About Career Education

Private Sector Colleges and Universities in America:
Meeting the Needs of the 21st Century Workforce

Background Questions and Answers

What is a private sector colleges and universities (PSCU)?
A private sector college or university is a postsecondary institution that provides professional and technical, career-specific educational programs. Most private sector colleges or universities pay taxes yet receive no direct financial support from state governments, unlike public, not-for-profit institutions that receive state tax support or not-for-profit private colleges that pay no taxes. Completion of a private sector college or university program can range from doctoral and master’s degrees, to bachelor’s degrees, to associate degrees, to short-term certificates and diplomas. Private sector colleges or universities are owned and operated by private individuals, private investors and public corporations.

What areas of study are offered by private sector colleges or universities?
Private sector colleges or universities provide educational programs in over 200 occupational fields, including accounting, allied healthcare, automotive technology, business administration, commercial art, criminal justice and law enforcement administration, culinary and hospitality management, emergency medical technology, information technology, interior design, legal administration, network administration, nursing, digital media, and visual and performing arts.

What is the Association of Private Sector Colleges and Universities?
The Association of Private Sector Colleges and Universities (APSCU), with over 1,800 members, is a voluntary, Washington, D.C.-based membership organization for private, postsecondary schools, institutes, colleges and universities that educate and support the career-oriented sector of higher education through a full range of higher education programs: master’s and doctoral degree programs, two- and four-year associate and baccalaureate degree programs, and short-term certificate and diploma programs. Private sector colleges and universities (PSCUs) educate over three million students each year.

All APSCU members must be licensed by the state in which they are located and accredited by a national or regional accrediting body approved by the U.S. Department of Education. Many also participate in other federal, state and local education and workforce training programs.

APSCU serves its members by promoting access, accountability and excellence in career and professional higher education. Principal APSCU programs focus on public policy advocacy, sector promotion and research, and professional and business development. The APSCU Annual Convention and Exposition attracts over 2,000 attendees; the organization holds other events throughout the year, including the APSCU Symposium and Public Policy Forum and Hill Day.

APSCU governance is provided by a board of directors composed of 16 members. Arthur Keiser, Ph.D. of Keiser University, Keiser Career College and Southeastern Institute, is the Board Chairman. David Pauldine of DeVry University is Vice Chairman. Robert Herzog of Harrison College is treasurer. Brian Moran is Interim President and CEO of APSCU, overseeing the day to day operations of the organization. APSCU maintains a professional staff of over 35.

Why enroll in a private sector college or university?
The focus of employers today is on skills. Between 2008-2018, approximately 47 million job openings are projected and 63% will require some college, a 20% increase from current employment education levels.¹

Over half of the 20 fastest growing occupational categories between 2008 and 2018 require less than a four-year degree. The government forecasts that four of these occupations require an associate’s or postsecondary vocational award. Another five categories need a four-year degree, including the top two fastest growing occupational categories, biomedical engineering and network systems and communications. Four other categories require post-graduate degrees.²

Also, within the 20 fastest growing occupational categories, half are related to healthcare.³ In 2008-2009, PSCUs educated 58% of the allied health workforce and 11% of nurses.⁴

Private sector colleges and universities focus on the needs of both students and employers. Many offer online courses of study, flexible course schedules and accelerated completions to meet the needs of working adults juggling study, full time employment and personal commitments. Many private sector colleges and universities also have business advisory councils that help shape curricula and develop programs to meet growing and shifting workforce demands.

What is the mission of private sector colleges or universities?
The 21st Century workforce demands highly skilled workers, and private sector colleges or universities are well positioned to educate Americans for information age jobs. Jobs in information technology, accounting, finance and engineering are regularly being outsourced overseas because there are not enough skilled workers to meet U.S. demand. 77 million baby boomers are beginning to retire, and the U.S. healthcare infrastructure is badly understaffed to meet a tidal wave of seniors requiring acute, post-acute, chronic and rehabilitative care.

Private sector colleges or universities are a key piece of the education and skill development puzzle. They adapt to market needs more quickly than traditional institutions and maintain much higher graduation rates than community colleges. While traditional colleges and universities often help students gain broad background in the liberal arts, “find themselves” in personal terms, explore intellectual interests or perform research, private sector colleges and universities serve individuals who are committed to a specific occupational goal and seek the most direct route to reaching it.

How big is the private sector college or university marketplace?
Over three million students attended accredited private sector college or universities in 2008-2009, which represents about 12% of the total market of nearly 27.5 million students. Enrollment at private sector colleges or universities in the last five years (between 2004-2005 and 2008-2009) increased by 46%.⁵

Who attends private sector colleges or universities?
Private sector college or university students are predominantly working adults looking to achieve the American dream by obtaining an education directly related to their career goals. 41% are minorities⁶ and almost 76% are defined as independent or “self-supporting” and 62% are age 24 or older. 47% have dependent children and more than 39% of the students are employed full-time (30 hrs. +) while enrolled.⁷

How do private sector college or university graduation rates compare to traditional schools?
According to the U.S. Department of Education’s National Center for Education Statistics (NCES), fall 2008, 60% of private sector college or university students who attended 2-year institutions graduate within six years of enrolling. At community colleges, over the same time span, 22% of the students graduate.⁸ Also, from 2008-2009 NCES data, PSCUs award 16% of all postsecondary degrees and certificates while enrolling just under 12% of all postsecondary students.⁹

How do private sector college and university tuition costs compare to traditional schools?Every college is different, of course, and tuition will vary depending on such factors as degree focus area, local economic conditions, student demand and the like. As a general rule, private sector colleges and universities are more expensive than community colleges and public four-year institutions and less expensive than private non-profit colleges and universities.

What is the student's return on investment for a private sector college or university education?
In salary terms alone, in 2007, the median annual earnings of adults with some college or an associate’s degree was $40,769 versus $32,862 for their high school graduate counterparts. The average rate of return on a student’s investment is 24%.¹⁰

How do private sector college and university students finance their education?
Private sector college and university students often finance their education with a combination of Federal (Pell Grants) and state and local government grants, government subsidized and unsubsidized loans (Stafford Loans) and private banking loans. Unfortunately, federal and state support for higher education has not kept pace with inflation and the difference between Pell Grant and Stafford Loan funding amounts and tuition and related costs can leave a funding gap. This gap can be addressed by PLUS Loans, where parents agree to co-sign for the student, commercial market loans and self financing.

How do private sector college and university student loan default rates compare with other student loan default rates?
Private sector college and university default rates are slightly higher than default rates for students at community colleges and two-year private non-profit colleges, while considerably higher than at four-year public and private not-for-profit colleges and universities. According to the U.S. Department of Education, “proprietary” school students in 2008 had a loan repayment default rate of 11.6%, compared with 10.1% for students at community colleges (public two-year institutions) and 8.2% at two-year private not-for-profit institutions. The default rate for federal loans at public four-year institutions was 4.4% and 3.8% at four-year private not-for-profit institutions. ¹¹ The higher default rates at both private sector colleges or universities and community colleges reflect the fact they both serve a substantially greater percentage of students coming from low income circumstances compared to the other types of institutions. Facts show that the economic condition of the borrower, not the quality of the institution or its tax status, determined default rates. Economically disadvantaged students default at similar rates, regardless of the type of institution attended. ¹²

How do private sector colleges or universities impact the U.S. economy?
Private sector colleges and universities make an important contribution to the American economy. They operate as tax-paying businesses that put dollars in the economy of every state and community in which they are located. In addition, their graduates earn more, spend more and pay more taxes than would be the case if they had not received training beyond high school. A May 2007 report from the Imagine America Foundation concluded that private sector colleges and universities contributed $38.6 billion to the U.S. economy in 2005. This includes $14.6 billion in direct institutional expenditures and $4.0 billion spent by students on expenses other than tuition required to attend the institutions. In addition, the sector generated $3.5 billion in secondary earnings gains, defined here as the increase in private sector college or university graduate salaries, and $16.5 billion in indirect economic activity associated with the industries in which graduates are employed.¹³

What is the projected demand for a private sector college or university education?
The U.S. Census Bureau reports that in 2008 only 38.2% of Americans held college degrees. While this is a record high, the percentage is expected to climb.¹⁴ According to the U.S. Department of Education, between 2009 and 2018, postsecondary enrollment in degree-granting institutions is expected to increase overall by 8%.¹⁵

How are private sector colleges and universities accredited?
Title IV eligible private sector college and universities can be nationally or regionally accredited. Accreditation is a condition of APSCU membership. However, many private sector colleges and universities are not accredited and are not APSCU members. Leading national accreditation organizations are the Accrediting Commission of Career Schools and Colleges (ACCSC) and the Accrediting Council of Independent Colleges and Schools (ACICS). There are six major regional accrediting organizations. Many private sector colleges and universities are accredited by multiple bodies.

Accreditation involves an in-depth assessment of an institution’s compliance with educational standards. The review examines the school’s infrastructure and resources for delivering higher education and, in the case of national accreditations, its ability to produce satisfactory educational outcomes. In terms of the former, such a review covers the adequacy of faculty, curriculum, facilities and equipment, admissions practices, retention, financial and administrative capabilities, and student services. Outcomes include factors such as program completion and job placement rates, graduate performance on state licensing examinations, and student satisfaction.

Accreditation of an institution can take up to two years and costs several thousand dollars to complete. The accreditation process involves both self-reporting and on-site visits to the institution by accreditation body personnel. Accredited institutions must comply with all federal, state and local requirements and be financially sound, audited and reviewed by an independent certified public accountant. The institution must file an annual financial statement with the accrediting body.

What are the placement rates for private sector colleges and universities?
Placement rates for individuals completing programs at private sector colleges and universities are high. One of the national accrediting bodies (ACICS), which accredits over 700 institutions whose enrollment in 2009 was slightly over 700,000, collects such information. It reported that in 2009, of over 132,000 completers and graduates, nearly 69,000 were placed in their field of study and over 13,000 were placed in a related field.16 76% of those earning an occupational associate’s degree found employment in 2009, according to ACICS, while 73% did so with academic associate’s degrees, 74% in bachelor’s degree programs and 78% in master’s degrees programs. Placement rates for certificate and diploma completers were over 73%.¹⁷

The Association of Private Sector Colleges and Universities
1101 Connecticut Avenue, NW Suite 900
Washington, DC 20036

www.apscu.org
202-336-6700

Footnotes:
¹ Carnevale, A., Smith, N. & Strohl, J., Help Wanted: Projections of Jobs and Education Requirements through 2018, June 2010, Georgetown University Center on Education and the Workforce, Table 3.6, p. 26.

² U.S. Department of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, 2010-11 Edition, “Overview of the 2008-2018 Projections,” Table 1, p. 7. http://www.bls.gov/oco/oco2003.htm

³ Ibid, p. 6.

⁴U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Fall 2009 survey. http://nces.ed.gov/ipeds/datacenter/

⁵ U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Postsecondary Institutions in the United States: Fall 2004-2006,and Degrees and Other Awards Conferred: 2003-2006; Postsecondary Institutions in the United States: Fall 2004-2006; Graduation Rates, 1998 & 2001 Cohorts, and Financial Statistics, Fiscal Year 2004-2006; Postsecondary Institutions and Price of Attendance in the United States: Fall 2007-2009, Degrees and Other Awards Conferred: 2006-2009, and 12-Month Enrollment: 2006-2009, “Total unduplicated headcount enrollment at Title IV institutions, by student level, sector, race/ethnicity, and gender: United States, academic year 2006-2009”, Table 8, 2006-2008 and Table 10, 2008-2009.

⁶ Op Cit.

⁷ U.S. Department of Education, National Center for Education Statistics, “National Postsecondary Student Aid Study 2007-2008” (NPSAS: 2008). http://nces.ed.gov/surveys/npsas/

⁸ U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Enrollment in Postsecondary Institutions, Fall 2008; Graduation Rates, 2002and 2005 Cohorts; and Financial Statistics, Fiscal Year 2008, “Graduation rates at Title IV institutions, by race/ethnicity, level and control of institution, gender, and degree at the institution where the students started as full-time, first-time students: United States, cohort year 2002-2005,” Table 5, p.14. http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2010152rev

⁹U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Postsecondary Institutions and Price of Attendance in the United States: Fall 2007-2009, Degrees and Other Awards Conferred: 2008-2009, and 12-Month Enrollment: 2008-2009, “Total unduplicated headcount enrollment at Title IV institutions, by student level, sector, race/ethnicity, and gender: United States, 2008-2009,” Table 2, p.7 and Table 10, p.18. http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2010161

¹⁰ U.S. Census Bureau, Educational Attainment in the United States: 2007, January 2009, P20-560, “Median Earnings by Highest Degree Earned, 2007”, Table 3, p.9. http://www.census.gov/prod/2009pubs/p20-560.pdf

¹¹ U.S. Department of Education, Office of Federal Student Aid, Information for Financial Aid Professionals (IFAP), “Direct Loan and Federal Family Education Loan Programs, Institutional Default Rate Comparison of FY 2006, 2007, and 2008 Cohort Default Rates,” September 2010, http://www.ed.gov/offices/OSFAP/defaultmanagement/instrates.html

¹² U.S. General Accountability Office (GAO), Proprietary Schools: Stronger Department of Education Oversight Needed to Help Ensure Only Eligible Students Receive Federal Student Aid, GAO-09-600, August 2009. http://www.gao.gov/new.items/d09600.pdf

¹³ Imagine America Foundation, Economic Impact of America’s Career Colleges, May, 2007, “Total Annual Economic Impact of Career Colleges,” Table 1, p. 6. Washington, DC.

¹⁴ U.S. Census Bureau, Current Population Survey, “Educational Attainment by Selected Characteristics: 2008,” Table 226, http://www.census.gov/compendia/statab/2010/tables/10s0226.pdf

¹⁵ U.S. Department of Education, Digest of Education Statistics 2009, “Total fall enrollment in degree-granting institutions by sex, age, and attendance status: Selected Years, 1970 through 2018,” Table 191, http://nces.ed.gov/pub2009/2009020.pdf

¹⁶ Accrediting Council for Independent Colleges and Schools, Educating America’s Workforce, Summary of Key Operating Statistics, 2009 Data, “2009 Placement Data,” p. 11, http://www.acics.org/KOS.aspx

¹⁷ Ibid, p.12.


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