In one program for aspiring Wisconsin criminologists at an Indianapolis-based online college, 16 students started classes in 2012. A year later, just one was still enrolled. A program for would-be Wisconsin chefs hosted by a Minnesota online college began with 34 students. A year later, it had dwindled to a class of four.

The data come from a new survey of online and for-profit colleges that enroll Wisconsin students. Overall, the average dropout rate among all 185 schools surveyed was 28 percent, the data show.

Online, out-of-state schools reported the highest dropout rates: Of the 20 schools that lost more than 40 percent of their students in the first year, 16 were for-profit online schools based out of state.

It’s the first report that charts one-year retention rates for state residents not only at the school level but also in each individual program, where dropout rates were as high as 94 percent. It doesn’t account for longer-term dropout rates.

“That number is only going to get worse,” said David Dies, executive secretary of the Educational Approval Board, “if 30, 40 or 50 percent are dropping out in the first year.”

The survey renews a debate about how much power the state should have in regulating for-profit colleges after an effort last year to create standards for retention and graduation got scuttled by state lawmakers under pressure from the industry.

Officials at the schools defended their performance by noting they serve nontraditional, typically older students who have a harder time focusing on school because of tight finances and demands from family and jobs.

“We find that a number of our students have obstacles in their lives that may prevent them from completing their programs,” Mitchell Gilbert, assistant vice president of state licensing for Argosy University, an online school that lost 46 percent of Wisconsin students in their first year, wrote to the approval board.

Dies said his board understands the schools’ situation.

“I have no problem with an institution serving a more difficult population,” he said. “They just have to be prepared for students showing up with some baggage that a student wouldn’t showing up at UW-Madison.”

Dies and his staff are working with the schools to identify why they’re losing so many students and what they can do to improve, he said.

“We want to see some positive change in the needle over time,” he said.

Kent Jenkins, a spokesman for Everest University, which the report listed as having a 58 percent dropout rate, disagreed with the analysis.

“Many students who enroll in online programs often withdraw for brief periods and later re-enroll, depending on their personal schedules and needs,” he said. “Typically, the U.S. Department of Education measures completion of associate degree programs over a three-year period rather than a single year.”

By that measure, he said, Wisconsin residents drop out of Everest at a 50 percent rate, slightly lower than the EAB measure.

High cost, little oversight

An estimated 26,000 Wisconsin students attend for-profit online colleges annually, Dies said, paying about $155 million in tuition to mostly out-of-state companies.

When they fail to graduate or get jobs, it can be particularly costly to society since the schools, which receive no public funding, tend to charge higher tuition than public colleges and rely heavily on federal financial aid to operate. Their students have higher default rates on loans, which forces taxpayers to pick up the tab.

At Westwood College, headquartered in Denver, Wisconsin dropouts amassed an average student loan debt of $17,800 in their short stints, according to the college. The Colorado Springs-based University of the Rockies reported that its Wisconsin dropouts left owing an average of $10,221.

The report also serves as a reminder of how little power EAB has to penalize schools with dismal retention rates. Emails between the agency and the schools, provided by Dies at the State Journal’s request, include passages where college leaders express alarm when faced with their numbers and questions about what comes next.

“Asked me what authority EAB had to enforce,” wrote EAB staffer Pat Sweeney in describing a response from one of the schools when told of its high dropout rate. “I said likely none given ‘performance standards’ fiasco.”

He was referring to an effort last year by the board to impose standards for student retention, graduation rates and employment. After meeting just once in February 2013, a committee charged with developing the standards was dissolved under pressure from the industry and top politicians.

Gov. Scott Walker had earlier replaced three members of the seven-member board, stripping it of most institutional memory especially with regard to the standards.

Then just weeks after the first committee meeting, Rep. Steve Nass, chairman of the Assembly higher education committee, wrote in an email to the board that it should suspend the committee and work “in a more cooperative atmosphere” with the schools.

“I believe this process is very premature,” Nass wrote in March 2013 of the proposed standards — which would have required the colleges to show that at least 60 percent of students who started programs finished and got jobs in their fields. The committee never met again.

Nass spokesman Mike Mikalson said Friday that issues remain with the proposed boost in EAB’s regulatory powers, noting that the small agency likely lacks adequate staff to deal with the increased workload the powers would bring, which has found little support from state lawmakers in previous budget cycles, he said.


Another major issue looms for all of higher education as the state decides whether to join the State Authorization Reciprocity Agreements. It’s a new initiative that would create reciprocity across states in regulating distance education for college students.

SARA is funded by a $2.3 million grant from the Lumina Foundation, a private higher-education agency dedicated to improving access and success for students post-high school.

Dies said SARA would likely strip his agency’s power to collect data on retention and other measures, as schools would need authorization to operate only from the state in which they’re headquartered instead of from each state where they enroll students. Mikalson said that so far Nass doesn’t support the nascent initiative.

“It’s really a great no-man’s land,” he said. “The consumer protection issue is in the gray.”

Dies said that even without regulatory authority, his board currently can influence bad actors to get in line by collecting and publicizing data about retention and graduation rates, arming would-be students with information.

“There can be the consequence of students voting with their feet,” he said.


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