Posted by: clholoman | August 16, 2010

There but for the grace of God…

It is sometimes hard to resist a bit of Schadenfreude when observing the intense scrutiny the for-profit sector of higher education is taking these days. They’re growing so fast, they must be doing something shady, right? And certainly there are many examples of misrepresentation and poor advice given to students. The Department of Education released a mountain of data on Friday that show that graduates of the for-profits are repaying their student loans at much lower rates than graduates from “traditional” colleges and universities. The assumption is that this shows that students have borrowed for degrees or certificates without sufficient earning potential to pay back the loans. But there’s another way of looking at it that should give us at least some pause:

 Mark Kantrowitz, publisher of Finaid.org and a serious number cruncher, cuts those numbers another way, to ask a sort of (probably unanswerable) chicken and egg question: Do those institutions have lower loan repayment rates because of the quality and value of the programs they offer (as the government seems to suggest), or because of the types of students they enroll?

Institutions that enroll few low-income students have generally very high rates: those with fewer than 10 percent Pell Grant recipients have an average loan repayment rate of 66.3 percent, Kantrowitz said, compared to a 38.3 percent rate at colleges with between 40 and 50 percent Pell Grant recipients.

“The concern is that the institutions that do a better job of serving or attracting Pell Grant recipients are going to be the ones that are negatively impacted” by the government’s proposed approach, Kantrowitz said, while acknowledging the flipside argument that those institutions might be exploiting students if few of them can repay their educational loans. (http://www.insidehighered.com/news/2010/08/16/eddata)

As an administrator at a school that both by mission and history attracts a large number of low-income students, I am keenly aware of how this can skew all sorts of data that we are required to report. In terms of student learning we can get around this a bit by good baselining: if we can show that we provided a lot of “value added” , even if our students start out at a lower point (on whatever scale), then I believe we have fulfilled our mission. But in other areas–financial, retention, etc.–there’s pretty good data to suggest that low income creates (or serves as a proxy for other factors that create) a tough statistical nut to crack. Our experience is showing, for example, that despite massive efforts, following best practices, etc., it would be virtually impossible, given our student profile, to get to a retention rate of 80%. 

We are not in a position to be able to give our students enough grant aid to avoid loans altogether. So what is a reasonable loan limit?

I note in passing that it’s a tough day on the market for the publically traded for-profits, as they are hitting 52 week lows.

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