Federal Student Loans and For Profit Colleges

Making a bad financial decisions when you actually could opt for better when getting enrolled in an institution. The context below briefly describes about enrolling of for-profit colleges and federal student loans, the rules implied by the government for for-profit colleges.

Updated by Nchumbeni F Yan on 16th July 2020

Federal student loans is a major context to pass for every dunce, especially for out-to-state students and even for federal state students or individuals.

If you continue to study in the United States and attempt to get a degree, then one must have the knowledge of For-profit colleges.

It believes in improving the student loan process, the funding system that could be accessible to every student in every corner of the field as possible. A debt crisis is resolved with this series of regulations designed with For-Profit Colleges in the run.

It also aims to build connections to Federal Financial aid for the success and welfare for every single student dreaming of another goal each day.

Table of contents

What is a For-Profit College?

A For-Profit College is an educational institution that is governed by single or multiple private businesses.

They are not Private  Colleges nor Public schools/colleges, but the fact that many schools use a National Landmark or State capital in their name. Grand Canyon University and the University of Phoenix are popularly known For-Profit Colleges.

For-Profit programs in the United States includes for-profit mechanisms such as endowment money managers, for-profit marketing, enrollment services, lead generation, for-profit fees for services, campus services under private, for-profit online program managers(OPMs), privatized housing, student loan servicers, private student loans, Human Capital Contracts known as income share agreements.

In July 2012, The regulation under the original For-profit College was blocked by the U.S. District Judge struck down the “Gainful Employment Rule”.

The Judge stated that the government had no standard to use in restricting For-Profit College's access to Federal financial aid programs, only if the students are benefited from success towards cooperation.

Clear view between for-profit and non-profit

There have been clarifications between for-profit and non-profit colleges, as for-profit colleges face a decline in their enrollment.

The For-profit Online Program Managers (OPMs) include academic partnerships, bisk education, Pearson education, Wiley education and solutions, 2U. They progress more than two dozen OPMs in 2018.

As in the case of for-profit vehicles, human capital contracts ( Income Share Agreements) or ISAs may be included under it.

Brief History for For-profit Colleges

Their origins belong in the Colonial era in the U.S.

According to Aj Angulo, it emerged in the 19th century to meet a demand for practical job training. The expansion began in the1850s and 1860s to Chicago, New Orleans, Memphis, and San Jose. Angulo estimated that there were 2,000 for-profit colleges, with a number of more than 240,000 students during that time, fly-by-night schools were also included. 

Bryant and Stratton Chain School expanded to 50 schools by 1864.

The fall of proprietary colleges was aided by the Smith-Hughes Act of 1917, known as the National Vocational Education Act, legislation that funds public vocational education.

Worried about your For-profit Colleges? Find the best student loans suited to you.

List of some for-profit corporations with their brands

The following is a list of some of the for-profit companies in the higher education sector.

  • Apollo Education Group ( a subsidiary of Apollo Global Management and parent company of University of Phoenix)

  • Adtalem Global Education (owner of Chamberlain Nursing, Ross university medical school, Ross university school of veterinary medicine).

  • Ancora Education ( owner of Arizona Automotive Institute, Berks technical Institute, Edge Tech Academy, International Schools, McCann School of Business and Technology, Miller-Motte Technical College, Platt College, South Texas Vocational Technical Institute)

  • American Public Education ( found American Public University, Military University)

  • Connections Academy ( a subsidiary of Pearson education)

  • Career Education Corporation ( includes Colorado Technical University, American Intercontinental University)

  • Centers for higher education ( consists CollegeAmerica, Stevens-Henager College, California College San Diego, Independence University)

  • Education Affiliates ( includes Fortis College and Fortis Institutes)

  • Graham Holdings (subsidiary Kaplan Higher Education is the servicer of Purdue University Global)

  • International Education Corporation includes UEI College, United Education Institute, Florida Career College and Us Colleges.

  • JLL partners (includes Education Affiliates, Ross Medical Education Center)

  • Lincoln Group of Schools

  • Linden Education Group

  • Nemo Investor Aggregator owner of Cortiva Institute brand.

  • Palm Ventures (owner of DeVry University)

  • Strategic Education (merged Strayer, Capella University]y)

  • TA Associates (owner of Full Sail University)

  • Universal Technical Institute.

  • Zovio (owner of Ashford University and Fullstack Academy)

For-profit  marketing, Enrollment, and lead generators

Lead generation companies target potential students to take their personal information under For-profit colleges. As competition in the market level has risen, the government schools are also establishing.

Lead generation uses multiple methods to attract students, and enroll students. There are multiple sites on the internet that gather information for institutions. Examples of two lead generators that are QuinStreet and Education Dynamics.

List of some For-profit online program managers (OPMs)

OPMs play a very crucial role in the administration of online education.

Following are some of the list of For-profit online program managers and the institution they provide the service and offers.

  • Academic Partnerships (servicer of University of Texas at Arlington, Florida International University)

  • Bisk (University Alliance; a division of Bisk, servicing Villanova University, University of Notre Dame’s Mendoza College of Business, Michigan State University, Florida Institute of Technology, Jacksonville University, University of South Florida, and also New England college)

  • Collegis Education.

  • Cintas servicing  Arizona State University.

  • 2U (services programs at American University, Baylor University, George Washington University, Harvard University, Pepperdine University, Berkeley, Rice University, Syracuse University, University of North, University of California, and Washington University)

  • InStride (OPMs for Arizona State University)

  • Pearson education (Embanet)

  • Wiley (publisher)(education solutions) provide servicing Northern Illinois university Michigan State University.

  • Noodle Partners offering to service University of Michigan (Ross and Nursing), Harvard (Kennedy School), University of Pittsburgh (Health Informatics and Physical Therapy), Boston College, University of Virginia, South Methodist University, Virginia Commonwealth University, New York University, and University of Tennessee, Tulane.

  • HotChalk

  • iDesign

  • Kaplan Higher Education (Servicer of Purdue University Global and the Purdue University system)

  • Grand Canyon Education servicing Grand Canyon University.

  • Laureate education serves the University of Miami graduate programs.

Why are the rules for For-profit being updated?

Most of the people are concerned over For-profit colleges as most of the students defaulted on their student loans from public colleges and universities. Almost 8.2 percent of students defaulted from private, non-profit institutions during 2012.

The regulations are revised, it contains a certain standard that the department of education believes will stand up to the judicial review for the welfare of the students. This is known as the Cohort Default Rate. The rate helps to determine college access to federal student loan funding.

With the revised regulations, the government hopes to improve any for-profit college that has a Cohort Default Rate over at least 30% For three years out of a four year period, it is at risk of losing connections to Federal Student Loan Programs. Also, access can also be lost if graduates students annual repayment amounts limits 8% of their total annual income or 20% of their discretionary income within the same time period. These numbers are more than the originally placed regulations.

Is a student affected by the new rules?

Every rule has an impact either for good or for the worst.

In the case of the for-profit colleges, the association of private colleges and universities president and CEO Steve Gunderson sent a letter to Education Secretary Arne Duncan, referring to the new rules as financial discrimination.

As for-profit colleges serve a good percentage of minority students, lower-income families unable to pay or attend traditional colleges due to financial crisis or other problems hampering their money status.

The average age of a person attending for-profit colleges is averagely 24-25 and supporting their own self, are not recent high-school graduates.

Thus, the new rules are not a perfect solution. The previous attempts to aid new requirements, restrictions on the students and parents have been plagued with consequences, such as for Historically Black Colleges and Universities.

The new rules that are restricting the overall number of colleges or institutions, in such a way that students may benefit from education using Federal student loans. However, it does not place any additional hardship to students or parents.

Federal Student Loans Guide helps you understand the various key factors before you make any decision regarding your student loans. The application process and eligibility criteria can save a good deal of your time. Knowing the types of suitable loan can help you take advantage of the relief program each offers you in times of crisis. Choosing the right repayment options will help you make an informed decision to manage your expenses in the future.

The Failing of For-profit Colleges

For-profit colleges are private businesses whose goal is to make a financial business grow unlike old traditional schools, which have traditional non-profit.

Here are some of the drawbacks listed below why they fail.

They are expensive:

There is a huge difference between the cost of for-profit and non-profit institutions.

Here is some of the data report for various degrees as

  • A certificate program costs around $20,806 at a for-profit college, and $4,250 at a public college.

  • A bachelor's degree costs $64,000 at a for-profit college and $52,500 at an average public college. You can also save money on the latter by completing your first two years of education at a community college)

  • An associate degree costs around $40,000 at a for-profit college in comparison to a public college.

The rising benefit of For-Profit Colleges

Some of the benefits for For-profit Colleges are as follows:

  • Offers open admissions to non-traditional students, the convenience of location, schedule convenience, instructors with workplace information, real-world vocational training with the latest technology.

  • Provide more inclusive, recruiting and graduating more Africans Americans rather than public higher education.

  • The Thurgood Marshall fund provided students at 47 publically supported black colleges and universities, supplementing their on-campus course loads with course programs using the university of phoenix online platform.

  • For-profit colleges can be an option for students who have poor performance

  • Create innovative programs and offers that would help public education to be more benefit able as per student needs.

  • For-profit colleges in comparison to community colleges with regard to graduation rates, as these comparisons may offer misleading statistical comparisons.

Concluding Thoughts

Getting stock tips from one of the best growth investors is a golden guideline if you attempt to strengthen your student loan process and funding while attending reputed schools.

Regardless of your age, schedule, or grades, you can find schooling option which will cost you less with a better degree and safest reputed school without being scammed, as it is easy to get consumed in the marketing world and sales tactics imposed for for-profit colleges and with federal student loans.