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A Blog from New America's Higher Education Initiative

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NAICU Has Bad Apples Too

Published:  February 7, 2013
Rotten Apple

There's always a bad apple among the good. Image licensed CC by MrB-MMX.

There are bad actors in every sector of higher education. But the National Association of Independent Colleges and Universities (NAICU) would like you to believe otherwise. During a panel discussion with Congressional staffers at their annual conference, private college presidents expressed frustration with increased federal scrutiny and regulation. They argued that problems with debt and default are just for-profit problems, not private nonprofit problems. A Republican staffer for the House Committee on Education and the Workforce, Brian Melnyk, agreed in part saying, “There are some bad actors among for-profits,” but he added, “bad actors can be found in every sector of higher education.” This comment was not well received. Several audience members yelled, “Name them.” Melnyk declined. But I won’t.

In October, the Department of Education released the first official 3-year cohort default rates (CDR) for postsecondary institutions, which measure the percentage of students who have defaulted on their federal loans within three years of leaving college. Having a rate above 30 percent starts an institution on the road to federal student aid sanctions. And although institutions with 3-year CDRs over 30 percent are overwhelmingly for-profits (73 percent), private nonprofits still account for 11 percent of the schools. Of that 11 percent, almost half are NAICU members.

Arkansas Baptist College is one such NAICU bad offender, with abysmal graduation rates, and high net-prices for its predominantly low-income students. Pell Grant recipients make up about 75 percent of the student body and the net price for low-income students is over $14,000 a year. Add that to a six-year graduation rate of 5 percent and a 3-year CDR of 32 percent, can anyone argue this institution is serving its students well? While some may argue these statistics may be more indicative of the students Arkansas Baptist serves, they fall dead last within their peer group for graduation rates according to Education Trust’s College Results Online.

Or take Jarvis Christian College as another example. Located in Texas, 90 percent of its students receive Pell Grants.  But only 14 percent of its students manage to graduate. For those who do manage to cross the finish line, they find themselves facing an average debt of over $29,000. That’s higher than the national average. Three years after leaving school, more than 37 percent of Jarvis Christian students default on their loans. The average Parent PLUS loan disbursement for Jarvis Christian last year was over $11,000, indicating that not only are students going into a considerable amount of debt, but so are their families. What’s worse is that Parent PLUS loans are not calculated in cohort default rates so we have no way of knowing if parent borrowers are struggling. Given their student demographics and outcomes, it’s probably safe to assume that they are.

All of the NAICU institutions with 3-year CDR above 30 percent serve high proportions of Pell Grant students (> 65 percent). That’s a lot of federal money being spent, both through loans and grants, with lousy outcomes to show for it. While a larger proportion of bad actors can be found in the for-profit sector, no sector is blameless. Students and the federal government deserve to know what’s happening with their investment in higher education—transparency and accountability are needed across all sectors. Sorry NAICU schools, but that means you too

A table of the NAICU institutions with 3-year CDR above 30 percent can be found below:




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