High costs, low graduation rates, and complaints trigger CRL analysis

As higher education costs continue to rise, new research by the Center for Responsible Lending (CRL) analyzes the debts and outcomes resulting from a wide-ranging choice of institutions – both public and private nonprofits and for-profit colleges located in North Carolina. NC Student Loan Calculus found that choices in higher education can either be a boost or a burden to students and their families.

"When borrowers who attend public and private colleges leave school," states the report, "they can afford to repay their loans. By contrast, North Carolina's for-profit post-secondary institutions are more expensive and borrowers are less likely to be able to repay their loans when they leave. … [T]he question is not merely one of dealing with outstanding debt, but rather whether the underlying degree is a product that is one of value."

Data for the most recent year available shows that North Carolina's 79 for-profit, 2-year and 4-year institutions enrolled 21,579 students. Students at the 2-year, for-profit institutions graduated with 170 percent - $16,533 – of the debt load of comparable 2-year public colleges at $9,728.

Less than half of the state's for-profit student borrowers – 42 percent – are able to make their college loan repayment, the percentage of borrowers who are able to pay even one dollar towards the principal of their loan after three years. By comparison, 70 percent of student borrowers from the state's private colleges and 62 percent of public college borrowers are able to make their loan repayments.

The state's for-profit colleges are also disproportionately African-American. At 51 percent of enrollment, it is a level almost two times greater than those at the state's public and private institutions. This high minority enrollment is in spite of the fact that North Carolina is home to 10 Historically Black Colleges and Universities (HBCUs). The public HBCUs also have average completion rates that are nearly triple the graduation rates of students enrolled in 4-year, for-profit colleges.

"This report seems to be telling us that students of color are being targeted by these for-profit colleges that have a history of low graduations, high debt, and leave students with few if any marketable skills," said Mrs. Andrea Harris, Founder and Senior Fellow at the North Carolina Institute of Minority Economic

Development, also known as the ‘Institute'. "At the same time, North Carolina's HBCUs upwards of a $2 billion impact on our state in addition to their long and proud record of producing not just graduates but contributing members of society that give back."

"Somewhere an educational disconnect has occurred and it must be stopped," continued Ms. Harris. "We are hurting too many people who are part of a population that suffered the most from the recent recession. Abuses of their youth should not be allowed."

CRL's report also notes that since 2012, the North Carolina Attorney General's Office has pursued a series of investigations that have led to favorable consumer victories.

Following a 2012 investigation into Kaplan College's Charlotte campus that misleading statements were made about the licensure of its program, Kaplan withdrew its license to operate a dental assistant training program in the state and refunded monies to students."

The following year, after suing Thomas Healthcare, an unlicensed, for-profit nursing school, a consent judgment ordered consumer refunds of more than $12,000 and stopped the illegal operation.

More recently, late last year the AG's office filed a complaint against the North Carolina Medical Institute, an unlicensed nursing training school. The case will go to trial this fall.

The state has also been a part of several multi-state actions involving for-profits such as Corinthian Colleges, the ongoing ITT Technical Institute, EDMC's Art Institutes in Durham and Charlotte that provided $4.1 million in debt forgiveness.

With high costs, poor performance and widespread reports of unfair and deceptive practices at North Carolina's for-profit post-secondary institutions, CRL proposes a series of policy reforms that correspond with the questionable practices found. For statewide actions, CRL proposes that North Carolina:

  • Improve oversight of for-profit schools by requiring the institutions to report on how much they spend on tuition compared to other spending such as advertising and salaries.
  • Strengthen reporting requirements – particularly for for-profit schools - that track accreditation, licensing, graduation, drop-out rates, loan indebtedness, loan defaults and other measures that together reflect what an educational investment in these institutions will provide.
  • Use objective data to shut down poorly performing schools and support those that well-serve their students.
  • Increase funding and support for HBCUs that prioritize spending on student instruction and success.

"North Carolina's students invested in higher education as a way to secure their futures," said Whitney Barkley, a CRL policy counsel. "Their educational commitments make our communities and state economically stronger. So all of our leaders must equally use their authority and influence to give our students a leg up in the workplace. Only amassing student debt should not be their futures or ours."

For more information, or to arrange an interview with a CRL expert, please contact Charlene Crowell at charlene.crowell@responsiblelending.org or 919.313.8523