Kaplan U. Investigated by GAO for Predatory Practices; Some Public Univs in CA cost $50K/yr

Just a short post about predatory practices among for-profit online learning vendors, and the high cost of brick-and-mortar public universities.

The NYT placed a story today in my content aggregator, which means it was one of the 3 top stories it blasted out: "Scrutiny Takes a Toll on For-Profit College Company."

Kaplan higher education revenues eclipse not only the test-prep operations, but all the rest of the Washington Post Company’s operations. And Kaplan’s revenue grew 9 percent during the last quarter to $743.3 million — with higher education revenues more than four times greater than those from test-prep — helping its parent company more than triple its profits.

For-profit education companies will protect the interests of shareholders, not learners. A series of lawsuits pending against Kaplan suggest that it aggressively recruits students who it thinks will be unlikely to finish the program. Even when students complete coursework, Kaplan may withhold access to the last degree requirement (such as a practicum), so students are left in limbo. Non-white single moms are Kaplan's ideal recruit.

NYT's Tamar Lewin explains how Kaplan became enormously profitable: "All these schools get most of their revenue from federal student aid. Kaplan Higher Education, for example, gets 91.5 percent of its revenue from the federal government, through Pell grants, Stafford loans, military and veterans benefits and other aid."

The government pays Kaplan. But only 28% of Kaplan's students repay the government, a rate significantly lower than the 48% of brick-and-mortar repays and 45% University of Phoenix repays.

Kaplan's significantly lower repay rate might reflect its predatory practice of allegedly admitting students that are unlikely to 1) complete the program; or, 2) earn more money as a result of obtaining the Kaplan degree. According to the NYT, most Kaplan students did not see a boost in earning power as a result of their Kaplan degrees, despite Kaplan recruiting promises to the contrary.

It's no wonder that students are scrambling to find affordable alternatives to community colleges and public universities. NPR reported Nov. 1st that:

A year of college at a public university now costs more than $50,000 — if you enroll at the University of Berkeley and don't have in-state status. Berkeley is the first public school to join the 50K club, according to College Board data analyzed by The Chronicle of Higher Education.

Still, Berkeley isn't likely to have the distinction to itself for long. Back in the 2008-2009 school year, only three schools in the nation charged more than $50,000. For 2010-2011, there are 100.

With perils at either end of the prestige & costs spectra, I think more students will take matters into their own hands and crowdsource knowledge. Not all learners are motivated enough to do this, and a college degree is still the Golden Ticket to white collar jobs.

That may change if more and more students opt not to incur tremendous debt but can find equivalent knowledge on their own.