For-profit colleges losing their edge

Over the last year, for-profit colleges have come under quite the attack. Many have questioned the validity of their degrees; others have said their recruiting practices are unethical.

"The deceptive practices which many of these institutions have employed, the emphasis on recruiting among the most vulnerable and emotionally ill-prepared … this is nothing less than the hijacking of the American dream," civil rights advocate Wade Henderson was quoted as saying by the Huffington Post in a June Senate hearing.

Earlier this month, the Department of Justice filed a complaint against Education Management Corp. for paying their recruiters based on how many students each one enrolls, according to MSNBC. And now many of these colleges are seeing a backlash.

Enrollments have been plummeting, as much as 45 percent in some cases, according to an article in The Wall Street Journal earlier this week. Schools are backing off on recruiting practices and students are becoming more leery of for-profits, the reporter said.

"Enrollment at for-profit colleges soared during the recession, amid heavy advertising that appealed to suddenly jobless people needing new skills," The Wall Street Journal wrote. "But while the advertising continues, a number of for-profit schools including Corinthian, Apollo Group Inc. (operator of the University of Phoenix chain) and others have tamped down aggressive recruiting."

In June, the federal government created regulations for for-profit colleges, telling them they would lose their federal student aid eligibility for not complying, The New York Times reported in June. For-profits must show over the next four years that their students meet benchmarks in repaying their loans.

"The colleges contend the rules are unnecessary and illegal, and would limit educational opportunities for the low-income and minority students who make up most of their enrollment," The Times said.

Yet in 2008 (the most recent date available), the default rate on loans made to students at for-profit colleges was twice that of public college students, The Wall Street Journal reported this week. And federal aid money going to the private sector grew from $4.6 billion to more than $26 billion from 2000 to 2010 with about one in eight American college students attending a for-profit college, the Associated Press wrote in an article earlier this month.

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