Gas station without pumps

2015 October 31

Dealing with for-profit competition

In The New Yorker gets one right, “Dean Dad” praises a short article in The New Yorker about for-profit colleges;

A tip o’the cap to James Suroweicki, at The New Yorker, for encapsulating the issues around for-profit colleges clearly and well in a single page.  The piece is well worth the couple of minutes it takes, not least because Suroweicki neatly dispatches a couple of widely held, but false, assumptions.

The way to get the best outcome all around isn’t to ban them or to try to pass lawyer-proof regulations.  It’s to outcompete them  Flood the zone with well-funded public colleges with the staffing, the facilities, and yes, the marketing, to compete.  Force the for-profits to compete on quality.  Frankly, if they can prove they do a better job with students, I have no theological objection to them.  But the experience of the last ten years suggests that if they can only compete on quality, they’ll shrink to a much less threatening size, and students will be better off.  
For-profits met a need.  The way to beat them is to meet that need better.  Austerity in the public sector cedes the field to people with other agendas.  Beef up the publics, and the need that fed the for-profits in the first place will fade away.  They can’t lawyer their way out of that.

Suroweicki’s articleThe Rise and Fall of For-Profit Colleges has the same message, plus a bit more.  The article ends with

But if we really want more people to go to college we should put more money into community colleges and public universities, which have been starved of funding in recent years. We should also rethink our assumption that college is always the right answer, regardless of cost. Politicians love to invoke education as the solution to our economic ills. But they’re often papering over the fact that our economy just isn’t creating enough good jobs for ordinary Americans. The notion that college will transform your job prospects is, in many cases, an illusion, and for a while for-profit schools turned it into a very lucrative one.

The business model for the for-profit colleges has been to get students to take out as much debt as they can, give all the money to the college (who then transfer it to a handful of executives and investors), and deliver little or nothing useful in return, leaving the students with debts that they can’t discharge.  This was obviously a socially undesirable outcome, but legislators have been doing all they can to get rid of funding for public colleges and force them to follow the same model.  I really don’t understand politicians—do they really want the sort of world that they are building?

2014 September 9

Why are students going to for-profit colleges?

Filed under: Uncategorized — gasstationwithoutpumps @ 18:03
Tags: , , , ,

Faculty in public colleges are often mystified why students would choose to take out enormous loans to attend for-profit colleges whose degrees are mostly not respected either by industry or other colleges. In Confessions of a Community College Dean: Corinthian Learner “Dean Dad” explains why for-profit colleges managed to attract students, despite the low quality and ripoff financing:

Put simply, for-profits rushed in to fill the void left by the publics.  Decades of relative neglect of public higher education, combined with a certain (ahem) narcissism within the sector itself, left entire populations underserved.  Perhaps for impure reasons, for-profits figured out how to reach students nobody else bothered to reach.  They pioneered evening, weekend, and online delivery.  They built schedules around student needs.  They focused on a few distinct majors that both students and employers could understand.  And for a while, in some sectors, some of them got decent results.  In the late 90’s, you could do a lot worse than graduating with a degree in CIS.

For-profits filled a void. If you want to prevent the next catastrophe, tend to the void.

That means consciously and aggressively using the public sector—both community colleges and four-year regional campuses—as hedges against future disaster. It means making a dramatic and sustained turn away from the long-term trend of austerity for the publics and an open spigot for for-profits. When you include the cost of bailouts, the “efficient” for-profits wind up inflicting a far greater fiscal burden on the public than more generously funded publics would have. That’s even more true when you factor in student loan debt from students who never graduated, or who graduated but never earned salaries commensurate with their debts.

If dampening demand isn’t really an option, and diverting demand to the private sector leads to financial catastrophe, maybe…stay with me…we could fund the public sector well enough to meet the demand itself. Keep student cost down, get quality up, and learn some valuable lessons from for-profits about meeting students where they actually are. Prevent the next wave of for-profit megagrowth by choking off its air supply.

That means getting away from flat or declining operating budgets supplemented by “targeted” grants that fade away in three years, and instead pouring a fraction of what a for-profit bailout would cost into the public sector. When I was at DeVry, I didn’t see fear of the government or fear of lawyers. I saw fear of the nearby community college. There was a reason for that.

As long as for-profits are considered in isolation, we’ll continue to miss the point. Yes, close loopholes, prosecute liars, and enforce regulations, but those amount to fighting the last war. If you want to prevent the next bailout instead of the last one, you have to address the demand side. Give community and state colleges the resources—and, yes, the flexibility—to flood the zone. It’ll cost some money upfront, but it’s cheaper, more humane, and far more productive than bailouts and legal fees after the next collapse. We don’t have a great record of learning from catastrophes, but this one should be easy.

His post was made in response to the failure of the Corinthian Colleges chain, where the investors had siphoned off all they could get away with and the federal government was not allowing them to be the recipients of student loan money any more.  Other for-profit chains (Anthem Education, for example) are also on the ropes, now that the Federal spigot of infinite loans is being turned back a tiny bit. No attempt is expected to claw back the money from the “investors” who ripped off the students tricking them into taking out enormous loans for a fake education.

I think that his message is indeed correct. It is a lot cheaper to fund public universities well than to clean up the mess left by a completely unregulated for-profit education “industry”.  Students should not need to take out enormous loans to get an education, particularly not the inferior one that the for-profits provided.  Society is better served by having an educated populace that is not hugely in debt.

 

%d bloggers like this: