For-profit tech colleges: Can employers trust them?

When Steven Peabody chose the University of Phoenix for his bachelor's in business and information systems management in 2001 and his MBA in technology management in 2008, he knew he was paying a lot extra to take classes on his own schedule and finish his degrees as quickly as possible.

Some $54,000 in debt later, he's pleased with the education but not so much with the loans, especially since losing his job as a project manager in December 2008. He now runs a small IT services company and teaching at a private college. "If I could go back in time," he might have decided to "sacrifice my time over my wallet" by attending a less expensive, but less convenient not-for-profit school.

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For-profit schools, such as Capella University, DeVry University, ITT Technical Institute, Kaplan University, University of Phoenix, and Walden University have come under increasing scrutiny for alleged deceptive practices that leave students in high debt for jobs that pay little. An August 2010 General Accountability Office study of 15 for-profit schools that receive 89 percent or more of their revenue from federal student loans found that 4 encouraged fraudulent practices and all 15 made deceptive or otherwise questionable statements (PDF) to the GAO's undercover applicants. And the Obama administration has proposed reducing student loan support to such schools due to concerns over students' inability to repay their loans because of the high costs of their degrees and the low wages many graduates get.

Should IT pros looking to increase their skills, or people seeking to enter the IT profession, consider such for-profit schools? And should employers trust their graduates' skills?

The lure of such schools is strong for many students seeking careers in IT, especially those who already have jobs or families or are deployed with the military. Unable to find classes at cash-strapped community colleges or to get to physical classes on a set schedule, they're lured by the convenience and ease of for-profit schools.

Former students and observers say such schools, where enrollment has risen sharply in recent years, can provide a good IT education if you choose the institution carefully. But you could pay twice as much or more per credit as you would at a public school. The extra money gets you easier registration, more help planning your program, instant class availability, and online courses tailored to your schedule.

How for-profit tech schools earned a bad reputationFor-profit schools carry a stigma in some eyes because of their reputation for hard sales pitches, aggressive marketing tactics, and saddling students with big loans for dubious degrees or certificates.

A November 2010 report from the Education Trust found that for-profits offering bachelor's degrees in 2008 graduated, on average, 22 percent of their first-time, full-time students, compared with 55 percent of such students at public institutions and 65 percent at private nonprofits. It also found that the median debt of bachelor's degree recipients at for-profits in 2007-2008 was $31,190, almost twice that of private nonprofits and more than 3.5 times that of public colleges.

September 2010 figures from the U.S. Department of Education show that 11.6 percent of students at for-profit colleges default on their student loans, compared to 4 percent for those at private schools and 6 percent at public schools. Industry spokespeople say that's due, in part, to the fact their students tend to be lower-income.

"There's some truth to that," says Ben Miller, a policy analyst at Education Sector, a nonprofit educational research center in Washington, D.C. However, he says, even if "they are offering a high-quality program, if it costs too much" the student won't be able to get a job that pays enough to let them repay the loan.

Figures from outside observers show for-profits charge the highest premium for certificate programs, and less of a premium for two-year associate degrees; they come closest to the cost of not-for-profits for four-year bachelor degree programs.

According to the College Board figures for the 2010-2011 school year, tuition and fees averaged $13,935 at for-profit schools, $2,713 at public two-year schools, and $7,605 for in-state students at public four-year schools. (Out-of-state tuition at four-year public schools averaged $19,595, with tuition at private not-for-profit schools averaging $27,293.)

An August 2010 Government Accountability Office (GAO) report found that a certificate program in computer-aided drafting would cost $13,495 at a for-profit school, compared to $520 at one community college. It also found a certificate in Web page design could cost as much as $21,250 at a for-profit, compared to as little as $2,037 at one public school.

How to increase the odds for success with a for-profit school In response to such reports, for-profit schools have posted online tools to help students estimate their costs and taken other steps to assure ethical practices. Kaplan University, for example, puts students through a detailed introductory process before they incur any charges. The government has also proposed a "gainful employment" rule limiting students' access to federal loans if previous graduates of their programs fail to meet benchmarks for repaying their loans, or for limiting their loan debt to a certain percentage of their income.

To increase the chances of a worthwhile education, students (and their employers) should choose only schools that have the most prestigious levels of accreditation, meaning they are members of the nation's six top regional accrediting agencies rather than from national, industry-based, and lesser regional agencies. The top regional accreditation agencies are the Middle States Association of Colleges and Schools (MSA), the New England Association of Schools and Colleges, the North Central Association of Colleges and Schools, Northwest Commission on Colleges and Universities, the Southern Association of Colleges and Schools, and the Western Association of Schools and Colleges. Accreditation from these agencies means the school has met the highest educational standards, and credits earned from it can be transferred to most other schools.

Of the major for-profit colleges, Capella, DeVry, Kaplan, University of Phoenix, and Walden are accredited by the North Central Association of Colleges and Schools. ITT Tech is accredited by the Accrediting Council for Independent Colleges and Schools, a less prestigious national agency that mostly accredits smaller schools providing primarily job-related training.

Education Sector's Miller warns of expensive courses in "aspirational" fields such as computer animation, special effects, and graphic design for which there are few jobs. Chip White, co-founder of, a website for those interested in online education, says that trade and technical schools, which cater to those looking for lesser-skilled jobs such as basic computer repair, "are some of the worst offenders" in overcharging students for the jobs they're being prepared for.

Other tips include checking the school's loan default rate, graduation rate, and the average level of debt graduates carry. Some observers also suggested comparing a for-profit's curriculum with that of not-for-profits in the same area, and making sure that the job you're being trained for is actually in demand.

Jesús Borrego, now a faculty member at Regis University, looked carefully at online universities and was "very disappointed" by some that promised a doctorate in suspiciously short time periods. One, for example, told him he could get his doctorate in two years, by giving him "lots of credit for life experience. We'll get you in and out -- that was their basic pitch. I could save a lot of money by getting Photoshop and printing a degree" instead, he says.

When for-profit colleges do deliver for their studentsSome for-profit colleges' students, even those with substantial debt, say they were happy to pay extra for guaranteed access to classes, flexible schedules, and more help planning an education and career.

Unlike the breaks between semesters at a not-for-profit, says IT services company owner Peabody, "You finished one course and next Monday, you were onto the next. You didn't have to analyze what courses you had already completed. They said, 'Here are your schedules all the way through to graduation.'"

"The program is mapped out so that you don't need to change classes around" or puzzle over which class to take next, says Adam Lopez, a senior IT business consultant for a West Coast health care provider; Lopez received an associate degree in computer and electronic engineering technology and a bachelor's in information systems security in March 2009 from ITT Tech. "They pretty much walk you through the entire program," he says, unlike at a community college where a student might "have no direction about what you want to do."

"Everyone is always complaining about how some of the classes at community colleges aren't available, so your program can take longer than two years," says Lopez. "At ITT Tech, all the classes are always there."

The cost of that convenience and availability is high: Lopez incurred a school debt of $80,00 to $90,000, which he and his parents are splitting. Now 24, Lopez figures he should repay his loan "within 10 years. I'll be 35, around that time -- still young." (At a 6 percent interest rate, a $90,000 loan costs $1,000 per month to repay in 10 years.)

"Overall, you are paying for convenience," says Reba Gaines, who owns her own IT consulting firm and has $70,000 in loans from her bachelor's in information technology and MBA in technology management programs at the University of Phoenix. While the loans are "going to take a while to repay" she says, "I think it's put me in a position with my career where I'm not as expendable" as she otherwise might be.

The convenience of the online courses was also critical for Gaines, as she was constantly traveling for business while studying. Although almost all schools offer online courses, former students say for-profits seem to do a better job of gearing them to the needs of mobile adult learners.

Regis professor Borrego says Walden University advisers also did a better job during his Management Information Systems doctoral program than advisers he's had at not-for-profits. He says Walden faculty provided constant feedback online, whereas at one state university his adviser failed to appear for their first session "and the second time, showed up 10 minutes late, for a 30-minute session."

Not all programs or classes deliver, of course. Peabody was "not impressed" with the University of Phoenix classes he took for his bachelor's degree in business and information systems management, saying they didn't provide enough hands-on programming experience. But he was happy enough to return for an MBA, which he found far more demanding and worthwhile.

Do for-profits set up students for IT jobs after they graduate? Employment and job placement rates for graduates of not-for-profit schools are hard to come by, says Education Sector's Miller, "because there's no standard definition or calculation" for how to define, for example, a job related to a student's education. None of the schools interviewed would disclose their graduation or job placement rates.

Even graduation rates among for-profit and not-for-profit schools are difficult to compare, says Miller. For-profits overall, for example, boast a graduation rate in the high 60 percent range, compared to the low 20s for community colleges. However, many for-profit schools count as graduates those receiving a certificate or two-year associate degrees, while many more community college students transfer to four-year schools for a bachelor's degree, and thus don't count as graduates.

Some for-profit graduates are happy not only with their education but their careers. Chris Torres, a PC client administrator for a satellite imagery provider, was referred to ITT Tech by a fellow Marine while in the service, received his associate degree in computer network systems in June 2008, and is currently studying there for his bachelor's in information security systems. ITT career counselors found him a job with a firm doing PC troubleshooting for the military, which eventually led to his current position.

Sue Talley, associate dean for undergraduate studies at Capella University, says most of the school's students are already employed and are taking graduate programs. She says its graduates are in high demand because of the school's credentials. For example, Capella has been designated by the Department of Homeland Security and the National Security Agency as a center of excellence in information assurance and security and is a registered education provider for the Project Management Institute.

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