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Three weeks ago for-profit college giant Kaplan announced it was closing thirteen campuses. Yesterday the Apollo Group, owner of Phoenix University, announced even larger cuts.

With Phoenix enrollment falling nearly 14% in the latest quarter, the company plans to close 115 of its 227 locations throughout the country.

Although the “campuses” facing closure are mostly among Phoenix’s smaller locations, the retrenchment reflects a dramatic reversal for Apollo and the industry as a whole. Apollo profits are down more than half from a year ago, and Phoenix enrollment has declined by more than 70,000 students from its peak.

As I noted when reporting on the Kaplan closures, for-profit students represent a bit more than a tenth of the students enrolled in American higher ed institutions, but they account for a quarter of student-loan borrowers and half of student loan defaults. Because the vast majority of for-profit college revenue comes government-backed student loans, these defaults are a significant drain on taxpayer money.

The government has been slow to regulate for-profit colleges as the scope of their malfeasance has become clear, but the regulatory pace has been picking up in recent months. At least as important, students are wising up about for-profits’ defects, and abandoning the schools in droves.

That’s good news, for them and for the rest of us.

This is really welcome news.

For-profit higher ed behemoth Kaplan, which is owned by the Washington Post, announced last week that it is closing thirteen of its seventy campuses nationwide. Nine will shut down completely, and another four will be folded into nearby locations.

Even better news is the reason for the shutdowns — three of the campuses were apparently just stripped of their accreditation, and thus their students’ eligibility for federal loans.

Loan defaults at for-profit colleges are ridiculously common, with three-year defaults standing at 22.7% in newly-released figures, more than twice the rate of public colleges.

Put another way, for-profit students represented a bit more than a tenth of the students in the cohort, a quarter of the borrowers, and half the defaults. And this is public money — as the Post itself acknowledges, nearly 90% of Kaplan higher ed revenue comes from federally guaranteed student loans.

For-profit colleges are a huge fraud on the nation’s students and taxpayers, but because of their parent companies’ lobbying clout regulation has been slow and lax. New rules implemented during the Obama administration have been far less aggressive than I’d like, but even in their weakened form they’re proving sharp enough to have an effect. As the Chronicle of Higher Education notes, “of the colleges that would not meet the new standards, 160 are for-profit, 35 are public, and 23 are private.”

In its most recent annual report Kaplan’s higher ed division showed a $500 million decline in revenue, a 74% drop in profits, and a loss of 25,000 students. Here’s to more of the same, and better, in coming years.

Pell Grant expenditures by the federal government fell by more than six percent last year, according to new figures from the federal government, despite the fact that they were expected to rise by some $4.4 billion.

The $2.2 billion (or $6.6 billion, depending on how you look at it) savings won’t be fully explained until more detailed numbers are released, but there are likely three overlapping explanations.

The first, and likely largest, factor was the government’s elimination of year-round Pell eligibility last year. Congress zapped summer Pell Grants as a cost-saving measure, and that policy change was expected to reduce outlays by some $4 billion.

Another $1.4 billion of the gap came from declining grant awards to for-profit colleges, which saw Pell enrollment fall by more than a hundred thousand students, or about five percent.

As for the rest? Experts interviewed by Inside Higher Ed suggested that it might have come from a shift from full-time to part-time enrollment, possibly spurred by higher costs of attendance.

The elimination of year-round Pell was obviously a setback for higher ed access, and if students are dropping down to part-time for financial reasons that’s troubling too. But the shrinkage of for-profit enrollment is good news for a few reasons.

For-profit colleges charge students more than publics, and they pass those costs on to the government. Because average Pell outlays to students at for-profits are higher than those to students at the public colleges they’d most likely be attending otherwise, for-profit colleges have for years consumed a disproportionate share of Pell Grant spending. A decline in for-profit colleges — which often engage in predatory enrollment tactics, deliver shoddy instruction, and dump students into loan default after graduation — is good for students, good for the economy, and good for the government’s bottom line.

Chilean student activists hold control of at least seven schools in the country’s capital this morning, following street protests that saw 75 arrested and three city buses burned.

The students are seeking to reverse the privatization of the country’s educational system that took place under dictator Augusto Pinochet, the Associated Press reports, rejecting government proposals to expand scholarships and lower loan rates as inadequate:

Mass demonstrations initially raised expectations for profound changes but more than a year after the first protests few students have seen any real benefits. Protesters say the system still fails families with poor quality public schools, expensive private universities, unprepared teachers and banks that make education loans at high interest rates most Chileans can ill afford…

Student leaders say real change will only come when the private sector is regulated and education is no longer a for-profit business…

“If we’re coming to this extreme, this level of anger among students, it’s because this government has been unable to have a dialogue and give us any answers,” said Gabriel Boric, the president of the University of Chile student federation.

Student leaders met on Tuesday with Santiago mayor Pablo Zalaquett, who has threatened protesters with the loss of their academic scholarships, but the talks broke down after only two hours.

Matt Yglesias recently linked to the above chart on college enrollment as an illustration of the huge size of the American community college student body. His thoughts on that subject are well made and worth reading, but it’d be a missed opportunity to end the discussion there.

Here’s a few other things that jumped out at me:

  • American higher education is overwhelmingly public. A full 77% of American college students are enrolled at public colleges and universities.
  • The for-profit sector is a tiny sliver of higher education enrollment, despite its outsized share of government grant and loan money.
  • Private research universities enroll only 4% of American undergrads, just one fifth as many as public research universities do.
  • Traditional non-profit private universities and colleges enroll only 15% of undergrads, and about a quarter of students in bachelors degree granting programs.
  • Taking private and public institutions together, only 24% of US undergraduates are enrolled at research universities.

Yglesias is right to point out the cultural invisibility of community college students, but our myopia extends far beyond the two-year/four-year split. Americans’ image of undergraduates is based on a higher education model that hasn’t existed in reality in generations, and those distortions have far-reaching effects on public policy and public opinion.

(Note: I haven’t been able to find the source for this chart, so it’s possible that some of its figures may be off. It does seem to reflect Carnegie data, however.)

About This Blog

n7772graysmall is the work of Angus Johnston, a historian and advocate of American student organizing.

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