PBS broadcast a documentary on for-profit higher education last week, titled College, Inc. It begins with the slightly ridiculous figure of Michael Clifford, a former cocaine abuser turned born-again Christian who never went to college, yet makes a living padding around the lawn of his oceanside home wearing sandals and loose-fitting print shirts, buying up distressed non-profit colleges and turning them into for-profit money machines.
Improbably, Clifford emerges from the documentary looking OK. When asked what he brings to the deals he brokers, he cites nothing educational. Instead, it’s the “Three M’s: Money, Management, and Marketing.” And hey, there’s nothing wrong with that. A college may have deep traditions and dedicated faculty, but if it’s bankrupt, anonymous, and incompetently run, it won’t do students much good. “Nonprofit” colleges that pay their leaders executive salaries and run multi-billion dollar sports franchises have long since ceded the moral high ground when it comes to chasing the bottom line.
The problem with for-profit higher education, as the documentary ably shows, is that people like Clifford are applying private sector principles to an industry with a number of distinct characteristics. Four stand out. First, it’s heavily subsidized. Corporate giants like the University of Phoenix are now pulling in hundreds of millions of dollars per year from the taxpayers, through federal grants and student loans. Second, it’s awkwardly regulated. Regional accreditors may protest that their imprimatur isn’t like a taxicab medallion to be bought and sold on the open market. But as the documentary makes clear, that’s precisely the way it works now. (Clifford puts the value at $10-million.)
Third, it’s hard for consumers to know what they’re getting at the point of purchase. College is an experiential good; reputations and brochures can only tell you so much. Fourth—and I don’t think this is given proper weight when people think about the dynamics of the higher-education market—college is generally something you only buy a couple of times, early in your adult life.
All of which creates the potential—arguably, the inevitability—for sad situations like the three nursing students in the documentary who were comprehensively ripped off by a for-profit school that sent them to a daycare center for their “pediatric rotation” and left them with no job prospects and tens of thousands of dollars in debt. The government subsidies create huge incentives for for-profit colleges to enroll anyone they can find. The awkward regulation offers little in the way of effective oversight. The opaque nature of the higher-education experience makes it hard for consumers to sniff out fraudsters up-front. And the fact that people don’t continually purchase higher education throughout their lives limits the downside for bad actors. A restaurant or automobile manufacturer that continually screws its customers will eventually go out of business. For colleges, there’s always another batch of high-school graduates to enroll.
The Obama administration has made waves in recent months by proposing to tackle some of these problems by implementing “gainful employment” rules that would essentially require for-profits to show that students will be able to make enough money with their degrees to pay back their loans. It’s a good idea, but it also raises an interesting question: Why apply this policy only to for-profits? Corporate higher education may be the fastest growing segment of the market, but it still educates a small minority of students and will for a long time to come. There are plenty of traditional colleges out there that are mainly in the business of preparing students for jobs, and that charge a lot of money for degrees of questionable value. What would happen if the gainful employment standard were applied to a mediocre private university that happily allows undergraduates to take out six-figure loans in exchange for a plain-vanilla business B.A.?
The gainful employment standard highlights some of my biggest concerns about the Obama administration’s approach to higher-education policy. To its lasting credit, the administration has taken on powerful moneyed interests and succeeded. Taking down the FFEL program was a historic victory for low-income students and reining in the abuses of for-profit higher education is a needed and important step.
But the administration has displayed no similar enthusiasm for addressing the many problems in the traditional public and non-profit sector where most students actually go to college. Attacking corporate interests is good politics for a Democratic administration. Challenging the academy to do a better job of teaching students and helping them graduate is a much bigger lift. But that’s what will have to happen if the administration is serious about meeting its 2020 goal for college completion. The clock is ticking, and the easy targets are only going to last so long.
6 Responses to ‘College, Inc.’
ronprice47 - May 11, 2010 at 12:35 pm
Mr. Carey touches on a very good point – What if all higher education institutions were to be measured under “gainful employment?” Although many liberal arts academics often forget that ultimately we are all vocational instructors, the entire model of higher education should be examined (from the top down) on the relative value contributed by each function, activity, and person to the overall value proposition realized by the student, regardless of whether he or she graduates. We must develop the attitude that the customer’s goals trump the lofty mission statement of the hallowed institution.
saluki87 - May 11, 2010 at 1:40 pm
There are many shady private for-profit institutions out there. However, there are some good ones as well. U of Phoenix and Kaplan do a very good job by most reports (I sttended public institutions so I have no bias towards the for-profits) and I’m sure there are others. Traditional higher ed should consider greater use of professional upper administrative managers rather than simply taking biologists, historians, engineers, etc. and assuming their on-the-job training has prepared them to run a multi-million dollar operation. Multi-million dollar operations require expert management to succeed and the successful for-profits understand this.
chandru - May 11, 2010 at 2:27 pm
During the dot-com frenzy of the late 1990s and early 2000s, some saner and wiser observers were cautioning others that the adjective electronic in the phrase “e-business” was a transient phenomenon and that, after the e-dust settles, all of us would simply take e-mail, e-business, e-commerce etc so for granted that we would drop that adjective and simply assume that all manner of business will be conducted as a blend between the physical (atoms) and informational (bytes). In a similar vein, learning today has largely become blended, as face-to-face instruction is increasingly complemented and supplemented by interaction in the electronic medium. A parallel exists between the above and the twin-adjectives of non-profit and for-profit. As for-profit higher-ed sector becomes a substantial part of the landscape, these prefixes and adjectives will go away. The distinction is already becoming moot. If payroll, technology, e-mail hosting, the cafeteria, book-store, estate-management and numerous other activities are already being outsourced to for-profit vendors and service providers, then the convergence mentioned above is well underway. The same debates were seen in healthcare. While the hospitals themselves might have been non-profits, every supplier and partner they do “business” with (suppliers of pharmaceuticals, linen, waste-disposal, medical equipment, insurance etc) are for-profit entities. Clearly, the proportion of economic activities that are carried out under the for-profit roof has gone up. Ask any administrator in these settings why they chose to outsource these activities and s/he is bound to cite the proverbial make-or-buy calculus. There is no escaping the fact that EFFICIENCY (doing more with less) and EFFECTIVENESS (made possible by specialized expertise embodied by dedicated suppliers) are what drive the decisions to “buy” rather than “make.” In a world increasingly characterized by specialized expertise and economies of scale, we must expect a greater tendency toward outsourcing to specialists, while retaining only the core of what the principal organization does best or is meant to accomplish. Rather than debate the moot distinction between for-profits and non-profits, the Obama Administration would be better of orchestrating a new regulatory infrastructure that achieved the following objectives:(1) raise the level of accountability (use not just gainful employment, but other criteria as well) for ALL institutions;(2) encourage the media, NGOs, foundations and employers to collaborate to come up with more meaningful, subtle and granular measures of institutional effectiveness than so far attempted;(3) re-conceptualize the mission of the DoE to include a more sophisticated understanding of higher education, as opposed to the primary focus on K-12, which although more pressing runs the risk of crowding out higher-ed from the national agenda;(4) broaden the definitions of what constitutes malfeasance on the part of education providers (whether they are non-profits or for-profits).(5) tighten the definition of achievement and hold ALL institutions to those definitions and standards. (You will get a lot of push-back from colleges that constructs like Critical Thinking are difficult to assess, but these are just cop-outs and excuses. Insist on the creation of cross-constituency panels consisting of representatives from employers, accreditors and academics and mandate them to agree on the set of competencies, by discipline, that students should possess at the time of graduation. Use independent panels (with a similar profile as the above, but with different individuals) to assess student competencies. Combine high-stakes standardized assessment WITH course-embedded, in-context assessment to provide for both comparability (relative to peers) AND granular/ contextually-grounded assessment. TIE FUNDING TO INSTITUTIONAL ACHIEVEMENT ON THESE ASSESSMENTS. STIR, SERVE, REFINE, STIR, SERVE, REFINE —REPEAT!(6) Most traditional institutions take in higher-quality students and then add very little value (relative to resources used). So, they end up looking a lot better than their for-profit counterparts. So, the Feds should insist on VALUE-ADDED measures of student achievement, so as to account for the differences in demographics and incoming student-quality that institutions get to work with.
greatheart - May 11, 2010 at 4:41 pm
Wow, Kevin…that was cold…more to come…
greatheart - May 11, 2010 at 9:16 pm
Kevin,That was cold!I won’t make fun of your skinny little runty bod, nor your scraggly unkept excuse for a beard, or your geeky out-of-date basement glasses…and that cheesy suit from the Sale Rack…because we have a lot more to agree upon together!So let’s focus on what we can agree upon, rather than tear each other down, so we can create a discussion that will benefit our students. First, I agree with you that the federal government has unfairly targeted the market-funded sector through the proposed gainful employment rule. But that is fine with me, as I truly believe that the great majority of market-funded schools are raising the bar via innovation.Regarding my background (e.g., “slightly rediculous figure”), my success comes first from a love of education for all people. My second objective is to help create jobs–we have helped create over 9,000 new jobs in higher education in the last six years, while other non-profits are cutting back. Thirdly, my comment about what I do bring to a school, “Money, Management, Marketing,” was edited. When I manage anyone, we create the resources for the academics to do what they do best: teach. If you take a moment to do your research, you will find that 100% of ALL the leadership in ANY school that I am involved with has the extremely qualified academic leadership. If we are to help fulfill the President’s objective, we need “All Hands on Deck” to work together…we need to stop the childish bickering about for profit versus non-profit. Both can learn best practices from each another. We need to ALL become Student-Centric.I admit failure as a GQ model.On a last note, I’ll point out that I find it highly problematic that the Frontline piece focused on the “sector,” suggesting that market-funded institutions is homogenous. But they did an outstanding job in a short time on a BIG topic. Our industry is an incredibly diverse industry, with good and bad actors offering a myriad of different programs targeted to different segments of the population at varied price points. Off with the heads of the Bad Actors! And, it is unfortunate that Frontline did not have time to discuss the core values behind my organization, SignificantFederation. Those include:* FULL & EQUAL ACCESS – Giving every student who is willing to make the required effort the opportunity to acquire a quality college education.* AFFORDABLE – Lowering tuition and fees so the focus is on getting an education, not financing an education.* TIMELY & RELEVANT – Facilitating faster completion with lower debt and equipping graduates with relevant, real-world skills.* PURPOSEFUL & ETHICAL – Equipping graduates with a strong ethical and moral compass and a willingness to help others.The most relevant one in this conversation remains affordability. I’m in the business of helping people live better lives. My institions tend to charge a lower tuition rate than other postsecondary institutions, whether they are non-profit or for-profit. Our family donates as much as possible to help fulfill this mission. My prayer has always been for us to use our resources to be givers of our time, talent, and treasures.So, as my fat fingers are worn out from typing this to you, note that I just left you a phone message to ask for your guidance in my wardrobe for the next TV interview. Perhaps we can even work together in creating greater educational opportunities for all Americans.Love,Michael K. Clifford
rlhgatorgirl - May 20, 2010 at 11:34 am
While I am not a proponent of For-Profit Colleges, these educational businesses at least operate closer to other entities in the capitalist marketplace. As an academic who attended 5 different state institutions and one private in the quest for the ultimate teaching credential, my PhD I now am the proud owner of a 30-year mortgage for my troubles. While I alone am responsible for this amassed debt, I will NEVER recoup the cost of my “credential” with my “gainful employment”–higher education. Why is education, especially higher education, under the illusion that as a social good it should operate outside basic capitalist priciples? I was a college professor for 10 years making a pittance of what many of my students have gone on to earn. Why do spouses have the right to asset division after the dissolution of marriage and yet an education professional is paid once for their time with a professor when they gained skills and knowledge that that they use on a daily basis to earn their gainful employment? Where are my royalties? Why shouldn’t I get a kick back from all the former students who have become gainfully employed? Isn’t that ultimately merit-based teacher pay?