5 Ways to Vet For-Profit Colleges

A for-profit school might be a good fit for you, but do a little homework before you commit.

For students who would rather hone job skills than hurl Frisbees, for-profit colleges offer an alternative to traditional colleges. For-profits let you take tightly focused, career-related programs; go to classes at night and on weekends to accommodate a day job; and attend school year-round, picking up a degree or certificate more efficiently than if you were on a two-semester schedule.

But for-profit colleges also come with a downside. They are more expensive than public two-year and four-year programs, and most of their students rely heavily on loans to cover the costs. Average graduation rates for bachelor’s degrees at for-profits fall well short of public- and private-school rates. As for job training, the promises made by recruiters don’t always match reality.

Upshot: When it comes to a for-profit education, proceed with caution. (You can find details on specific for-profits at Collegenavigator.ed.gov (opens in new tab).)

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1. Compare prices. You’d think that a school that skips the frills would be cheaper than other programs, but that’s not so: Tuition and fees at for-profits approach $14,000 a year, about twice the in-state price at four-year public colleges and more than five times the $2,713 average annual cost of two-year public colleges. Before you spring for a for-profit program, check the alternatives, especially your local community college, which likely offers job-oriented programs and a flexible schedule on par with that of for-profit programs.

2. Ask about graduation rates. Only one in five students seeking a bachelor’s degree at a four-year for-profit succeeds within six years, according to the Education Trust, an advocacy group. That track record compares poorly with the record of public and nonprofit private schools, which post six-year grad rates of 55% and 65%, respectively: Find out how the program you’re considering measures up before committing to it. Also see that it includes at least some classroom time. Online-only programs -- a hallmark of for-profits -- can be a prescription for failure, says Kevin Kinser, a professor at SUNY Albany who studies the for-profit-college industry. “More people drop out of online programs.”

3. Think twice about debt. Virtually everyone who attends a for-profit college borrows to pay the bills, and 42% of those graduating with bachelor’s degrees borrow more than $25,000, according to Mark Kantrowitz, of Finaid.org. Don’t borrow a dime without researching your ability to repay the money. Use the Loan Calculator at Finaid.org to find out what your monthly payments would be according to various loan amounts and interest rates. To get a sense of how other borrowers manage at your college of choice, look at its default rate. Recent data show that 25% of borrowers at for-profits default within three years of entering repayment, nearly twice the average for borrowers at other colleges.

4. Scope out job prospects. You’ll have trouble repaying your student loans if your program doesn’t lead to the kind of job you’ve been promised. Rather than take an admissions recruiter’s word at face value, visit Payscale.com to look up average salaries in your prospective profession, and ask employers about the likelihood of openings in your field. As of July 2011, new regulations that defines “gainful employment,” give you another way to separate the real from the spiel. The new rules require for-profit colleges to report former students’ debt relative to their income, and their progress in paying down loan principal, both indications of whether the school delivers on job promises. (Terms of the regulations are still being fine-tuned.)

5. Check accreditation. Some for-profit colleges boast of national accreditation, but public and nonprofit private colleges consider regional accreditation, not national, to be the gold standard and typically do not accept credits from colleges that lack that credential. If you anticipate transferring or going on to grad school from a for-profit, be sure it has earned accreditation by one of the six regional accrediting agencies. Also investigate the requirements for professional accreditation in your field and see whether the for-profit program meets them.

Jane Bennett Clark
Senior Editor, Kiplinger's Personal Finance
The late Jane Bennett Clark, who passed away in March 2017, covered all facets of retirement and wrote a bimonthly column that took a fresh, sometimes provocative look at ways to approach life after a career. She also oversaw the annual Kiplinger rankings for best values in public and private colleges and universities and spearheaded the annual "Best Cities" feature. Clark graduated from Northwestern University.