"... greed, for lack of a better word, is good. Greed is right, greed works."- Gordon Gekko, from the motion picture Wall Street
The picture above is a screenshot of the values of the leading for-profit companies at the end of trading yesterday. Why the sudden uptick? The announcement of the coming departure of Mr. Rob Shireman, a key figure at the Department of Education who has been known for taking a hard stance against for-profit colleges, that's why. The rise in stock values was Wall Street's collective boner at the fact that these companies could face less stringent regulation after July 1 (and thus could be much more profitable). Hmm. For-profit, for whom exactly?
Not the students, IMO. Of all the stakeholders involved in the business of for-profit colleges: the students, the federal government, the shareholders of the for-profits, the management, the "admissions counselors" and so on, the students are probably lowest on the totem poll. They bear all of the risk involved in the process: the tremendous cost of the loans, the opportunity cost of time spent in classes, and the chance that they will not even succeed in getting the degree they are seeking. For the for-profits (FPs), the risk is minimal. As long as they can get a butt in each seat in the classroom, they can keep the loan money flowing in and their investors happy. They are completely divorced from the outcomes of their students. Whether students fail or succeed is really of minimal concern to the FP, even if a student comes out with a terrible experience, loads of debt, and is super vocal about their tribulations, these companies have tremendous advertising budgets that will allow to them to drown out the voices of dissent with their siren song of "get this degree, make more money, have a better life."
For this reason, I think the FP model of education is simply untenable. The best interests of the students and the companies that run these schools are almost in complete opposition. The students are in need of a relevant and useful educational experience that can be parlayed into a better job and more opportunities. The company is best served by increasing enrollments and delivering this "education" at the greatest margin of profit. Because there is only so much money that these students could likely pay in a year (based on income and loans), these companies have to cut back on overhead. This profit maximization takes place in the form of more online classes of dubious rigor and value and more "vocational experiences" where a nursing clinical is actually a trip to a daycare (I cannot make this up, watch the Frontline piece mentioned in my previous post). The very essence of their business model depends on educating as many students as cheaply as possible.
Traditional non-profit schools, in a sense, operate in a much more "market-oriented" fashion: if they are truly good at educating their students, putting them in the best possible position to succeed, they should be able to solicit donations from grateful alumni and build a nice endowment. With said endowment (and yes, this is EGREGIOUS simplification here, but bear with me), they can build nicer facilities, hire better professors. and offer better financial aid packages to needy students. All of these benefits are cyclical in that they go back to the next generation of students, who then repeat the process. Hmm... a company (college/university) makes a good product (an education), its customers (students) go out and make money/gain prominence/promote product, and the company is able to expand and improve operations with more investment (alumni/corporate/foundational support). SEEMS PRETTY CAPITALIST TO ME. Somewhere Adam Smith is reaching for a Kleenex. The difference between this setup and the FP model is that the students, college, and the pursuit of knowledge benefit in this model, where as the shareholders reap most of the benefit with FPs.
Proponents of FPs say that they are simply catering to the "market" for education, that they fill a much-needed niche in the education sector. In some cases that may be true. By and large, these schools merely do the job that community colleges should perform: provide a vast array of vocational and transferable 1-2 year degrees. If all of the federal money currently going to line the pockets of the Barons of For-Profit Education went instead to a drastic reshaping and revitalization of our community college system to meet the dynamic needs of our workforce, it would be money much better spent.
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