Stealing Share

Browse all Market Studies

FOR-PROFIT UNIVERSITIES

For-profit universities may currently have the strongest and most profitable place in the “business” of education — and that is most certainly what these institutions are. A business.

Using aggressive advertising tactics, a well skilled sales force, and a stronghold on the federal student loan system, these universities have become known for “recruiting students who don’t understand the debt burden under which they’ll spend their lives” (http://www.redeyechicgo.com).

Here’s how they work.

For-profit universities employ well produced mass media (internet, print, billboard, radio and television ads) to build brand recognition. For example, visit Google and type in the key word, “university.” Who owns the first option under Google Ads? That’s right, the University of Phoenix — the world’s largest for-profit institution.

At first glance, one would not realize that these schools lack proper accreditation — a major downfall for these universities. Moreover, as reported by PBS in its documentary College Inc., these schools also lack the depth of degree requisites that properly prepare students for the work force.

For-profits seek to strike a cord with low-income, potential students looking for a degree to change their life’s circumstance. Again, let’s use our example of the University of Phoenix. Say you are a potential student and you follow Phoenix’s Google Ad. First, you click on the link and are brought to a somewhat vague website for the university (but has been created very tactically to get you to sign up as quickly as possible.)

Here’s a shot of the site’s intro page:

Although the brand of the University of Phoenix can only be gleaned from the name (rising after being left for dead) and is a good one, the site itself has been developed tactically. How? Because you are forced to click further and become involved as a user and potential customer (even if you are just curious).

Obviously, you’ll need to follow the “Learn More” link to get anywhere on the site. It could prompt visitor anger, but clicking on it prompts the visitor through several questions like, “What’s your degree interest?”, “What’s your level of education?” as well as location. Following these questions, you are brought to a form letter which looks like this:

Like any user coming to this form, you can either exit immediately or complete the form with the hopes that you can find the answer to your questions about the University of Phoenix.

But here is the hook. Completing this form and the leading questions gives Phoenix a telephone number, which allows the sales force to call you — whenever they want. Incidentally, Phoenix also knows your educational interests, and experiences. This allows their salespeople to pull on your heart strings on the phone.

As was reported by PBS, the salesforce of for-profit universities are a tireless, focused and driven group. They call incessantly, and make educational and career promises (which can reel in many financially struggling adults). Their goal? For you to believe that their university is the answer to your prayers. (Rising like a phoenix?)

Now, what about federal student loans? These degrees, unbelievably, cost more than in-state tuition at a university. For example, undergrad programs are currently $550/credit + $90/course tech fee. Typically, each course is 3-4 credits and you will need approximately 120 credits to graduate. Adding this up, this will cost you roughly $70,000. Plus, these calculations do not reflect additional expenses like books and graduation.

Shockingly, these schools (while only accounting for 10% of the nation’s total college student population) account for 25% of federal student aid and, even more astoundingly, make up nearly half of all student loan defaults.

This begs the question: What is a college degree truly worth? Is a low-income individual truly in a better financial position prior to attending a for-profit? Or are a degree, debt and the possibility of no job actually worse? For-profit’s are betting on the latter.

Even if you don’t agree with the process, for-profits are a big business, and they have recognized their difference better than any other collegiate system in the market.

Take, for example, these television campaigns:

First is for the market leader, The University of Phoenix. In this spot a successful professional in police attire proclaims that: “I am a Phoenix” and is part of a larger campaign.

Here is another spot focusing on another adult who has earned her doctorate through Phoenix. She tells us what it feels like to graduate from an institution of higher education, and it is hard to avoid that sense of joy as a viewer:

Without pulling any punches, these commercials are heads and tails better than those produced by the major state and private universities. These advertisements are evocative, personal and inspiring. Who, after watching, wouldn’t also want to be a “Phoenix”? They are the most emotional ones in the market. It’s one of the reasons why Phoenix has the largest enrollment in the nation, with more than 300,000 students annually.

How about Walden University — another massively successful for-profit? The following commercial is also student-centric and hinges on the “higher purposes” of the attendees at Walden.

Equally as poignant is the following advertisement for Kaplan University:

There are two points about this for profits. For one, they are generally directed at the older student, much more so than private or public universities. Therefore, the focus is more on their aspirational end results rather than the college experience.

The other point is that their production values are much sharper than those of non-profits. That makes a difference as many within other industries battle unsuccessfully with lower production values that just contributes to an “unprofessional” brand face. (Credit unions in the face of the banking industry is a prime example.) It’s no wonder the rate of for-profits students is increasing.

Sadly for those attending for-profits, the branding promise of these universities does not translate to jobs in the real world. Recently, Education Week shared that: “Although the for-profit schools have greater success at retaining students in their first year and getting them to complete short programs at the certificate and AA levels, they were not as successful in the employment arena compared with similar students at other types of schools, the research found.”

Continuing: “Graduates of for-profit colleges had earnings from work that were on average $1,800 to $2,000 less than their counterparts at other schools. This study notes the gap was likely linked to lower rates of employment. Students with training from for-profits were 4.8 percentage points to 6.7 percentage points more likely to be unemployed than those who attended other types of institutions.”

Ultimately, the impact of for-profit universities is big. But that brand does not guarantee you a better future.

 

 To continue to part 3 click HERE