About That Ad You Clicked On…

For-profit colleges target people of color with misleading advertising about certificate programs that donu2019t deliver.

By Kerri Kanelos Nov 01, 2008

DAYTIME TELEVISION—including shows like Judge Joe Brown, Jerry Springer, and Divorce Court—features a slew of predatory advertising, including financing for people without dental insurance, rent-to-own furniture and attorneys offering lucrative settlements for car accidents. But no advertisements are more prevalent during this time of day than the ones for the University of Phoenix, Gibbs College, Capella University and other proprietary schools—privately owned, for-profit colleges that offer the promise of a successful career through a variety of certificate programs and degrees in subjects from medical billing and graphic design to massage therapy and criminal justice.

About half of the students at these schools are people of color, according to Nick Glakas, president of the Career College Association lobbying group, who gave this figure during a 60 Minutes interview in 2005. A full 70 percent are first-generation college students—a number that is much higher than at most nonprofit colleges and universities. The proprietary schools, though, have pricy tuitions, sometimes in excess of $50,000. How do students finance it? With federal and state financial aid grants and loans. These grants and loans account for more than 60 percent of the revenues at proprietary schools.

At first glance, it seems like a good deal. People of color are getting solid job skills and the financing to do it. So what’s the catch?

There are several lawsuits now pending against proprietary schools throughout the country by former students who say they got false information like inflated job placement and graduation rates. Former students at Brooks College in California say they were misled by school officials there. The college allegedly counted students who worked part-time in retail stores as successful job placements from their fashion design program.
According to a 2005 report from the Consumer Law Center, the Department of Education does not collect job placement rates, making it difficult to estimate how many graduates fail to find employment. But there is no lack of personal stories. Faye Kaeka, a graduate of the now-defunct Business Computer Training Institute in Tacoma, Washington, left a modestly paying job to pursue what she thought was a high-paying career in computers. When The News Tribune interviewed her a few years later, Kaeka was working multiple jobs just to make ends meet. Her wages were also garnished because she defaulted on her student loan payments.

In many ways, these private schools are continuing a cycle of poverty that starts when they snare students who have few opportunities for economic advancement with relentless advertising.

Samuel C. Wood, a business lecturer at Stanford University, estimates that nonprofit colleges and universities spend approximately 1 to 2 percent of revenue on advertising, while for-profit schools spend a whopping 23 percent. While public, nonprofit schools are at the mercy of state and federal funding, proprietary schools can rely on their own steady stream of business profits to market their programs.

Besides a barrage of television, newspaper and mass transit advertising, proprietary schools promote their programs all over the Internet. In 2006, The Apollo Group, the parent company of the University of Phoenix, was the eighth largest purchaser (across all industries) of online advertising according to the Magazine of Online Media, Marketing, and Advertising. By spending a portion of their advertising dollars on search engine optimization, for-profit schools are now featured in the top search results for higher education.

Several proprietary schools have already come under fire for shameless recruiting tactics like registering homeless people for classes or recruiting students outside of unemployment offices, courthouses and drug rehabilitation centers. In 2004, the University of Phoenix settled a $9.8-million case based on charges that they violated federal education regulations by paying admissions recruiters based on their number of enrollees.
Proprietary school tuition is often far more expensive than community colleges or public schools and universities. Many students graduate from these for-profit colleges with massive debt, and compared with students at nonprofit colleges, they have a much higher rate of defaulting on their student loans.
The higher rate of student loan default may also correlate with some schools’ less-than-successful job placement rates. Some academic programs such as massage therapy, fashion merchandising and video game design are marketable to potential students but have few career opportunities available after graduation. Graduates unable to find employment in their field of study are sometimes forced to settle for the same low-paying, entry-level positions offered to people without career training or education.

While it’s difficult enough to become self-sufficient while working a low-wage job, it is even more discouraging to have the burden of student loan payments, especially when the job training does not lead to a new career.

Students are also locked into these schools.

Since the schools have a different process for being accredited than public colleges, students are often not allowed to transfer their credits if and when they decide to continue their education at another institution. Some proprietary schools have come under fire by watchdog groups and former students for offering degrees that include credits that can’t be transferred. As students get deeper into one of these programs, they are forced to complete their education at that particular school or face the prospect of starting over again at a public college or university.

Watchdog groups like the Consumer Law Center are fighting for students’ rights against these large education corporations. Since many proprietary schools are publicly traded companies, these corporations are first and foremost responsible to their stockholders. And as for-profit college revenue has increased over the past few decades, their lobbying power on both the state and federal levels has increased as well. Proprietary school lobbyists were recently successful in their advocacy around the reauthorization of the Higher Education Act, the federal legislation that sets rules and regulations in higher education for the next five years. For-profit colleges now have more flexibility with what is known as the “90/10 rule”—a provision that requires colleges and universities to receive at least 10 percent of their funding from sources other than the U.S. government (this often means students’ credit cards). Now the for-profit schools will be able to get more than 90 percent of their funding from the government.

Many experts on workforce development issues agree that well-run proprietary schools have a lot to offer, since there are career opportunities that require short-term training experience instead of academic degrees. And for-profit colleges have made major, positive advancements in certain aspects of higher education like distance learning, flexible class and program schedules that best accommodate working students, and job placement services. Low-income, first-generation students could benefit greatly from these changes in career training and development. However, without the right regulation from the federal government or regulatory agencies, many students will continue to fall further into debt and further behind in the workforce because of deceptive corporate practices. And some advocates wonder if there is more than chance at work when an industry that depends on vulnerable, low-income clients for its profits—who are more often than not people of color—manages to avoid accountability so effectively. n

Kerri Kanelos writes frequently about gender, culture and the media and lives in Providence, Rhode Island.