37%4Undergraduate and Graduate

Visit Discover

1.30% – 10.00%5Undergraduate and Graduate

Visit SoFi

2.73% – 13.01%6Undergraduate and Graduate

Visit Ascent

3.52% – 9.50%7Undergraduate and Graduate

Visit CommonBond

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

2 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. Rates shown are for the College Ave Undergraduate Loan product and include autopay 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. This informational repayment example uses typical loan terms for a first year graduate student 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 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 7/1/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


3 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


4 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 APRs shown for Discover Student Loans are available for the most creditworthy applicants for the Discover Private Consolidation Loan and include an Auto Debit Reward. 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. For variable interest rate loans, the 3-Month LIBOR is 0.375% as of July 1, 2020. Discover Student Loans may 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. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates.
  5. Get a variable interest rate from 2.37% APR to 6.14% APR (3-Month LIBOR + 2.00% to 3-Month LIBOR + 5.77%) for either a 10-year or 20-year repayment term. Or lock in a fixed interest rate from 3.99% APR to 7.49% APR for a 10-year repayment term or from 4.24% APR to 7.74% APR for a 20-year repayment term. 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 0.375% as of July 1, 2020. Discover Student Loans may 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.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

5 Important Disclosures for SoFi.

sofiDisclosures

*UNDERGRADUATE LOANS: Fixed rates from 4.73% to 11.46% annual percentage rate (“APR”) (with autopay), variable rates from 1.30% to 10.00% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.51% to 11.76% APR (with autopay), variable rates from 1.08% to 10.30% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.41% to 11.67% APR (with autopay), variable rates from 0.98% to 10.21% APR (with autopay). PARENT LOANS: Fixed rates from 4.73% to 11.46% APR (with autopay), variable rates from 1.30% to 9.88% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 6/29/20. Enrolling in autopay is not required to receive a loan from SoFiSoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


6 Important Disclosures for Ascent.

Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Competitive variable rates calculated monthly at the time of loan approval based on a margin plus the 1-Month London Interbank Offered Rate (LIBOR) rounded to the nearest 1/100th of a percent. The current LIBOR is 0.190%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes. Rates are effective as of 07/07/2020 and reflect an Automatic Payment Discount. Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month.(See Automatic Payment Discount Terms & Conditions.)
    1. Undergraduate Loans: Variable rate loans have an Annual Percentage (APR) range between 2.73% – 13.01%. Fixed rate loans have an APR range between 3.62% and 14.50% based on your credit worthiness and your selected program. Rates reflect an Automatic Payment Discount of 0.25% (for Credit-Based Loans) on the lowest offered rate and a 2.00% (for Undergraduate Future Income-Based Loans ) discount on the highest offered rate. (See Undergraduate Loan repayment examples.)
    2. Graduate Loans: Variable rate loans have an APR range between 5.33% and 11.42%. Fixed rate loans have an APR range between 6.14% and 11.92% based on your credit worthiness and your selected program. Rates reflect an Automatic Payment Discount of 0.25%. (See Graduate Loan repayment examples.)
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. (See Undergraduate Loan repayment examples.)
  4. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000.
  5. Interest rate reduction of either 0.25% (for Credit-Based Loans) or 2.00% (for Undergraduate Future Income-Based Loans) applies only when the borrower and/or cosigner sign up for automatic payments and the payment amount is successfully deducted from the designated bank account each month. The amount of the discount is dependent upon the loan product and credit history of the borrower at the time of application. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of in-school, deferment, grace or forbearance, unless a regular payment amount has been arranged with the servicer. If you have two (2) consecutive returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the interest rate reduction.(See Automatic Payment Discount Terms & Conditions.)
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions. Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation:
    • The student borrower has graduated from the degree program that the loan was used to fund.
    • The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate)
    • The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement.
    • Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicant’s ability to supply the necessary information for submission.


7 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.

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.