Q and A With Sandy Baum: June 2011

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Sandy Baum is an independent policy analyst for the College Board and senior fellow at the George Washington University School of Education and Human Development. She is the co-author of the recent report entitled, “Trends in For-Profit Postsecondary Education: Enrollment, Prices, Student Aid and Outcomes.”
She spoke with State Legislatures about the report.

State Legislatures: For-profit institutions have been a part of the higher education system for a long time. Why the increased attention now?

Sandy Baum: The increased attention is partly because of the dramatic increase in enrollment. For many years it was a small portion of higher education, but now that more students are enrolling in these institutions it’s something you can’t ignore. As you now have these large corporations, some publicly held, it means their function has somewhat changed. When you talk to individuals that own and manage for-profit institutions, they seem to be very focused on the education aspect, where the shareholders don’t have education as the main priority.
And, of course, the student loan issue. It is clear that for-profit institutions are more expensive because they don’t have public subsidies, and they enroll more low-income students and more independent students who take on more debt. If you have so much of the debt concentrated in one sector, of course it’s going to get more attention.

Another part of the increase in enrollment is that some are worried about it, but others are asking why are so many students going to these institutions? What are they offering that other institutes aren’t? So it’s not all negative attention, it’s going in all different directions

SL: You highlight some data on dependent and independent students attending for-profit schools. Can you talk about the student characteristics you found in these groups attending for-profit schools?

Baum: We know that for-profit schools enroll a lot of adult students. In fact, University of Phoenix was limited to older students initially. So yes, there are many more independent students at for profit schools and we do know there are disproportionately more minority students. You have such a high percent of revenue coming through federal student aid, because they [for-profit schools] enroll students that can’t afford to pay for themselves. They are servicing a high-needs population, and for many students this sector provides these opportunities they wouldn’t otherwise have. There are hardly any dependent students whose parents can afford to pay for these institutions. You don’t have parents saying “this is where I’m going to pay for my child to attend.” Now, maybe this I not the audience they are targeting, but it might be good if we understood that better.

SL: You highlight graduation rates, particularly at 4-year institutions, are much better at public and nonprofit institutions than for-profit schools. Critics have said that these are unfair “apples to oranges” comparisons between dependent, higher income students attending public/nonprofit 4-year schools, and independent, low-income students at for-profit schools. Is this a fair criticism?

Baum: It is absolutely right that you can’t do straight graduation rate comparisons between sectors to compare how institutions are doing. If you take students who are at risk, you are, of course, going to have a lower graduation rate. No one should say that graduation rates are the only accurate reflection of how an institution is doing. US World News report just released an article on the 10 colleges with the highest graduation rates—I actually just did a blog about it—and of course the top colleges are places like Harvard and Yale. If you are only admitting the top students, the ones who are the most academically prepared and financially able, you are going to have disproportionately high graduation rates. But you can’t use this to say that these institutions are doing the best to graduate all different types of students.

That said, the graduation rates for 4-year degrees at for-profits are so low that they just can’t be justified. It is great to take students who are risk, we don’t want 100 percent graduation rates, but in order to serve those students we should expect a reasonable graduation rate. You can’t serve a student by having them come to school and not being able to walk away with something to show for it.
Also, the same data indicate that the for-profit sector has higher completion rates than community colleges for 2-year and under degrees. Now, community colleges have a higher ratio of associates to certificates, where for-profits have higher ratio of certificates to associate. So it seems that for-profits do well in getting people through short certificate programs and community colleges seem to have more trouble with these programs. Graduation rates aren’t the total picture. They are complicated numbers, and that should be acknowledged.

SL: What should state legislators keep in mind when considering policies impacting for-profit institutions in their state?

Baum: I think understanding who is being served by these institutions is very important. We need to look how these students are being served and we need to look at outcomes, too . If at-risk students are going and not graduating, they are not being well served. But we need to look with more nuance. All for-profits are not created alike, and the same goes for nonprofit and public schools. There are great ones and not great ones. What is important to figure out is what is it about institutions that help students be more successful or not.

SL: Any final thoughts?

Baum: I think the big problem in the discussion of for-profits is that people are on one side or another, saying they’re good or bad. In writing this report, we hope that the conversation that people have would be, “How can we improve things?” and not “Is this sector good or bad?” because it’s not going away. We need it and we need to make it better.