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Community colleges and other public institutions have been a popular route for many students to receive higher education in recent decades. However, funding cuts have led many of these public universities to limit the number of students they take on—and as a result, more students than ever before are choosing to attend “for profit” schools. The Huffington Post reports:

A report released this month by the U.S. Treasury Department shows a correlation between state budget cuts to community colleges over the past decade and a growth in enrollment at for-profit colleges.

The report, titled “The Economics of Higher Education,” examined both employment and income characteristics of Americans who attain some form of a post-secondary education alongside funding and tuition costs at public and private colleges.

The report notes that more high school students are graduating and going on to colleges and universities. Most attend public schools, many with shrinking state funding, which puts added pressure on community colleges:

“Community colleges are highly dependent on state funding since, unlike four-year, public schools, they do not have diversified revenue sources such as hospitals, endowments, or research grants. While enrollments have been increasing, state support per student has remained relatively flat. In 2009, community colleges received approximately $6,450 per FTE (full-time equivalent) student, only slightly higher than the $6,210 in 1999.”

According to the report, the funding decline for public colleges and universities bottomed out in 2005, then slightly increased before dropping again in 2008.

Because of the budget squeeze, community colleges are pushed to either raise tuition or or to limit class size, and often choose the latter, leading to a correlating spike in for-profit college enrollment. According to the report, community colleges are “more likely to serve low-income and first-generation student populations than four-year schools, and these students now constitute the bulk of the student population at for-profit schools.”

For their part, for-profit colleges are targeting these low-income students in their marketing and recruitment efforts, court documents revealed earlier this year.

At the for-profits, students are more likely to default on their student loans and struggle to find work, compared to their counterparts at public colleges. The average graduation rate at for-profit colleges is unimpressive, often falling below 30 percent, compared to public and private non-profits with graduation rates above 65 percent.

As you probably know by now, the process of planning for your (or your student’s) higher education is very complex. There are many factors to be balanced—including cost, quality of education, employment prospects, and many more. And as the report we’ve highlighted points out, the college landscape is constantly changing. And many students are responding to the changing environment by making choices which may not be good ones in the long run.

So what do you do? It starts with understanding that there is no “one size fits all” solution. Every student is different, and so every student’s “ideal path” is different. If you’d like to work with our team to create a plan for your student that allows him (or her) to achieve his (or her) dreams, without handing over your life’s savings to pay for it, please get in touch with us today!

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