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Is This The End Of For-Profit Online Colleges?

Ten years ago, investors believed that for-profit online colleges would make traditional colleges obsolete. So far, history has had other ideas. While most colleges have seen a drop or flattening in their admissions over the last few years, online for-profit colleges have truly plummeted.

The biggest and best-known of these colleges, the University of Phoenix, had nearly half-a-million students in 2010. Now it has about 85,000 students – and is up for sale to the University of Arkansas.

The Chronicle of Higher Education reports that this is part of a trend: for-profit online colleges are being bought up by the very institutions that they were predicted to replace: public universities.

Purdue University purchased Kaplan in 2017; the University of Arizona purchased Ashford in 2020; the biggest for-profit college left, Arizona’s Grand Canyon University, has been trying to transition into a non-profit college, and in fact already claims to be one.  

All of which raises a question that seemed unthinkable just ten years ago: Is the era of big, online, for-profit colleges already over?

What happened? And what does it mean for the future of online education?

Colleges Are Stronger When They Put Students First

While some for-profit colleges have held themselves to high standards, the field as a whole has been known for predatory institutions that put students into debt, have terrible retention rates, and often leave graduating students worse off than they would have been if they’d never gone to college.  

This happens because, on average, for-profit institutions charge students about five times as much as public community colleges; it happens because for-profit colleges serve only about 10 percent of the college students in America but are responsible for about half of all student loan defaults.  

Most fundamentally, however, for-profit colleges don’t exist to educate and support students – they exist to make money. And it shows.

According to Data for Progress, for-profit colleges spend just 26 cents per dollar on actually teaching their students. Some of the for-profit colleges spend less than 20 percent of their revenue on educating their students. Where does the rest of it go? Toward advertising, marketing, and profits for owners and shareholders.  

Public colleges, on the other hand, spend an average of $1.13 for every dollar of public funds they receive on educating their students. They actually spend more on educating students than they take in from the taxpayers. The rest comes primarily from tuition, which also goes to things like building upkeep and non-academic staff.  

Public and non-profit colleges can put their students first in a way that most for-profit colleges can’t, and we see it in the results they get. The highest college alumni college satisfaction rates, whether in degree or non-degree programs, are at community colleges. Studies have shown that the best career boosts tend to come not from expensive college degrees but from low-cost community college programs. An overwhelming majority of the best rated online college degree programs are also at public colleges and universities. 

Over time, for-profit colleges just weren’t getting the same results.

A Legacy of Innovation and Accessibility

While for-profit colleges are clearly no replacement for public institutions, they have done two important things right that many nonprofit and public colleges and universities are learning from. This is the positive legacy that they leave.

First, for-profit colleges reduce barriers to entry. Many non-profit colleges have a history of deliberately putting up barriers to entry to try and appear exclusive and elite, and their bureaucratic requirements for admission – while sometimes well intentioned – often seem impenetrable. At a time when we, as a society, desperately need an educated workforce, artificial barriers to admissions make colleges inaccessible to the people who could most benefit from college.  For-profit colleges do everything they can to get students to enroll. They make it easy and accessible. This is a good thing: the problem isn’t that they’re so accessible, the problem is that they make promises they can’t keep and are often predatory.  

Second, for-profit colleges are more experimental than non-profit colleges. They iterate, they adjust, they throw out convention, and they try new things. Public colleges only seemed uncompetitive when they were refusing to experiment. As public colleges have begun embracing more open admissions and trying new approaches to support non-traditional students, their many advantages have become apparent again. 

A college like Calbright — a free online community college offering non-degree certificates designed to help students quickly advance their careers — was unthinkable before the era of private, for-profit colleges. We’ve taken the best of their lessons to heart: making a college education that is easy to access, and finding new ways to support students through their entire journey.  

It turns out that success it is not as much about the technology a college uses but the degree to which they’re focused – and creative – on their mission to support students across their entire education.  

If the public universities buying up for-profit colleges can extend new and better kinds of support to their online students, then everyone will benefit. 

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