university students
It's easy to imagine that the well-worn path from high school to college to gainful employment has always been the norm, but you don't have to look too far back into the past to find a time when that wasn't the case. Only after the GI Bill took hold following World War II did Americans start going off to colleges en masse. In fact, we only recently surpassed the milestone of 30% of U.S. adults holding a bachelor's degree.

That being said, Americans' drive to get an education is growing at an accelerating rate. Enrollment in degree-granting schools rose 38% between 1999 and 2009, an astounding jump considering the same metric grew by just 9% in the preceding decade.

And that growth isn't just happening at four-year colleges and universities. In 2011, a record 43% of students were enrolled in community colleges. And what was once a small niche -- for-profit education -- has burst outward, climbing from 366,000 students in 2000 to 1.5 million by 2009.

As these for-profit schools become more and more commonplace, it's worth investigating whether they are worth the price of admission.

Dollars and Cents

Other than health care, no expense for American families has increased as much over the past 10 years as college education, so students should weigh their options -- both public and private -- carefully.

Of course, not every school costs as much as, say, Sarah Lawrence, which -- when tuition and room and board are considered -- adds up to $59,170 annually. But based on broad averages, for-profit institutions generally sit in the middle of the pack.

Annual Tuition
Source: The College Board.

If you're after a four-year degree, it's almost twice as expensive to attend a for-profit school as it is to go to an in-state public university. If, however, you're strongly considering going out of state or to private school, there are considerable price advantages to picking a for-profit school.

Price is one thing; what about quality?

There are several ways to address the quality of schooling, and no method will ever be universally agreed upon. In the end, the student is the real judge of the quality of education he or she received.

But there are governing bodies in place that monitor how well schools meet national quality standards. In the past couple of weeks, stock in Bridgepoint Education (BPI), a prominent for-profit school, plunged 61% on news that it failed to meet the standards set by the Higher Learning Commission and the Western Association of Schools and Colleges. Bridgepoint, however, is just one company, and isn't necessarily indicative of the for-profit education industry as a whole.

If, however, you were to use graduation rates as your measure of a quality educational institution -- and after all, what are you studying for if not to get your degree? -- then for-profit options fail badly. Over four-, five-, and six-year periods, for-profit schools have abysmally low graduation rates when compared to both private and public nonprofit schools.

Completion-rateSource: The College Board.

The crucial thing to notice here is that public institutions -- which, if you pick an in-state school, cost half as much as for-profit schools -- have a graduation rate two-and-a-half times that of for-profits schools. After six years, fewer than one in four students at a for-profit school has earned the bachelor's degree they were aiming for. With numbers that poor, it's reasonable to wonder why anyone would enroll at a for-profit school in the first place.

It's All About Flexibility

Beyond the cost advantage versus out-of-state and private institutions, for-profit education also has the added benefit of providing the kind of flexibility most students can't find anywhere else. As most FPE schools have online courses, necessary work can be completed whenever works best for the student.

That's in stark contrast to the historically rigid schedules most students expect when attending a traditional university. This may help explain why twice as many for-profit education students are over 24 years old, and are married or have dependents. They are also more likely to be working day jobs.

Though that flexibility may sound enticing, based on the completion rates, clearly, many people who thought they could balance work, family and school weren't able to, and dropped out before graduating.

It's likely that traditional colleges and universities will soon catch up to for-profit education and start offering the same flexibility. But that doesn't help students who want to start working on a degree right now. For-profit schools should only be considered after the costs, quality, and potential outcomes are weighed. For far too many, for-profit education hasn't lived up to its promises; but if you go in with eyes wide open, there's a chance it could work for you.


Motley Fool contributor Brian Stoffel does not hold any positions within the for-profit education sector. You can follow him on Twitter, where he goes by TMFStoffel. The Motley Fool owns shares of Bridgepoint Education. Motley Fool newsletter services have recommended writing puts on Bridgepoint Education.


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ali.cherish

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I can't believe that our state university, a tier 1 school, did not have an 5-year Architecture program. Absolutely unacceptable because our tax dollars help support this school.

July 31 2012 at 11:05 AM Report abuse rate up rate down Reply
sgtdjusmc

its just like everything else...when people get easy credit for loans and more money goes after the same amount of goods then prices rise. Also, the colleges know they can just keep jacking tuition because everyone gets loans. You really want to know why it costs so much take a walk through the faculty parking lot. These guys drives high end porsche's to teach 2 classes a semester and only care about their research. Dont get me started on university presidents making between 500k-1 million a year....what a joke. its just one big scam. So you go into monster debt for the possiblity of getting a 30k cubicle when you get out..so nice.

July 30 2012 at 1:22 AM Report abuse rate up rate down Reply
sgtdjusmc

its because people either want the traditional college experience or dont comparison shop. WGU is no proft, 5k a year, i am doing my MBA with texas am commerce online for less then $1100 a class.....people are dumb if they spend 50-75k on a BS.

July 30 2012 at 1:20 AM Report abuse rate up rate down Reply
Atlanta Native

Ashworth College. $5k a year. Nationally accredited. 100% online. Best deal ever.

July 29 2012 at 11:53 PM Report abuse rate up rate down Reply
Barbara

Going to an in state University is a great idea, however our in state school is now roughly $23,000 year... hardly a bargain. Our second son wanted to study Architecture. Our state university did not have a program and referred us to a technical institute that they considered it's Architectural school. No way. That institute is no where on the same level as our tier one state university. Very disappointing. So my son had to go out of state to find a good program. He will come out owing a lot in loans and we will have many parent plus loans. I can't believe that our state university, a tier 1 school, did not have an 5-year Architecture program. Absolutely unacceptable because our tax dollars help support this school.

July 27 2012 at 2:45 PM Report abuse -1 rate up rate down Reply
Reese Roberts

Four year public colleges have been doing remedial education for years because they accept students who are not academic prepared. I have gone to CC, public university, 3 private colleges (3 Master degree). I was better prepared than my peers when I transferred from CC to the public university because CCs are more about teaching. I was able to get my science prerequisites by the time I graduated CC and got immediately accepted into a program with limited slots, while my peers who had been there since freshman year had not received a slot after 3 years. I knew how to study. The roommate called CC glorified high school, but she was one academic probation, couldn't get a major to her, and flunked out. My mother went to CC first (she was a college dean), and so did by brother (Software Architect) with MS from a private university. It is more about the individual, then the school.

July 27 2012 at 9:47 AM Report abuse rate up rate down Reply
mmmgoblue

Agree, for profit colleges rely on a simple business model: Accept anyone who can fog a mirror and assist them with filling out Federal financial loan applications. It's hugely profitable. They could care less whether or not a student graduates let alone learns anything. Studies show that 90% of for profit colleges are financed through federal student loan dollars that most do not pay back. Outfits like Phoenix college have been fined due to deceptive sales practices. Their sales force is no longer allowed to be paid a commision based on how many they sign up and that has hurt their profits and stock price.

July 26 2012 at 12:13 AM Report abuse rate up rate down Reply
sugarcreekchile

For-profit schools offer a substandard education at a high price that employers laugh at. Employers don't want a Phoenix, they want people who have graduated from a traditional university. Many traditional universities, whose degrees are respected, now offer online courses at less cost than the for-profit scammers. Getting a degree from a traditional university is just as flexible and convenient these days as from any for-profit. My son, who's career military, just finished his bachelor's degree online from the University of Alabama. All the for- profits are interested in is money. They troll for people who'll qualify for government loans and grants to pay them and could care less if their students graduate. They'll take anyone they can make a dime off of and don't care if it's an illiterate drunk who's a street bum who never shows up for class or a serious student. They get paid by the government either way. There's a reason why the military is banning for-profit colleges from recruiting on their bases. They don't want to see soldiers being taken advantage of by these schools and wasting their GI benefits.

July 25 2012 at 11:09 PM Report abuse rate up rate down Reply
rohlemeyer

You might also point out that many of these for-profit universities don't offer degrees in "Womyn's Studies" or "History of Rap Music."

July 25 2012 at 10:33 PM Report abuse +1 rate up rate down Reply
itzfatcat

It is the quality of education that is important. In their effort to get and keep students, I believe quality has been degraded to accommodate lesser students. Too many students just don’t want to put the effort into quality education. This trend has trickled down to our high schools. To increase graduation rates, standards have been reduced to where some students graduate barely able to read and/or write.

July 25 2012 at 5:38 PM Report abuse rate up rate down Reply