F-M for-profit colleges say don’t punish them for a few ‘bad actors’

Officials from for-profit colleges that have campuses in Fargo-Moorhead say it’s unfair to lump them together with the for-profit colleges found to be using shady practices.

J. Michael Locke, CEO of Rasmussen Inc., which has campuses in Fargo and Moorhead, said the college has no tolerance for the fraud that was encouraged by some for-profit colleges in a report released this month.

For-profit colleges — the largest being the University of Phoenix — are run by private companies or organizations.

The U.S. Government Accountability Office did undercover tests at 15 for-profit colleges and found that four encouraged fraud and all 15 made deceptive or questionable statements to workers posing as potential students.

In some cases, employees told the government testers to lie on financial aid forms. Others misled students about the price of tuition or pressured them to sign contracts before they could meet with a financial aid adviser.

‘A few bad actors’

“It really saddens me that schools would be doing some of the activities that have been alleged in some of the recent reports,” said Locke, who is based in Chicago.

But as lawmakers debate for-profit colleges and proposed new regulations, they should be careful not to harm colleges that didn’t do anything wrong, said Erik Engberg, director for the Moorhead campus of Minnesota School of Business.

“I think it’s bad to punish everybody for the acts of a few bad actors,” Engberg said. “If they see there are bad practices, they should stamp those out where they’re happening and not just assume that it’s happening across the board.”

Locke said he supports an accurate and full dialog on for-profit colleges, but a problem with the discussion is that it focuses on for-profit colleges as a group.

“Higher education is a very heterogeneous sector, and so there are good schools and bad schools,” Locke said. “There are good for-profit schools like Rasmussen, there are bad for-profit schools. There are good nonprofit schools, there are bad nonprofit schools.”

Officials in North Dakota and Minnesota say they’re not aware of the deceptive practices raised in the report happening here.

“We hope they’re not occurring,” said George Roedler, licensure manager for the Minnesota Office of Higher Education. “If they are, we’re not hearing about it.”

Growing presence

One reason for-profit colleges have been in the spotlight lately is their sheer growth.

Enrollment in for-profit colleges nationally has grown from about 365,000 students to nearly 1.8 million over the past several years, said the government report.

That growth is reflected locally.

Rasmussen, formerly Aakers College, opened its Moorhead campus in 2008. Enrollment at the Fargo-Moorhead campuses is now about 950 students.

The college has plans to expand the number of four-year programs offered, Locke said.

Minnesota School of Business opened a campus in Moorhead two years ago that now has 300 students. Enrollment is expected to be about 500 a year from now, Engberg said.

Another factor for the scrutiny on for-profit colleges is those students are more likely to default on their federal loans, leaving the government and taxpayers on the hook.

In 2007, Rasmussen’s default rate for the entire college was 9.5 percent, while the Minnesota School of Business rate was 5 percent, according to the National Center for Education Statistics.

That same year, the average default rate was 5.9 percent for public schools, 3.7 percent for private nonprofit schools and 11 percent for for-profit schools, said the Department of Education.

As a whole, for-profit colleges also are receiving a large share of federal financial aid. In 2009, students at for-profit colleges received more than $4 billion in Pell Grants, the government report said.

Minnesota undergraduates attending for-profits represent 11 percent of all undergraduates and receive about 16 percent of all federal and state grants and scholarships, according to the Minnesota Office of Higher Education.

That figure is unavailable in North Dakota.

However, information from the North Dakota University System shows that for-profit students will use a greater share of state grant program funding this year.

Rasmussen College students recently became eligible for the grant, a $1,200 annual award for needy students.

In 2009-10, the first year Rasmussen students were eligible, 244 received the grant, representing about 3 percent of the total awards.

That’s projected to increase this year to 790 students out of a total 9,500 awards, or 8 percent.

Rasmussen students represent less than 3 percent of all North Dakota college students, according to enrollment figures.

Sen. Judy Lee, R-West Fargo, sponsored the bill in the last session to make Rasmussen students eligible for the grant.

“There are a lot of disadvantaged students that attend Rasmussen,” Lee said. “They really fill an important niche in the educational community.”

Flexible options

Erik Herford of West Fargo chose to attend Rasmussen because it offered a fully online criminal justice program. The 32-year-old is married, works full time and has three foster children.

The tuition is more expensive than a public university, but he needed the flexibility of an online program.

“I like the freedom to be able to log in, do the work when I can,” said Herford, who has completed an associate’s degree and is working toward a bachelor’s degree.

When applying at Rasmussen, Herford said he received accurate information from employees.

The school’s regional accreditation was important to Herford, and he independently confirmed it.

One surprise was that Herford said he didn’t realize tuition for 300and 400-level courses is higher than tuition for the lower level courses.

Rasmussen conducts “mystery shops,” similar to what the government did, in which they send people in to talk to employees to make sure they’re effectively communicating the right information, Locke said.

Minnesota School of Business also offers flexible program offerings for busy students.

The average student at the Moorhead campus is a 26-year-old white mother of one who is working part time, Engberg said.

‘A good alternative’

Sen. Tom Seymour, D-Minot, who has gone on accreditation visits for many for-profit colleges as a peer consultant for the Higher Learning Commission, said he doesn’t downplay for-profit colleges.

In some cases, the for-profit colleges have curriculum that is more focused and they tend to spend more money on professional development, Seymour said.

“They’re a good alternative for certain people,” said Seymour, also a professor at Minot (N.D.) State University.

Because for-profits don’t receive state support, the higher tuition is a factor that means they may not be right for everyone, Seymour said.

“I feel you can get more bang for your buck at a public school usually,” Seymour said.

Minnesota School of Business surveys students each quarter about their satisfaction on facilities, instruction, truthfulness of admissions employees and other areas.

In the most recent survey, 84 percent either agreed or strongly agreed with all the categories, Engberg said.

Minnesota School of Business also meets all of its accreditation goals, he said.

“We don’t see an alternative, really,” he said. “We strive to be the best school that we can be for our students.”

Amy Dalrymple is a reporter at The Forum of Fargo-Moorhead which is owned by Forum Communications Co.

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