But Silber says the Obama administration’s regulatory pressure has also been a major factor, particularly its aggressive of enforcement of rules preventing colleges of any kind from paying recruiters based on the number of students they enroll – once a common practice by for-profits.
“Historically this had been a sector where it was a pretty hard sell,” Silber said. After the crackdown, “they’re not doing it anymore because the folks that were selling hard have moved on to selling something else.”
For-profit colleges, though still annoyed by the regulations, say they are refocusing their efforts on enrolling students who can finish a degree and helping them find work when they graduate. An orientation program now gives Phoenix students three weeks to see if their program is a good fit before paying tuition. About 20 percent of participants decide not to enroll.
Phoenix also froze tuition, and this week announced a more substantial assessment and monitoring system to make sure students are getting the skills they want and need, but also to keep them on tracks toward jobs, particularly with about 2,000 corporate partners it’s been assembling.
“It’s really about the back end,” Phoenix president Bill Pepicello said in a phone interview. The career services that students typically tap as they approach graduation, “we’re moving that forward.”
A report released last summer by Sen. Tom Harkin, D-Iowa., who has led the criticism of for-profits from Capitol Hill, concluded for-profit colleges have been taking in upwards of $32 billion annually from taxpayers even though most students don’t graduate; those who departed lasted just four months on average. In 2010, the report found, leading companies employed nearly 10 times as many recruiters as career-services advisers, and spent more on marketing than on instruction.
The latest government figures show for-profits still have twice the federal student loan default rate of public colleges (23 percent of borrowers at for-profits have defaulted within three years).
For now, so-called “gainful employment” regulations that could cut off aid to colleges with poor job replacement rates are on hold, struck down by a federal judge in June (the Republican presidential candidate, former Massachusetts Gov. Mitt Romney, has criticized the rule and the Obama administration’s “ill-advised” regulation of the sector).