Security Analyst Faults Barron's Cover Story on For Profits

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November 10, 2009 this week in Barron’s takes aim at for-profit colleges and universities, saying student graduation rates and default rates are worse than those at traditional colleges, and that student dropout rates are as high as those at public universities.  “For-profit schools like to blame dropouts and defaults on the population of poor and minorities the industry ‘serves,'” concludes Bill Alpert, the article’s author. “But the evidence doesn’t show whether the industry’s serving that population or preying on it.” In a two-page critique released Monday, Ariel Sokol, a New York City-based analyst with Wedbush Securities, picks apart the article, describing it as sensationalized and saying the author’s analysis is flawed.  In particular, Sokol says Alpert uses U.S. Department of Education data on drop-out rates and graduation rates for full-time, first-time students pursuing bachelor’s degrees. Yet for profit institutions serve primarily working adults who are rarely first-time students, observes Sokol.  Therefore the department data that Alpert relies on “represents a fraction of the total enrolled students,” at for-profit institutions says Sokol.  He also says that because for-profit institutions typically have open admissions policies they are likely to have lower student retention rates. Additionally, he writes, pursing a degree as an adult is harder than as an 18-24-year old, leading to higher drop-out rates.   —-Andrea L. Foster]]>