For-Profit Schools Must Build Employer Relations to Build their Brand

These past two weeks there has been much talk about the quality of for-profit colleges and the relationships between their costs, admissions standards and their disproportionately high default rate on federally funded student loans. Today, according to various news stories, for profit institutions represent about ten percent of all college students nationally, but approximately 40 percent of the defaults on student loans.

Kevin Carey, policy director for Education Sector, a non-partisan think tank based in Washington D.C., makes this very valid point, which he claims the leaders of for-profit institutions deny: student borrowing is related to how much the school charges. And for-profits charge more than public or non-profit schools.

For-profits, unlike moderately selective schools, use a sales-driven admissions process. An admissions officer does not ask prospective students why they want to go to the school, or why they are interested in a specific program. There are no required tests for reading comprehension, writing ability or problem solving. Just present a transcript, send a check, complete a student loan application and you're in.

This goes to the heart of the problem with for-profit schools. There's no assessment of the student's ability to complete their program. There's little validation of the rigors of the degree programs from employers of choice, companies where students want to work.

Career services in the for-profit setting is also sales-driven. It is only natural that counselors in a sales-driven position will put more emphasis on placement than career development: helping a student find a job with the best for for their temperament, knowledge, skills and abilities.

I do not like the finger-pointing that has gone on between school leadership in the for-profit and non-profit sectors over the past few weeks. The for-profits take exception to comments on their admissions practices, but community colleges and many four-year schools, public and private, are equally non-competitive. They share the exact same problem: ill-prepared students.

There's no way to determine who would be their best educator when all schools hire equally qualified people--at least a master's degree in the subject--to teach and tutor the exact same material within a small set of degree programs. The biggest difference is that the for-profit asks the student to borrow more money, with little justification for the additional debt. No Congressional hearings nor additional oversight--beyond financial aid cuts--will change this more than market forces.

All the hearings and press clippings should have sent one concise message: the for-profit solution isn't worth the extra bucks when a publicly funded non-competitive two-year or four-year college is there to offer the exact same thing.

Get that message out and the for-profits will make more effort to justify their price. They will seek more and better validation from leading employers who have hired and retained their students. They will build and nurture an alumni network. They will do what brand-name public and non-profit school do: build their brand.

These schools have made money, but right now, their brand is perceived as fraud. No accreditation process will change that perception nor will any valiant defense by a well-compensated chief executive. Perception is reality.

Some for profits, the University of Phoenix and Kaplan being two examples, have become accommodating to employers who have already recruited, screened and hired their employees. The employers have sifted through their credentials. The sales process was more of a consultative sell. The school wants to prove their worthe and lessen the employer's risk as much as possible.

It is also quite likely that the cost-per-student between the for-profit and the public or non-profit school is practically the same. The difference is that the for-profit has more room to work with their profit margin; instructor salaries and benefits are lower. Because the for-profit is not bound by union contracts that stipulate wage scales and benefits, they may end up being the least-cost provider.

And that, I believe, must be the future for the for-profit community if these schools are to gain legitimacy among the business community and survive financially. They must be hired by the employers. They will not be able to depend on a life blood of government grants and student loans much longer.