For-profit universities prosper
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Less than a decade ago Franciscan University of the Prairies and Grand Canyon University were tiny regional schools, struggling to pay the bills. Bill payment is no longer a problem — both are for-profit institutions that enroll tens of thousands of students; most attend online. Private-equity-backed Bridgepoint Education (BPI), which purchased Franciscan University of the Prairies in 2005, has seen earnings nearly quintuple in the past five years, to $123 million last year. Grand Canyon Education (LOPE) bought its university in 2004 and has seen profits increase 10-fold since, to $69 million this year.
Returns for students are not as impressive: Graduation rates at for-profit universities are just 22% for a bachelor’s in six years. At public nonprofits, it’s 55%. Underprivileged students — who are more likely to enroll in a for-profit — can be left deeply in debt without a degree. Iowa Senator Tom Harkin slammed Bridgepoint recently, citing the fact that 84% of its two-year students and 63% of its four-year students who enrolled in 2008 had dropped out by 2010.
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