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Online Alumni Less Satisfied with For-Profit Colleges, Says New Survey

Because of all the controversy surrounding the for-profit University of Phoenix’s planned acquisition by the University of Idaho, it’s reasonable to ask questions about the relative value of for-profit higher education in America. Do the alumni of such schools value their educational experiences as much as the alumni of nonprofit colleges and universities?

Fortunately, a new survey released in March 2023 that polled alumni of online higher education degree programs helps clarify our understanding of the relative satisfaction levels among both groups. It remains unclear why this survey received relatively sparse press coverage because its findings are so significant. In short, substantially fewer of the for-profit alumni report feeling very satisfied—a marked contrast with the much greater satisfaction levels found among alumni from nonprofit institutions.

Comparing Value: For-Profit vs. Nonprofit Degree Programs

“For-profit institutions receive tens of billions of dollars in federal financial aid each year. It’s important for Americans to know whether we are getting value for that huge public investment in corporations owned by shareholders,” says Andrew Seligsohn. He’s the president of Public Agenda, the Brooklyn-based nonprofit research and public engagement organization that conducted this study.

Public Agenda was founded in 1975 by pollster Daniel Yankelovich along with Cyrus Vance, who later served as the Carter Administration’s secretary of state until 1980. “We strive to strengthen democracy and expand opportunity for all Americans,” says the organization’s mission statement. In recent years Public Agenda has focused on higher education reform as one of its principal policy initiatives, along with related issues such as student loan financing. The organization has also concentrated on healthcare, immigration, and energy policy.

In a statement, Seligsohn pointed out that online programs play a significant role in promoting educational access: “Online degree programs are a vital part of Americans’ access to higher education, so it matters whether they are serving students and the public well,” he said.

To underwrite the survey’s costs, Public Agenda approached Arnold Ventures, a strategic philanthropy foundation launched in 2010 “to maximize opportunity and minimize injustice.” The fund was established by John Arnold, Enron’s most successful trader, who earned a record $8 million bonus on the $750 million he made for the company just before its spectacular bankruptcy late in 2001. With that bonus, Arnold then founded an energy hedge fund known as Centaurus Advisors which in 2007 made him at age 33 into a living legend as the youngest billionaire in the United States.

The foundation’s vice president Kelly McManus had this to say about the survey:

As more and more students continue to participate in online education, especially in the wake of the pandemic, policymakers must ensure those programs are delivering value. Arnold Ventures believes this new research provides even more evidence for meaningful, bipartisan policy change to protect both students and taxpayers from low-quality options.

During the spring of 2022, Public Agenda’s researchers reached out to a nationwide online sample of 386 respondents in both English and Spanish. The respondents included 169 alumni of for-profit online colleges and universities and 217 alumni of nonprofit institutions. Here’s what the researchers learned.

Do Online For-Profit Programs Deliver?

Seligsohn sums up the results by emphasizing that nonprofit and for-profit degree programs fail to perform equally. He says:

Our new research shows that online for-profit programs are not delivering. Alumni are underwhelmed by the quality of education they received, especially compared to alumni of online programs at nonprofit public and private colleges. Students invest in their education, and they deserve a strong return on that investment—as does the public, which supports learners through federal student loans. . .

. . .We found that for-profit alumni were less likely to be satisfied with their overall experience, less likely to believe investing in their degree was worth it, and more likely to believe their college prioritized profits over students.

Specifically, in the report’s most significant finding, the researchers discovered that 70 percent of alumni who attended nonprofit online colleges and universities felt very satisfied with their institution. However, only 48 percent of the for-profit alumni felt very satisfied.

About 57 percent of the nonprofit alums also said their degree paid off, but only 39 percent of all the for-profit grads claimed such a payoff. In fact, the nonprofit alums’ satisfaction levels surpassed those of the for-profit alums along nearly every dimension the research team measured. Those metrics included the quality of professors and the availability of academic support like tutoring and the effectiveness of critical services such as career placement advising. Almost four in five of the nonprofit alumni felt confident before enrolling that their employment prospects would improve after they graduated, but only about three in five of the for-profit grads felt the same way.

Only a single factor existed where for-profit alumni told researchers that their schools performed better than the nonprofits: that was in providing hands-on support with financial aid applications, such as with their applications for federal student loans—the most popular method both groups used to underwrite educational costs.

For-profit online graduates are also more likely than nonprofit graduates to report difficulty making loan payments; 62 percent of the for-profit alums told the researchers they faced this challenge, compared with only 44 percent of the nonprofit alums.

Moreover, half of the for-profit alumni believed their school prioritized profits over educational quality. By contrast, only 31 percent of the nonprofit alums felt that way, and 69 percent of this latter group said they believed their school instead prioritized educating students.

The survey also found a significant difference in the emphasis each group attached to accreditation status. Two-thirds of the nonprofit alums paid a lot of attention to accreditation status while choosing their college, and 72 percent of this group recommended that prospective students pay attention to this factor. But the for-profit alumni paid much less attention to accreditation. Only 49 percent of the for-profit alums claimed to pay particular attention to a college’s accreditation while shopping for a school, but 61 percent advised future students to focus on it when deciding upon which school to attend.

Career Objectives and Employer Support

Another substantial difference between these groups exists concerning their enrollment objectives. Compared with only a quarter of the for-profit graduates, about half of the nonprofit alums (52 percent) enrolled to advance in their current career roles. Instead, 43 percent of the for-profit online grads enrolled to switch to an entirely new career.

Moreover, based on the data, employers tend to be much more supportive of the alumni who attended nonprofit colleges, even though the report doesn’t come out and express this conclusion directly. For example, more than double the number of nonprofit alums found out about universities and programs from their employers (18 percent) than the for-profit alumni (8 percent). And two-and-a-half times more employers paid tuition for nonprofit alums than for-profit graduates; employers paid the tuition for a quarter of the nonprofit alumni, as opposed to only having paid for 10 percent of the for-profit graduates.

Consequences for Underperforming Colleges

Fewer differences between the for-profit and nonprofit groups emerged in the ways these alumni recommend managing public issues affecting higher education. When asked to assess various challenges, many more graduates from for-profit and nonprofit institutions expressed concerns about excessive student debt loads, with far fewer troubled about low graduation or job placement rates.

Furthermore, significantly more alumni prefer initiatives requiring underperforming institutions to better support their students through financial, academic, or career counseling. By contrast, far fewer alums advocate sanctions on such colleges, such as withholding federal financial aid, revoking accreditation, or even shutting down schools like these.

Nevertheless, the alums’ lack of enthusiasm for punishing the underperforming colleges contradicts an initiative on Capitol Hill launched in mid-May. That’s when six senators asked the secretaries of the Departments of Education, Veterans Affairs, and Defense and the chair of the Federal Trade Commission for reviews of student loan privileges supporting the University of Phoenix.

Although a shadow of the school’s peak enrollment of 470,000 students a decade earlier, in 2021, Phoenix still enrolled 78,600 online students, making it the largest for-profit institution in America. And on May 18, the Idaho State Board of Education unanimously voted to approve a proposal by the University of Idaho to acquire Phoenix for $550 million.

As we point out in our recent feature article entitled “Analysis: With University of Phoenix Acquisition, Idaho Gambles Big on Online Education,” the senators’ action was triggered by Phoenix’s running a deceptive advertising campaign in 2022 and 2023 that frames the school as an affordable state university “when it is neither,” as the senators state in their letter. That campaign violates a $191 million settlement with the Federal Trade Commission in 2019 that precludes Phoenix from ever running any more misleading advertisements or promotions. As part of that stipulation, Phoenix canceled $141 million worth of debt owed by harmed students who relied on the school’s deceptive advertising when they enrolled.

With at most 21 percent of this sample favoring the withholding of federal financial aid dollars to penalize poorly performing colleges, it may be true that many online students wouldn’t favor the remedy these senators seek to punish the University of Phoenix. But that fact doesn’t negate the overall conclusion of this study that, by a wide margin, a typical for-profit college graduate is much less likely to feel satisfied with their educational experience than a typical alumni of a nonprofit university.

Douglas Mark

While a partner in a San Francisco marketing and design firm, for over 20 years Douglas Mark wrote online and print content for the world’s biggest brands, including United Airlines, Union Bank, Ziff Davis, Sebastiani and AT&T.

Since his first magazine article appeared in MacUser in 1995, he’s also written on finance and graduate business education in addition to mobile online devices, apps, and technology. He graduated in the top 1 percent of his class with a business administration degree from the University of Illinois and studied computer science at Stanford University.