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Proprietary schools and their students.

schools are small: Seventy-five percent enroll fewer than 175 students. At the same time, a few schools are quite large -- reporting enrollments as high as 12,000 students. And it is these large schools that enroll most proprietary school students: 10 percent of all schools enroll over 50 percent of the students.

Schools offering business and marketing programs and technology programs account for one-third of all proprietary schools and enroll nearly two-thirds of all enrollment. Cosmetology schools make up 40 percent of the schools and enroll about 14 percent of the students. The remaining schools offer programs ranging Introduction

Proprietary schools -- sometimes termed "private career schools" -- are for-profit institutions that offer mostly occupational training for post-high-school students. There are approximately six thousand of these schools of which four thousand are main campuses and two thousand are branches of those campuses. Overall, proprietary schools account for more than one-half of all postsecondary institutions. In the fall of 1986, proprietary schools enrolled an estimated 5 percent of all undergraduates and, according to the National Assessment of Vocational Education, 14 percent of all students enrolled in postsecondary vocational programs |22, pp. 20-21~.

Not only do proprietary schools provide a significant proportion of postsecondary occupational training, but their students receive a sizeable proportion of federal student financial aid under Title IV of the Higher Education Act (HEA). By U.S. Department of Education (ED) estimates, proprietary school students receive about 30 percent (approximately $5 billion dollars) of funds for these programs. They receive about one-quarter of all Pell grants and about one-third of all Stafford loans (formally the Guaranteed Student Loan or GSL program).

Moreover, proprietary school students are more likely to default on their federal loans. Fraas |5, p. 5~ reports ED analysis of "a random sample of Stafford loan borrowers who entered repayment in FY 1985 |that~ found that 50.6 percent of proprietary school borrowers defaulted on their loans by the end of FY 1988. This compared to about a third of community college students; default rates for students at 4-year schools are considerably lower."

Given the number of proprietary schools, the proportion of students served, and especially the amount of federal aid provided to proprietary-school students and their high default rates on federally guaranteed loans,(1) it is important to understand basic information about these schools and the students who attend them. Until now information about these schools came from older studies |for example, 2, 4, 6, 8, 28~, studies examining broader issues |for example, 9, 19, 22~ and studies conducted by or for the proprietary school industry |for example, 7~.

This article provides current, nationally representative information about proprietary schools and their students. It addresses several questions about these schools and students:

* What are the general attributes of proprietary schools?

* What kinds of training do proprietary schools offer?

* Who enrolls in proprietary schools?

* How much and what types of student financial aid do proprietary school students receive?

* How much does proprietary school training cost its students?

Comparison Groups

Several comparisons are useful to put the discussion of these questions into a broader context. One comparison is among proprietary schools offering training in different occupations. Because proprietary school owners often see other proprietary schools as their chief competitors |12, p. 36~, comparisons among proprietary schools are useful. Moreover, although proprietary schools are often discussed as a distinct form of educational institution, comparisons among proprietary schools reveal that they are not homogeneous institutions but differ in important respects, such as program length and cost.

Comparisons between proprietary schools and public institutions offering postsecondary occupational training are also useful. Comparisons are made with two types of public institutions: community colleges and public institutions offering less-than-two-year occupational training, which include vocational-technical institutes and area vocational schools. Community colleges are a particularly important comparison group because they are major providers of postsecondary occupational training(2) and therefore offer a useful benchmark for discussing proprietary schools.(3)

Proprietary school students are compared with three groups of students attending other postsecondary institutions: all undergraduates, all community college students, and a subset of community college students enrolled full-time in occupational programs with durations of one year or less. Students in the latter group provide a particularly useful comparison group because their educational programs most closely resemble proprietary school students' programs, which usually offer relatively short-term and full-time occupational training.

Sources of Data

Findings reported here are based on two main sources of national data. Most information on schools is obtained from the 1988-89 Institutional Characteristics Survey (ICS) of the Integrated Postsecondary Education Data System (IPEDS88), which is sponsored by the National Center for Education Statistics (NCES) of the U.S. Department of Education (ED). Most data on students come from the October 1986 National Postsecondary Student Aid Study (NPSAS), which was also sponsored by NCES.(4)

Because NPSAS data are drawn from a sample of students attending postsecondary institutions, they are subject to sampling error or random fluctuation resulting from the sampling process. Except when noted, all comparisons based on NPSAS data discussed here are significantly different at the 0.05 level, that is, there is a 5 percent or less probability that the observed differences are due to chance.(5) (Because the IPEDS Institutional Characteristics Survey was not based on a sample, calculations of standard errors and statistical significance testing are not appropriate.)

What Are the General Attributes of Proprietary Schools?

Number of Schools

In school year 1988-89, there were an estimated sixty-two hundred proprietary schools,(6) representing more than one-half of the nearly twelve thousand postsecondary institutions nationwide. Public institutions with programs of two years or more (for example, community colleges) represent 11 percent all postsecondary institutions. Public institutions with programs shorter than two years (for example, some vocational-technical institutes) made up approximately 3 percent of all institutions.

The number of proprietary schools may have been declining at least since the middle of the 1970s. The estimated number of schools in 1974 was 6,512 |8~. In 1980 the estimate was 5,676 |8~; in 1982 it was 5,509 |4~. The apparent growth in the number of schools to 6,200 by 1988 probably does not reflect a reversal in the trend but more inclusive data collection procedures under IPEDS.

Although many schools are single entities, some are branches of main campuses; others are members of chains of proprietary schools. IPEDS does not identify main campuses and branches. An important difference between a school in a chain and a branch is that each school in a chain would be accredited separately by an accrediting agency.(7) Branches usually are not accredited separately. Thus one school in a chain could lose its accreditation without influencing the accreditation of other schools in the chain. Discussions with accrediting associations indicate that if a main campus lost its accreditation, none of its branches would retain accreditation. Data supplied by several accrediting associations(8) indicate that about one-third of the nearly six thousand accredited proprietary schools are branch campuses.(9) Thus, though it is correct to say that there are sixty-two hundred proprietary schools, it is also important to recognize that probably approximately four thousand of these schools are separately accredited main campuses and the remaining two thousand are branches of those main campuses.(10)

Association data suggest that some sectors of the proprietary school industry are more likely to have branches than are others. Approximately 34 percent of AICS-accredited schools, which are most likely to be business schools, are branches. About one-quarter of NATTS' schools (mostly offering trade and technical training) are branches. Schools of cosmetology tend to be single entities -- only 7 percent of NACCAS' schools are branches. ACCET and SACS/COEI, which accredit a variety of schools, report that 54 percent and 47 percent of their schools are branch campuses.

Table 1 suggests that the number of schools accredited by one or more accrediting bodies may have increased significantly since the mid-1970s. The subtotal of schools accredited by AICS, NATTS, and NACCAS has more than doubled since 1976 and increased by almost three-quarters during the 1980s. Some of this increase may be due to increased numbers of branches.(11) Even if one assumes that data for 1976 and 1980 contain only main campuses, the subtotal of main campuses for AICS, NATTS, and NACCAS schools (2,771) is 82 percent greater than the subtotal for 1976 and 28 percent greater than the 1980 subtotal.

These increases are more striking when one considers that the overall number of proprietary schools may have declined somewhat during the same period. A reasonable assumption is that school owners' desire for their schools to be eligible to provide federal aid to their students is a major reason for the increase in the number of accredited proprietary schools.
TABLE 1
Number of Schools Accredited by Major Accrediting Associations

Association                         Year

                          1976      1980       1989

AICS                       484       520      1,022
NATTS                      400       548      1,014
NACCAS                     642     1,100      1,684
Subtotals               (1,526)   (2,168)    (3,720)
ACCET                       NA        NA      1,440
SACS/COEI                   NA        NA        832

Total                       NA        NA       5,992

SOURCES: Data for 1976 are from Friedlander |6~; data for 1980
are from Jung |8~; 1989 data are from proprietary school
associations.

NOTE: NA = not available. Subtotals and totals may contain
duplicated counts. Schools can be accredited by more than one
association.


School Size

Two important points should be emphasized about the size of proprietary schools. First, estimates of enrollment from the IPEDS88 Institutional Characteristics Survey are for a point in time -- fall of 1988. Estimates of total students enrolled in a calendar year would be considerably higher because proprietary schools tend to operate year round and operate relatively short-term programs that might enroll new students every few weeks or even every day. Second, although the preponderance of proprietary schools is small, a relatively small number of the largest schools enroll most proprietary school students.

In 1988-89 the median fall enrollment for proprietary schools was 64 students. Only 25 percent of the schools had enrollments greater than 175 students. The median enrollment for the schools' largest programs (schools were asked to provide enrollment and other information for their three largest programs) was 35 students, although a few schools reported enrollments between 1,000 and 2,000 in their largest programs.

The number of occupational programs and faculty size also indicate that most proprietary schools are small. Although one school responding to the IPEDS survey reported offering 334 instructional programs, the median number of programs offered by proprietary schools was 3 in 1988-89, and 75 percent of all schools offered 5 or fewer programs. In the school year 1988-89, 75 percent of all proprietary schools had fewer than 15 full-time faculty. Public two-year institutions are considerably larger than proprietary schools. Median fall enrollment was 2,041 for two-year schools in school year 1988-89. Ninety-five percent of these schools reported more than 15 full-time faculty.

Although most proprietary schools are quite small, a few schools reported large enrollments. Some schools reported enrollments as high as 12,000. Overall, 10 percent of the schools that provided fall enrollment data for the IPEDS survey accounted for nearly 52 percent of students enrolled in proprietary schools in the fall of 1988.

Occupational Training and Student Services

Most proprietary schools specialize in one or two fields of training and offer a few programs related to that area. About two-thirds of all schools offer either business or cosmetology training. Nearly 80 percent of all proprietary school students pursue training in business, cosmetology, or technical occupations such as computer programming. Although some proprietary schools offer programs longer than two years, many programs are relatively short. Thirty-four percent of all programs are shorter than 6 months, and 23 percent are shorter than 3 months.

In addition to occupational training, most proprietary schools provide students with some type of support services such as job placement. However, as table 2 shows, proprietary schools are less likely to offer support services than are public two-year and public less-than-two-year institutions. The absence of these programs at proprietary schools -- 13 percent of respondents offer none of the services listed -- probably helps schools cut costs and streamline programs. At the same time, some might question whether proprietary schools can spare these services, given the disadvantaged populations many proprietary schools serve. As noted later, proprietary schools serve higher percentages of minorities and low-income students, who arguably are more in need of remedial TABULAR DATA OMITTED and other services than are middle-class white students. Similarly, proprietary schools serve higher percentages of single parents, but only 1 percent report providing day care.

Location of Proprietary Schools

Data from IPEDS88 indicate that more than one-third of all proprietary schools are located in five of the largest states: California (13 percent of all proprietary schools), Texas (6 percent), Illinois (5 percent), Pennsylvania (5 percent), and New York (5 percent). Based on data from the 1970s, Jung |8~ found that proprietary schools tend to be located in urban areas. There are no current national data on what proportion of all proprietary schools are in urban areas or central cities.(12)

What Kinds of Training Do Proprietary Schools Offer?

What Programs Do Proprietary Schools Offer and for What Occupations Do Proprietary School Students Study?

Nearly all (91 percent) of proprietary schools responding to IPEDS88 indicated that they offered occupational programs. In addition, fifty-seven percent said they offered academic programs.(13) Forty percent provide continuing occupational training; 20 percent offer avocational courses; 16 percent provide adult education and high school equivalency programs; and 13 percent offer high-school courses. Most schools (90 percent) grant certificates to successful completers. Only 6 percent grant associate degrees.

Table 3 shows the percentage of proprietary schools providing training in each of several program areas and the percentage of proprietary school students enrolled in each area in the fall of 1986. Each program area represents related instructional programs.(14) The following are the programs with the largest enrollments in each category:

* Business/Marketing: general real estate, wordprocessing, secretarial, travel/tourism

* Personal Services: barbering/hair styling, cosmetology, massage

* Health: medical assisting, nurse assisting

* Technology: general computer science, computer programming, data processing, electronic technology

* Trade/Industrial: construction, heating/air conditioning, auto mechanics, welding

* Transportation: truck/bus driving, airplane piloting

* Other: floral design, security services
TABLE 3

Percentage of Proprietary Schools Offering and Percentage of
Students Enrolled in Selected Programs

                             Percent of        Percent of
Programs                       Total           Proprietary
Offered                       Schools           Students

Business/marketing              24%                42%
Personal services               40                 14
Health                           7                  7
Technology                       8                 25
Trade/industrial                 7                  5
Transportation                   5                 --(*)
Other                            9                  7

Total                          100                100

SOURCES: Analysis of Integrated Postsecondary Education Data
System data for 1988-89 for percentage of schools; analysis of
National Postsecondary Study Aid Study data for percentages of
students.

NOTE: Data for schools are for school year 1988-89; student
data are for 1986-87.

* Less than 1 percent.


Nearly two-thirds of responding proprietary schools offer training in business, marketing, or cosmetology. The remaining one-third provide programs in health, technology, trade and industry, transportation, and other occupations, which include, for example, security services, culinary arts, casino dealing, and pet grooming.

Although classifications of programs are not completely comparable from study to study, over time it appears that some sectors of the proprietary school industry have expanded whereas others have declined. For example, business and cosmetology schools made up 56 percent of all schools in 1976 and 63 percent in 1980. Schools offering programs in health occupations grew from less than 1 percent of all schools in 1976 to 5 percent in 1980. During the same period, schools offering flight training declined from 23 percent of all proprietary schools to 17 percent |4, p. 30~.(15)

A somewhat different picture emerges when one considers proportions of students enrolled in these courses. Cosmetology schools, which make up 40 percent of all proprietary schools, enrolled only 14 percent of students attending proprietary schools in the fall of 1986. Business and marketing programs and technology programs, which together account for less than one-third of the schools, enrolled nearly two-thirds of all students in the fall of 1986.

Program Length

Most proprietary schools offer short-term training. Eighty-four percent of respondents to the IPEDS88 Institutional Characteristics Survey indicated that their longest program was less than two years. Seventy-nine percent said they offered programs that were shorter than one year. Median program length for schools' largest program was 960 hours, which is approximately a nine-month program.(16) The median length for other programs was 600 hours, which is the equivalent of a 6-month program. Twenty-three percent of all schools reported that their largest program was less than 300 contact hours. Another 11 percent reported that their largest programs were longer than 300 hours but less than 600 hours.

Concerns have been raised that the length of proprietary school training is more closely related to requirements for participation in student financial aid programs than to the actual amount of training needed to qualify students for a given job. The Office of the Inspector General (IG) of the U.S. Department of Education has charged that some schools "stretch" program length so that their students can receive federal student financial aid |25~. The IG cited training for security guards, nurses assistants, and manicurists as three areas of concern. The concern is not only that students receive (and pay for) more training than they need for these jobs but that -- in the case of security guard training -- students might receive training in areas, such as firearms and hand-to-hand combat, that are inappropriate for the jobs they perform.

Current data shed light on these concerns but are insufficient to resolve this issue. IPEDS provides useful data on program length;(17) however, we have only rough approximations from the U.S. Department of Labor (DOL) on how much training is necessary to perform given occupations |26~. The DOL estimates contain minimum and maximum training times for a wide range of occupations, but for several reasons these estimates must be used with caution: The DOL estimates are nearly ten years old; thus training times may have changed for some occupations if the skills required for those occupations have changed. Moreover, the estimates do not reflect differences in training methods. For example, training time for the same occupation might be considerably different if instruction is individualized and allows each student to progress through the training at his or her own pace. The more able and motivated students probably would require substantially less training time than other students.

Table 4 presents the median program lengths from select programs from IPEDS data together with high and low estimates of training times from the DOL data.(18) The DOL data provide some benchmarks for appropriate training time but are not meant to indicate exact ranges for how long it takes to qualify for various occupations. Table 4 shows that one program (security services) has a median program length apparently above the DOL estimated range.

Moreover, at least 25 percent of reported programs in security services were more than twice as long as the DOL maximum training period for this occupation. Median program lengths for other programs (cosmetology and truck and bus driving) fall within the DOL range. The length of several other programs (real estate, travel, medical assisting, auto mechanics, and welding) appear to be below the DOL minimum estimates. It would seem that some proprietary programs -- rather than being stretched -- are actually shorter than minimum estimated training periods.
TABLE 4

Median Length of Selected Proprietary School Programs and DOL
Estimated Training Times

                          Median        DOL           DOL
                          Program     Estimated    Estimated
                          Length      Training     Training
                          (contact      Time         Time
Instructional Program     hours)      (minimum)    (maximum)

Business/marketing
General real estate          45          600         1,200
Travel/tourism              187          300           600

Personal services
Cosmetology               1,500        1,200         2,400

Health
Medical assisting           650        1,200         2,400

Trade/industrial
Auto mechanics              900        2,400         4,800
Welding                     600        2,400         4,800

Transportation
Truck/bus driving           304          300           600

Other
Security services           490          100           300

SOURCES: Analysis of Integrated Postsecondary Education Data
System data for program lengths; Department of Labor data |26~
for training times.


The latter finding has several possible interpretations; however, data limitations prohibit reaching definitive conclusions. It is possible that some of the programs represented in the IPEDS data are not comparable with DOL job titles. Even though the program titles and job titles are identical or very similar, the training programs may prepare students for jobs requiring less training than the jobs represented by the DOL job titles. Another possibility is that the DOL estimates apparently include both formal training prior to employment and training acquired on the job,(19) whereas most proprietary school training would include little training on the job. Another theory is that some proprietary schools shorten programs to attract and train as many students as possible, thus maximizing profits. A fourth interpretation is that some proprietary school programs are so efficient that they can provide sufficient training for a given job in a period shorter than is usually necessary. Finally, it may be that some proprietary school programs, given how short they are, may not sufficiently train students for corresponding jobs.

Proprietary School Training and Labor Market Needs

A further issue related to proprietary school training is the extent to which these schools provide training that matches current and future labor market needs. Ideally occupational training programs should emphasize fields with high demand for workers and -- perhaps of more importance -- fields for which job demand will be strong over the next decade.

IPEDS provides data to help explore this issue. The Institutional Characteristics Survey asked proprietary school respondents to provide enrollments for their 3 largest programs. Table 5 presents a selection of the most frequently mentioned programs with the percentage of schools offering those programs and the percentage of students enrolled in them. The table also displays data from the Bureau of Labor Statistics (BLS) on examples of occupations for which these programs provide training. The BLS data provide numbers of jobs in these occupations and projected job growth or decline between 1988 and 2000.(20)

Labor market projections can be examined from several perspectives. One is the amount of growth projected for a given job classification. Overall, the BLS projects that job growth will average 15 percent across all occupations by the year 2000. Another perspective on labor market projections is the total number of jobs created in a given occupational area. The BLS moderate projections estimate approximately 18 million new jobs by the end of the decade. If only the projected growth rate is considered and not the number of jobs produced, there still might be mismatches between the number of trained individuals in a field and number of workers that the labor market will demand for that field. For example, the BLS projects that the demand for medical assistants will grow by 70 percent over the next ten years; however, this translates into 104,000 new jobs or about six-tenths of one percent of all new jobs.

Table 5 contains several proprietary school programs in areas with above average growth rates that are also projected to produce relatively large numbers of jobs. For example, demand for nurse assistants is projected to grow by more than 30 percent and produce almost 400,000 new jobs. Secretarial programs are preparing individuals for a slower growing occupation, but the demand for secretaries is projected to grow by 385,000 jobs during the 1990s. Still other proprietary school programs appear to be preparing individuals for jobs with less optimistic futures. TABULAR DATA OMITTED For example, cosmetology programs, which enroll a substantial percentage of all proprietary school students,(21) are preparing their students for a job market that is projected to experience below average growth and produce about 34,000 jobs in the next decade, or only about two-tenths of one percent of all new jobs.(22)

Who Attends Proprietary Schools?

Number of Students Enrolled in Proprietary Schools

In the mid 1980s, probably between 1.2 million and 1.6 million students annually attended noncorrespondence proprietary schools.(23) These figures represent the low and high estimates from several sources. The low estimate comes from the 1986-87 IPEDS Institutional Activity report, which indicated that 1,174,000 students attended proprietary schools in the school year 1986-87. This represented about 6.6 percent of the estimated 17.7 million undergraduates who enrolled in postsecondary institutions some time in that school year. The high estimate comes from a report by Shearson, Lehman, Hutton on proprietary schools |17~, which reported that in 1985 nearly 1.6 million students attended "campus-based" proprietary schools.(24) This represents about 9 percent of the IPEDS estimated total enrollment for all undergraduates.

Characteristics of Proprietary School Students

Using data from the NPSAS survey and other sources, the characteristics of proprietary school students are examined from two perspectives. One perspective is the composition of the student body: what proportion of students enrolled in proprietary schools are women, what proportion are minority, what proportion come from low-income families. In brief, when compared with their counterparts attending other postsecondary education institutions, proprietary school students are more likely to be women, minority group members, and poor.

The other perspective is the proportion of all postsecondary students with various backgrounds enrolled at proprietary schools: for example, what proportions of all women undergraduates, minority undergraduates, and low-income undergraduates attend proprietary schools. While relatively large proportions of proprietary school students belong to minority groups and come from low-income families, proprietary schools enroll a relatively modest proportion of all minority and low-income students attending postsecondary institutions.

PROFILE OF STUDENT BODIES. Table 6 presents fall 1986 profiles of student bodies at proprietary schools, community colleges, and short-term vocational programs at community colleges together with a profile of all undergraduates. It is apparent that students attending proprietary schools differ in important respects from their counterparts at other postsecondary institutions.

Gender. Compared with other postsecondary students, proprietary school students are more likely to be women. For example, while women made up about 57 percent of the community college population in the fall of 1986, they accounted for nearly two-thirds of all noncorrespondence proprietary school students.(25) The main reason for this is that many proprietary schools specialize in training for occupations -- such as cosmetology and office occupations -- that are dominated by women. Programs in office occupations and marketing, personal services (especially cosmetology), and health support occupations account for 63 percent of the enrollment of proprietary schools.(26) Data from NPSAS indicate that most students in these programs are women: office occupations (83 percent women), personal services (93 percent women), health support occupations (93 percent women).

The predominance of women in the proprietary school population has been true for some time. Based on data collected in 1975, Friedlander |6~ reported differences in sex composition between proprietary schools (66 percent female) and community colleges (48 percent female). Friedlander's explanation for this distribution was "the extreme overrepresentation of women in |Association of Independent Colleges and Schools (AICS)~ schools," which are mainly business schools (86 percent). Schools accredited by the National Association of Trade and Technical School (NATTS), which made up the other half of her sample, had 43 percent women.(27)

Race/ethnicity. Racial and ethnic breakdowns for the fall of 1986 show that minority students made up larger proportions of proprietary school enrollment when compared with proportions of these students enrolled in community colleges or in short-term vocational programs at community colleges. Nearly 40 percent of proprietary school students were members of a minority group, whereas 25 percent of students attending public community colleges were minority group members.

Past data also indicate that proprietary schools have served relatively high proportions of minority students for some time. Friedlander |6, table 5, p. 19~ reported that, in 1975, 32 percent of proprietary school students were members of minority groups (24 percent black) compared with 13 percent of students attending community colleges (6 percent black). In 1977 Jung |8, p. 17~ found that 40 percent of proprietary students versus 33 percent of public postsecondary vocational education students were members of a minority group.

TABULAR DATA OMITTED

Income. Proprietary school students are more likely to come from low-income families than are students enrolled in other types of postsecondary institutions. In the fall of 1986 the median family income of $21,600 for dependent proprietary school students was $12,000 less than for dependent undergraduates overall and $8,000 less than dependent students attending public community colleges. Similarly, the median income of $7,800 for independent proprietary school students was $8,000 less than all independent undergraduates and $11,000 less than independent community college students. Table 6 shows the percentage of dependent and independent students with family income below $10,000 and $5,000.(28) In all cases, the proportion of proprietary school students with incomes below these levels is greater than the proportions at community colleges.

Data from individual states and from early studies corroborate that significant numbers of proprietary school students come from low-income families. Studies of proprietary schools in the State of New York |12~ and the Commonwealth of Virginia |13~ found that nearly 1 in 3 proprietary school students in New York and more than 1 in 6 of such students in Virginia had received public assistance prior to enrolling. Data available from the 1970s suggest that proprietary school students came from low-income families. Friedlander |6~ found that in 1975, 32 percent of proprietary school students and 26 percent of community college students reported parents' income below $8,000.

Parents' education. Not only do higher proportions of proprietary school students come from low-income families, but their parents' educational levels (which are related to socioeconomic status) tend to be lower. In the fall of 1986 more than 20 percent of proprietary school students reported that neither parent had graduated from high school. This was true for 14 percent of students at public community colleges and for 10 percent of all undergraduates. Similarly, only 5 percent of proprietary school students reported that both parents had finished college, whereas 8 percent of their counterparts at community colleges and nearly 15 percent of all undergraduates had two parents with college degrees. Data from the 1970s corroborate these findings. In 1975 Friedlander |6~ found that 39 percent of proprietary school students said their fathers had not graduated from high school, whereas 26 percent of fathers of community college students were not high school graduates.

Students' prior education. Proprietary school students are more likely to enter postsecondary education without a high-school diploma or its equivalent. Approximately 9 percent reported that they had not earned a diploma or passed the General Education Development test (GED). About 3 percent of all community college students and less than 1 percent of public community college students enrolled in short-term occupational training had neither a high-school diploma nor equivalent in the fall of 1986.(29)

Single parenthood. Besides obstacles associated with lower income and limited educational preparation, a proportion of proprietary school students are single parents. In the fall of 1986, 17 percent of proprietary school students, 20 percent of community college students, and 13 percent of all undergraduates reported that they had dependent children. Nearly two-thirds (64 percent) of female proprietary school students with dependent children said that they had either never married or were separated. About one-third of community college women with children and 37 percent of all undergraduate women with children reported never being married or separated.

Percentages of All Students Enrolled

Table 7 compares enrollments of students with the same background characteristics to total undergraduates with the same characteristics. This provides a different perspective on students enrolled at proprietary schools. For example, although a large proportion of proprietary school students (39 percent) are members of minority groups, overall (in the fall of 1986) only a relatively small percentage of all minority undergraduates attended proprietary schools (9 percent). Similarly, low-income students make up substantial proportions of proprietary schools' student bodies. At the same time, enrollment data for the fall of 1986 show that other types of institutions served large numbers of low-income students. For example, 37 percent of dependent undergraduates and 43 percent of independent undergraduates with family incomes below $5,000 attended TABULAR DATA OMITTED public community colleges in the fall of 1986. Approximately 9 percent of the dependent students and 11 percent of the independent students below this income level were enrolled in proprietary schools.

It is important to remember that these percentages are based on enrollments at one point in time. If we had accurate annual enrollment data for different groups of students, we probably would find that proprietary schools enroll higher proportions of students who are minority group members, come from low-income families, and so on. If, for example, one assumes that annualized enrollments for 1986-87 would produce 3 times the number of proprietary school students in all categories and that the fall enrollments for other institutions would be equal to the annual enrollments,(30) proprietary school students would account for approximately 15 percent (rather than 5 percent) of all undergraduates. Percentages enrolled in proprietary schools from each category would be substantially greater than 15 percent, although the majority of students in each category would still be served by other postsecondary institutions.

Additional Data on Proprietary School Students

We turn now to a discussion of other characteristics of students attending proprietary schools. In brief, proprietary school students appear to be somewhat younger than students attending public community colleges but older than full-time students in short-term vocational programs at community colleges. Proprietary school students are less likely to have served in the armed forces; however, this may be because a larger proportion of proprietary school students are women, who are less likely to be veterans. The proportion of male proprietary school students who are veterans is comparable to the proportion of male veterans attending community colleges. Students choose to attend proprietary schools for somewhat different reasons than those given by community college students.

Age. As table 8 indicates, proprietary school students tend to be somewhat younger than students attending public community colleges, but apparently they are somewhat older than students enrolled in short-term vocational programs at public community colleges. About 50 percent of proprietary school students are between the ages of eighteen and twenty-two, whereas about 40 percent of community college students are in this age group. While one-quarter of all proprietary school students are thirty or older, more than one-third of community college students are at least thirty.

Today's proprietary schools may be enrolling younger students than they did a decade ago. Friedlander |6~ found, based on 1975 data, that proprietary school students tended to be older than students attending community colleges. Community college students most often went directly to their school after high school (91 percent enrolled in the same year they graduated). Students attending TABULAR DATA OMITTED proprietary schools in 1975 were more likely to have worked, joined the military, or attended other postsecondary institutions before enrolling in a proprietary school. Only about one-half went directly from high school to proprietary school. More than one-quarter had graduated from high school three or more years before enrolling.

Military service. Table 9 indicates that proprietary school students are less likely to be veterans of military service in comparison with students attending community colleges. However, it is important to remember that proprietary schools overall enroll a lower proportion of men than do community colleges and that men make up approximately 90 percent of the armed forces and an even higher percentage (96 percent) of veterans. Comparing proportions of male students who are veterans, one finds that the difference between community colleges and proprietary schools is not statistically significant (at the 0.05 level). The proportion of males who are veterans and enrolled full-time in short-term occupational training at community colleges is lower, perhaps because these students tend to be younger than proprietary school students, and younger students are less likely to have had time to enlist in the military and then to enroll in postsecondary education.

Reasons students choose proprietary schools. Data from NPSAS suggest that proprietary school students' reasons for attending their schools differ from reasons students attend community colleges. The school's reputation, availability of desired course, financial aid, and job placement rates are among the most important reasons why proprietary TABULAR DATA OMITTED school students say they chose their school. Desired courses are also important to community college students, but lower tuition, ability to attend school and work, and the possibility of living at home while attending school also were important reasons for community college students. In short, proprietary school students seem more concerned with school quality and with getting a job after completing school. Community college students appear to be more concerned with finding less expensive education that provides the training they desire.

To What Extent Do Proprietary School Students Participate in Federal Student Aid Programs?(31)

Percentage of Students Awarded Financial Aid

Eligibility for most federal student aid is based on financial need. In general, financial need is determined by subtracting a student's expected family contribution (the amount a student and his or her family can "reasonably be expected" to contribute from both income and assets) from his or her cost of attendance (tuition and fees, room and board, and other expenses). As we have seen, many proprietary school students come from low-income families, and as a result many may have low expected family contributions. In addition, as discussed later, many proprietary school students face relatively high educational costs. The combination of low family contributions and high educational costs results in sufficient financial need to qualify a high proportion of proprietary school students for federal student aid programs.

In the fall of 1986 proprietary school students were the group most likely to receive some financial assistance. More than 80 percent of proprietary school students received some kind of federal aid, and nearly that percentage received aid under HEA Title IV. In contrast, 16 percent of all community college students received Title IV aid, TABULAR DATA OMITTED and 36 percent of public community college students in short-term occupational training programs received Title IV aid.

Proprietary school students were also more likely to receive aid from the two largest Title IV programs: Pell grants and GSLs. About 1 proprietary school student in 2 was awarded a Pell Grant, whereas 1 in 4 community college students enrolled in vocational programs received a Pell Grant. Two-thirds of all proprietary school students received GSLs. About 10 percent of students in similar programs at community colleges received GSLs.

Composition of Financial Aid Packages

Students can receive different combinations or packages of federal student financial aid. Table 11 shows four student aid packages for proprietary school and other students: Pell grant only; GSL only; Pell grant and GSL; and Pell grant, GSL, and other federal aid.

In the fall of 1986, the aid package that proprietary school students most often received included both a Pell Grant and a Guaranteed Student Loan. Thirty percent of proprietary school students received both a Pell grant and a GSL. An additional 11 percent received a Pell grant and a GSL together with some other form of federal aid.

Proprietary school students were more likely than other students to receive a Guaranteed Student Loan and no other federal aid -- more than 25 percent received just a GSL. Proprietary school students were TABULAR DATA OMITTED less likely than community college students enrolled in vocational programs to receive only a Pell Grant. This is probably due to requirements of the Pell Grant program. Undergraduate students must receive a determination of whether they are eligible for a Pell Grant prior to applying for a GSL. Such a determination is designed to insure that students first receive any grant aid for which they may he eligible prior to incurring GSL debt. The grant-loan balance at proprietary schools in favor of GSLs may result because Pell Grants are not available to students in programs of fewer than 600 hours, thus leading eligible proprietary school students in short programs to rely solely on student loans. (As previously noted, many proprietary programs have fewer than 600 hours.)

Average Amount of Financial Aid Awarded by Type of Institution

Not only did a higher proportion of proprietary school students receive student financial aid, but in 1986-87 proprietary school students received larger federal aid awards than did public community college students enrolled in short-term vocational programs(32). Their greater financial need resulted in total federal aid that was nearly twice that received by their counterparts in public vocational programs at community colleges.

When comparing aid to proprietary school students and to students in comparable programs at community colleges, the average GSLs and Pell grant amounts are similar. At least part of the reason why these averages are not that different is because many students receiving Pell grants received the maximum grant ($2,100 in 1986-87). Similarly, many GSL recipients received the maximum loan ($2,500 in 1986-87). For example, in 1986-87, 77 percent of all proprietary school students who received GSLs received the maximum loan amount for the year. Nearly 50 percent of community college students who were GSL recipients received the maximum loan.

NPSAS data indicate that total federal aid for proprietary school students was nearly twice that received by students in similar programs in community colleges. If loan and grant amounts are similar, why is total aid so different? At least part of the explanation probably results from different aid packages. As table 11 indicates, proprietary schools students are more likely than students in community colleges to receive a combination of aid. In 1986-87, about 41 percent of all proprietary school students received both a GSL and a Pell grant, whereas approximately 3 percent of community college students received a package including both a Pell grant and a GSL.

How Much Do Proprietary Schools Cost?

There are a number of ways to think about costs of proprietary schools and other postsecondary institutions. From the perspective of TABULAR DATA OMITTED the school, one can consider the tuition and fees that school charges the student. From the student's perspective, tuition and fees represent only one component of cost. The student must also consider living expenses such as room and board that he or she must pay while attending school. The combination of tuition and fees and other costs such as living expenses is termed the cost of attendance. This cost is important because it (together with the student's expected family contribution) is part of the formula used to determine the amount of aid a student receives. In addition to the cost of attendance, the student faces so-called opportunity costs, which include earnings foregone because the student leaves the workforce or goes from a full-time job to a part-time job in order to attend school.

On the other side of the student's ledger is student financial aid that reduces costs to students. Clearly aid in the form of grants such as Pell grants reduces how much students pay for their education. The impact of loans on cost is more complex. Receiving a loan (such as a GSL) means the student initially pays less out of pocket than if he or she did not receive the loan. However, a loan eventually represents costs to the student when the loan principal and interest are paid back. Subtracting grants from the cost of attendance results in the student's net cost, which is the amount he or she must pay out of pocket.

From a broader perspective, there are the costs in public aid to schools(33) and to the students who attend them, tax revenues lost when a student leaves the workforce to return to school, and short-term and longer-term tax revenues (that is, cost reductions) resulting, for example, from taxes paid by profit-making schools.

Here we deal with three questions: To what extent do proprietary schools' tuition and fees differ among schools offering different types of training? How do total costs for students attending proprietary schools compare with total costs for students attending public institutions? When student aid is considered, are proprietary schools more expensive than public institutions?

Tuition and Fees of Proprietary Schools Offering Different Types of Training

One perspective on cost is whether some kinds of proprietary schools charge students more than others. The IPEDS88 Institutional Characteristics Survey asked proprietary schools to provide tuition and fees for their three largest programs. Because schools also supplied CIP codes, it was possible to categorize programs into occupational categories as follows: business and marketing, cosmetology, health, technology, trade and industry, ground transportation (for example, truck driving), flight schools, and other programs (such as floral design and security services).

Data show that tuition and fees vary by type of program. Technology training such as computer programming has the highest median tuition and fees. Cosmetology and other programs have the lowest median tuition and fees.

Comparing tuition and fees overlooks program length -- a program may cost more just because it is longer. One control for program length is to calculate cost per contact hour, that is, tuition and fees divided by program length. (Schools in the IPEDS survey were asked to provide total length in contact hours for schools' three largest programs.) These calculations reveal a different pattern of program costs to students. Overall, the median "unit cost" for all schools is about $5.00 per contact hour. Cosmetology programs have the lowest unit cost (approximately $3.00 per hour). Most other programs have median costs of $6.00 or $7.00 per contact hours. Schools offering training in ground transportation, such as truck driving schools, are somewhat more expensive ($11.00 per contact hour). Flight schools are much more expensive. These are the shortest programs (median length of 60 hours) and the highest cost per hour (a median of $50).

Cost of Attendance

Another perspective on cost is students' cost of attendance (that is, tuition and fees plus other costs such as room and board). Data from NPSAS suggest that proprietary school students' cost of attendance is higher than the cost of attending community college. For the school year 1986-87, the average cost of attendance for proprietary school students was nearly $8,000 and about $5,000 for community college students.

TABULAR DATA OMITTED

Although differences in these costs help explain why proprietary school students receive higher federal student aid payments than community college students do, they are not really appropriate for assessing whether proprietary school students' costs are higher than costs for students attending proprietary schools. One problem is that proprietary school programs are usually one year or less in length, while many community college programs are two years in length. Similarly, most proprietary school students attend full-time, whereas many community college students attend part-time.(34)

In addition, these cost comparisons do not take into account opportunity costs. Some argue that, when these additional costs to students are considered and the shorter instructional period for many proprietary school programs is taken into account, proprietary schools are really less expensive.(35) The following is a statement of this position: "Even though tuitions are generally higher in proprietary schools, the student's cost of attendance is lower because the programs take about half as much time to complete compared to the public sector. A student taking a proprietary school course is going to be on the job and earning money twice as soon as his peer in the public program. This means that the proprietary school student's lost income is half that of the public school student. Lost income is a very real cost for the student attending school and when it is considered as part of the total cost of attendance, it exceeds tuition by a significant amount" |10, p. 28~.

This perspective may not consider that, although many community college programs are longer than most proprietary school programs, opportunity costs to community college students resulting from foregone wages may not be that significant because many community college students work and attend school part-time. Data from NPSAS show that 71 percent of community college students reported that they were working for pay during the fall of 1986. Moreover, community college students reported working substantial hours per week: The median reported work week was forty hours for community college students reporting that they worked while attending school. In comparison, one-half of proprietary school students surveyed reported that they worked while attending school during the fall of 1986. The median work week for these students was thirty hours.

Finally, comparing costs of attendance does not take into account student grant aid. If financial aid is subtracted from the cost of attendance, one presumably obtains the amount students must pay out of pocket for their education (that is, their net cost).

Data limitations do not permit adjusting costs so that they would be comparable across all types of institutions. For example, NPSAS has cost data for only one year, so costs for multiple-year programs would have to be estimated. Factoring in changes in tuition and fees and the impact of inflation on living expenses along with other adjustments would make these estimates very approximate. What has been done is to compare cost of attendance and net cost for two similar groups of students: (1) full-time proprietary school students enrolled in programs of one year or less and (2) full-time community college students enrolled in vocational programs of one year or less.(36) Comparing costs for these two groups helps to control the problems just discussed. This eliminates problems of calculating students' cost of attendance for multi-year programs because only students in programs that last one year or less are considered. The problem of prorating costs for part-time attendance is also eliminated by considering only full-time students. Finally, differences in opportunity costs are controlled by considering programs of similar length. Limiting public community college students to those enrolled full-time in relatively short-term vocational programs helps to ensure that both proprietary and community college students face similar opportunity costs. Because they complete their programs at roughly the same time, opportunities for post-completion earnings will begin at approximately the same time.

Table 14 indicates that the average cost of attendance for this subset of proprietary school students is $2,800 higher than the average cost of attendance for students in similar programs at community colleges ($9,000 versus $6,200). What accounts for this difference? It appears not to be differences in living expenses, which are the same for the two TABULAR DATA OMITTED groups, on average ($5,600). The $2,800 difference in the cost of attendance appears to be due mostly to higher tuition and fees charged by proprietary schools ($3,700 versus $400).

Net Cost

Comparing cost of attendance does not take into account student financial aid, which reduces what students pay out of pocket for their education. NPSAS data for the same two comparison groups suggest that proprietary school costs are still higher than costs for students in comparable public programs even when student aid is considered.

Table 15 compares net costs for the two groups of students when all grant aid and all federal grant aid are taken into account. (We have excluded student loans from these calculations; they do not reduce student costs because students are obligated eventually to pay them off.) Data in table 15 suggest that net cost is greater for proprietary schools students than for students in similar programs at community colleges. When federal grant aid is considered, the average net cost to proprietary school students is $2,500 greater than the average net cost for students in similar community college programs ($7,300 versus $4,800). The difference is also $2,500 when net cost is based on all grant aid ($6,900 versus ($4,400).

Summary

Proprietary schools are a significant sector of American postsecondary education. These schools make up more than one-half of all postsecondary institutions and provide a substantial proportion of postsecondary occupational training. Perhaps of more importance, proprietary school students receive about 30 percent of all federal student aid funds, and TABULAR DATA OMITTED those who receive federally guaranteed student loans are more likely to default on their loans than are students in any other postsecondary sector.

Despite the obvious importance of these schools, we have been unable to answer seemingly straightforward questions such as how many proprietary schools there are, what kinds of training they provide, who enrolls in proprietary schools, and how much proprietary training costs. This article has aimed at answering these questions. This section summarizes those answers.

There are approximately 6,000 proprietary schools, of which 4,000 are main campuses and 2,000 are branches. Most of these
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Author:Apling, Richard N.
Publication:Journal of Higher Education
Date:Jul 1, 1993
Words:8761
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