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New CRL Report, Published by Brookings, Provides Insights on Failings of Online For-Profit Colleges

Thursday, March 28, 2019
Robin Howarth
Lisa Stifler

WASHINGTON, D.C. – Today, the Brookings Institution published a new research report by the Center for Responsible Lending (CRL) that explores how online programs from for-profit institutions negatively affect low-income students, particularly African Americans, veterans, and female heads of household. The report also addresses the trend of for-profit colleges going exclusively online or partnering with non-profit institutions to run their online programs. Read the report.

Among the report's key findings:

  • For-profits colleges enroll an outsized share of students that take only online courses: 22% of online-only undergraduate students and 27% of all online-only graduate students.  (For-profit colleges enroll only 5.4% of all undergraduates and 8.9% of all graduates.)
  • The online-only student enrollments of for-profit colleges are 80% out-of-state for undergraduates and 85% out-of-state for graduates. Oversight and accountability for distance education offered across multiple state lines is both inadequate and in flux, leaving students vulnerable to substandard educational offerings.
  • Like for-profit enrollment generally, primarily online for-profit institutions focus their marketing and recruiting on African Americans, women, and adult (25 or older) students as reflected in the outsized enrollment shares of these students.
  • In contrast to the high enrollment share of African Americans in for-profit online institutions, Latinos and whites are underrepresented. Latinos in particular have low enrollment shares in distance education institutions overall, irrespective of whether these institutions are for-profit, private non-profit, or public. 
  • A nascent literature shows that outcomes for online-only for-profit student are particularly poor in terms of completion and earnings after leaving school.
  • CRL’s focus group research shows that students that enroll in for-profit online programs are attracted by easy enrollment and assistance in procuring student financial aid but are subsequently disappointed with the poor quality of education provided. Their hopes of improved financial stability through the pursuit of higher education meet head on with disappointing labor market outcomes and unsustainable levels of student debt.

CRL Senior Researcher Robin Howarth, who co-authored the report, made the following statement:

Even as for-profit colleges have contracted in recent years, their online-only programs persist and in some cases thrive due to consistent regulatory easing by the Department of Education and an aggressive and often predatory business model that targets and recruits low-income students, particularly African Americans, women, and veterans.

As our research shows, these online schools regularly take advantage of vulnerable students by promising them financial stability and the ability to repay their student loans after graduating. In most situations, employment outcomes fall short; thus, trapping students in unsustainable debt— Online institutions should not take advantage of students who are determined to improve their earnings potential and provide for their families.

CRL Deputy Director of State Policy Lisa Stifler, who co-authored the report, made the following statement:

Many online for-profit colleges continue to thrive because unlike those with a brick-and-mortar presence, the regulatory oversight for these programs is inconsistent, to say the least. In some instances, there is no regulation at all at the state level, leaving students vulnerable to subpar online educational services. Unfortunately, the Education Department has not stepped up to address these concerns, but instead we’ve seen the Department roll back protections for students who enroll at for-profit institutions. That is why state legislatures and regulators should increase oversight and accountability of these programs.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Vincenza Previte at vincenza.previte@responsiblelending.org.