The for-profit college industry is as old, if not older, than the United States. One of its first advocates was Benjamin Franklin. Franklin railed against what he called the “Latinists.” He was referring to the early U.S. academic institutions, Harvard, Yale, Princeton and Penn among them. The “Latinist” curriculum was about Greek, Latin, Classic Literature and Philosophy. Franklin saw these studies as being of little use in a growing economy.
So the pitch for the for-profit college in the 18th and 19th centuries was much the same as it is now: a practical education focused on business skills that lead to the kind of jobs that are in demand in the economy. I am reminded of a comment by Democratic Presidential Candidate Amy Klobuchar during one of the recent debates: “We aren’t going to need more MBA’s, we’re going to need more plumbers.”
Some of the earliest commercial schools were created by clergy. They made up a significant portion of the educated in colonial America. While they taught their students reading and writing, they also taught subjects like navigation and surveying.
The first commercial enterprise that I found to use “college” in its name was Bartlett’s Commercial College, founded in 1834, by R. Montgomery Bartlett in Cincinnati. It was described as a “short-hand institute and practical business training school.”
The first real surge in growth of for-profit universities started in the middle of the 19th century. That was at the cusp of the U.S. economy shifting from an agrarian to an industrial society. A.J. Angula, author of Diploma Mills, a history of for-profit colleges, estimated that by the 1860’s there were 2,000 for-profit colleges enrolling 240,000 students. In 1873, the U.S. Commissioner of Education noted that while some of these commercial colleges were providing useful training, others were “purely business speculations.”
One of those mid-19th century for-profits is still in business today. Founded in 1854, the Bryant & Stratton Chain School was operating 50 schools by the 1860’s. Originally the school focused on bookkeeping and penmanship. Today Bryant & Stratten has 19 locations and a sizable online education division. In 2009 it held its graduation ceremony online on Second Life.
Many for-profits only have federal accreditation which is less demanding than the regional accreditation that traditional colleges and universities have. Bryant & Stanton has regional accreditation through the Middle States Commission on Higher Education. With its long history and its accreditation, one might expect Bryant & Stratten to provide a better experience than many non-profits. But I looked at the Department of Education’s College Scoreboard and found that to hardly be the case. Bryant & Stratten’s graduation rate is 24%. The average salary for Bryant & Stratten students after graduation is between $20,000 and $32,000 while the average indebtedness is between $12,000 and $50,000 depending on course of study.
I went to the Web site gradreports.com to look at the reviews of Bryant & Stratten by some of its graduates. Here are excerpts from the first three reviews I read:
- “I do not understand how this ‘college’ is allowed to continue its operation. I came into the Nursing program after earning my Bachelor’s degree from a major university. I cannot believe that I fell for this scam.”
- “I honestly don’t know how this school is still open. They should be shut down. Saying it’s horrible, a scam, unprofessional, an embarrassment, those words do not even touch on this school. DON’T even waste your time thinking about it.”
- “The worst waste of time and money I ever spent for an education. Did not learn anything I could apply to a working environment. Left to go to a real college.”
Another 19th century for-profit college that is still in business is Strayer University. Founded in 1892 in Baltimore, Strayer catered to farmers who were looking for a new way to make a living in a changing economy. It offered instruction in areas like shorthand, typing and accounting. Like Bryant & Stratton, Strayer has regional accreditation.
Strayer later became a university and became Strayer Education, Inc., which went public in 1996. That resulted in a rapid period of growth, from 10,000 students in 1996 to 60,000 in 2000. It now has 76 campuses. It’s focus has shifted to technology services and its student body consists largely of working adults. Its enrollment pattern has followed that of for-profit colleges in general over the past two decades. By 2015 it had shrunk back to 43,000.
The outcomes for those students are all too familiar. I looked at the College Scoreboard stats for one of its campuses, in Morrisville, N.C. Of the 3,700 students who enrolled eight years ago, 44% dropped out, 36% transferred, 18% graduated and 1% are still enrolled. Eighty-four percent of its students received federal aid and the median indebtedness of its graduates ranged from $27,000 to $41,000.
In the first half of the 20th century, for-profit colleges were on the decline. This was partly due to 1917 legislation, the Smith-Hughes Act, which provided funding for public vocational education. But just as for-profit colleges surged in the middle of the 19th century, the same was true in the middle of the 20th century. The end of World War II signaled a wave of prosperity in the U.S. And the educational benefits available through the GI Bill prompted a wave of entrepreneurs ready and willing to get hold of those benefits. The same phenomenon occurred thirty years later with the veterans returning from Vietnam.
The Higher Education Act of 1965 expanded the use of student loans and Pell Grants, a healthy percentage of which went to for-profit colleges.
The success and enormous growth of the University of Phoenix led to for-profit education becoming a hot ticket on Wall Street for a period of time. The University of Phoenix went public in 1994. It was seen as proof that for-profit education was a viable business that could provide a return on investment. Several others followed suit.
An infusion of private equity, the availability of federal student aid and veterans tuition benefits and online education all contributed to growth that peaked in 2010 when some 2.4 million students were enrolled in for-profit ventures. The combination of high dropout rates, poor outcomes in terms of post-graduate earnings ability, indebtedness, closed campuses and loan defaults caused that number to shrink almost as quickly as it grew. (See The For-Profit College Industry: Dropouts, Debt and Padlocked Doors.) The University of Phoenix alone had 470,000 students in 2010. It is now believed to have dropped under 100,000.
Fantastic research Ken! I enjoyed reading about the history of these schools, along with the statistics you’ve analyzed. The fact that many of these schools are shams is a sad reality that we must address through better education policy and student loan forgiveness. Thank you for the insightful post!
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Thanks Ken for another interesting post on the business of education. It’s good news that prospective students have been waking up to the reality that these diploma mills aren’t going to provide them with the good jobs they were promised. And yes, Amy was right. Plumbers are in high demand and often make better wages than many professionals with bachelors and masters degrees.
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An important issue and so well-researched, Ken. I remember my years working for a state government when a 4-term Republican Governor continued to cut university funding each year, while increasing funding for technical schools. It was obvious that he just wanted workers who were technically trained without the ability to think critically. As an educator, I have learned that both technical skills and critical thinking are crucial. Otherwise, those like the 4-term Governor and Minnesota Senator can do as they please without being being held accountable by those who pay their salaries and expect them to function as representatives of the people, not corporations.
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