For-profit colleges are enjoying a vibrant market in the Treasure Valley, in part because of a weak economy.
Schools pitch dreams of new and brighter careers on local late-night TV ads. Those dreams are powerful when unemployment remains above 9 percent in the Treasure Valley, where more than 28,000 people are out of work. The schools offer professional degrees and certificates in fields such as business, health, information technology and criminal justice.
The degrees are costly. Five brick-and-mortar for-profit schools in Boise and Meridian brought in $53 million in tuition in 2009-2010 from about 5,142 students, according to State Board of Education documents obtained by the Idaho Statesman in a public-records request. That’s roughly $10,000 per student, about twice what Boise State University charges in yearly full-time tuition.
The colleges rely heavily on taxpayer-subsidized student loans and grants to help students pay their way. For-profit colleges have faced fierce criticism for hopelessly indebting students. The U.S. Department of Education reports that 46 percent of all student-loan dollars in default come from attendees of for-profit institutions, yet the schools account for just 12 percent of the country’s college students. The national default rate among students from these schools is 11.6 percent, compared with 7 percent for all schools.
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But there’s been little outcry in Idaho. Student-loan repayment and job-placement rates for for-profit college students in Idaho are equal to or better than the for-profit national average. In some cases, students from Treasure Valley for-profits are as likely to repay student debt as their public-school counterparts. In four years, state officials have received about 10 consumer complaints against for-profit colleges in the Valley, covering trouble with work placement, grades, financial aid, unexpected bills and program certification.
One exception to the relative silence is a pair of lawsuits filed last month by a total of 10 students of a surgical technology program at Brown-Mackie College in Boise.
They allege the school failed to obtain a promised accreditation of the program, leaving graduates unable to qualify for certificates they need to obtain jobs in the field.
Some local students say the schools meet their needs by providing instruction to students who have families and jobs and who may have to spend every available moment they have earning their degrees and certificates.
Local businesses appear ready to hire graduates from for-profit schools. But human resources departments caution students to make sure they are enrolling in programs with the proper accreditation, a seal of approval that many bosses look for.
The concern about debt loads has prompted new federal regulations aimed at keeping closer tabs on how the schools deliver on meaningful employment opportunities by paying attention to how well students are able to repay their loans. In Idaho, the State Board of Education also has new power to help students who file complaints against the schools.
Most of the schools declined to discuss their operations or address criticisms for this story. Stevens- Henager College and ITT Technical Institute did not return phone calls. The University of Phoenix, Carrington College and Brown Mackie College provided primarily written email statements and information. Only Broadview University, the newest entrant in the Valley market, agreed to interviews.
HOW THIS MARKET GREW
As Boise roared through the good times and fast-paced growth in the late 1990s and early 2000s, so did the region’s for-profit schools.
Apollo College, now Carrington College, was an early entry in the Boise for-profit college market, opening in 1980. ITT Technical Institute followed in 1986 as a descendant of the old Link School of Business, which started in 1906.
In the past nine years, four more for-profit colleges have set up shop in the Valley:
- University of Phoenix, 2002.
- Stevens-Henager College, 2004.
- Brown Mackie College, 2008.
- Broadview University, 2011.
The schools were started as the number of for-profit school students rose nationally to 3.8 million in 2010, a 123 percent increase over 2004.
Stevens-Henager had about 220 students in Boise in 2005. It has about 1,300 now. The school opened a 15,000-square-foot campus in Nampa last fall.
Some of those students were Valley residents who had lost jobs and are trying to retrain. In 2010, the school had 131 students — nearly 10 percent of its total — enrolled in a federal program that retrains workers who have lost their jobs to foreign competition.
Stevens-Henager sought to position itself as a community college in 2004 — when a public community college serving Ada and Canyon counties was still about three years away.
“Our private school fills that niche,” said Joe Walker, who was associate director of the Boise campus when he talked to the Statesman in 2005.
Indeed, after the College of Western Idaho finally opened in 2009, CWI’s enrollment jumped from about 1,200 to more than 7,300 in about three years, a sign of pent-up demand for education.
Brown Mackie College reported nearly 900 students in its 2010-2011 registration with the state.
Officials of Brown Mackie College say they were drawn to Boise because Idaho is a fast-growing state with a “high demand for education and skilled workers in a range of emerging fields, including health care, technology, legal service and business.”
Broadview University looked to get a foothold in the Treasure Valley before the recession ended.
The company believes the job market in the Treasure Valley will rebound soon, said Bob Trewartha, director of campus and program promotions. School administrators hope Broadview’s first graduating classes will enter the job market right as employers start hiring again. Broadview started networking with local employers a year before opening its doors, Trewartha said.
Broadview in Meridian is one of 28 schools owned by the Globe Education Network based in Minnesota. It offers bachelor’s degrees in areas such as health care management, criminal justice and information technology; associate degrees in 10 majors, including business administration, medical assistant and veterinary technology; and a massage therapy diploma.
The school here has about 60 students.
STUDENT GROWTH BOOSTS SCHOOL REVENUE
ITT Technical Institute has seen a 36 percent increase in students nationally since 2008 to 84,686 in 2010, according to company reports. Revenues shot up 57 percent to $1.6 billion.
Apollo Group, which owns University of Phoenix, reported revenues of $4.9 billion in 2010, up from $3.9 billion the previous year.
The economy is playing a role. In its annual report, DeVry Inc., the owner of Carrington College, told shareholders, “Management believes that the economic downturn has had a small, but positive, impact on enrollments, as individuals have returned to post-secondary education for job re-tooling.”
Ariel Sokol, an analyst with the UBS investment company, suggested in a report earlier this month that one risk for stocks in the colleges is that an improved economy could result in more competition for prospective students.
LOCAL STUDENT OWES A LOT BUT WOULD DO IT AGAIN
Suzanne Marinelli of Boise represents part of the growth in for-profit schools. After working on and off for more than two decades to complete her college education — fitting it in and around time in the military — she enrolled in Boise State University in 2006. She found herself in classrooms with people 20 years her junior — she was in her late 30s — so she enrolled at the University of Phoenix, which requires some attendance at the physical buildings.
The cost, she said, was “freaking expensive.” But she was drawn by the promise of a degree in business management in two years.
“The price put a lump in my throat — $1,000 a class,” she said. That’s nearly twice the cost of some Boise State classes she took.
Marinelli took out $30,000 in loans. She now pays about $400 a month to repay the loans.
That was the price she had to pay to get her coursework done quickly, she said. And the knowledge gained is something she uses in her job as emergency management program coordinator for the U.S. Bureau of Reclamation in Boise.
She said she doesn’t regret it.
ANOTHER STUDENT PRAISES A SCHOOL’S ATTITUDE
At a recent open house for Broadview, students and administrators filled the lobby. The students praised their new school for paying attention to them, courting them and walking them through registration and financial aid.
Jonnie Burns, a 21-year-old on the paralegal track, said that before Broadview, she was “sitting at home on my couch, taking care of my kids.”
When she started researching programs for a legal career, the state-run schools made a bad impression on her. She said they weren’t friendly and expected her to figure out the logistics herself. Broadview responded to her email within a day.
Burns said she read good things about Broadview on the Internet.
“They’re a very caring school,” said Burns, who is paying her way with a Pell grant, two federal loans and a little help from grandparents. The cost for a 21-month paralegal degree is listed at about $40,000 on the Broadview website, with a job-placement rate of 44 percent.
Burns said she appreciates the small class sizes — she had a total of six classmates in two courses last quarter.
Burns expects to graduate, work for a while, then “probably go and get my attorney’s license.” But she doesn’t know if her credits will transfer toward a four-year degree — a prerequisite for highly competitive law schools that prepare students for a bar exam.
“I haven’t figured it out that far,” she said.
CRITICS SAY SCHOOLS EXPLOIT POOR STUDENTS
The national for-profit college market has plenty of critics pointing to dismal statistics and tragic anecdotes. A study by the Education Trust research group in Washington, D.C., which advocates for at-risk students, likened for-profit colleges to the subprime lending crisis. The colleges provide “high-cost degree programs that have little chance of leading to high-paying careers and saddle the most vulnerable students with heavy debt,” the Trust said in a report late last year.
But that may not resonate in Idaho, based on local numbers. In fiscal 2008, local for-profit default rates reported by the U.S. Department of Education ranged from 2.7 percent at Carrington to 12.5 percent at ITT Tech. In comparison. Boise State’s rate that year was 4.7 percent and the College of Southern Idaho’s was 9.5 percent.
The national rate for all schools was 7 percent. Idaho’s rate for all schools was 5 percent.
WHAT LED TO THE LAWSUIT AGAINST BROWN MACKIE
The 10 surgical tech students from Brown Mackie who sued in state court say they knew the program was not accredited when they signed up. They say school officials assured them that accreditation was in the works. But when the students received their degrees, they learned the accreditation had never occurred and they could not take their certifying exams, according to the lawsuits.
The students also allege the school used high-pressure tactics to get students enrolled. A number of the students said they were told they had the last seat in the program.
Brown Mackie would not discuss the case except to say the school would vigorously defend itself.
Pam Thompson, 41, is one of those suing the school. She started in 2008 to train for a job, since her children were getting older. She said she chose the Brown Mackie program because she ran a day-care center and needed a school where she could take classes around her work schedule.
“I thought it was going to be my dream program,” she said. “They had a nice facility.”
Thompson said the surgical tech program was readying her to prepare instruments and make sure they were sterile in the operating room. She said she expected to get a job that would pay her $15 to $18 an hour.
She graduated with an associate’s degree in surgical tech in 2010. Now, she said, she is unable to repay her $28,000 in student loans, at $250 a month. She has a job in a shipping department of a local company that she got through a temp agency, but work is sporadic.
Bill Roberts: 377-6408
Audrey Dutton: 377-6448