Former Clinton aide and current for-profit higher education lobbyist Lanny Davis—whose other clients include Equatorial Guinea President Teodoro Obiang Nguema Mbasogo, a man who Foreign Policy ranked as the 14th-worst dictator in the world after he “amassed a fortune exceeding $600 million while the masses are left in desperate poverty”—has dutifully published an anti-”gainful employment regulation” article on behalf of his paymasters that doesn’t even try to be truthful or make sense. For example:
Liberals supporting these proposed regulations rightly complain about marketing and other abuses. But the fact is, such abuses occur at non-profits and public institutions as well as at for-profits and, in any event, the gainful employment regulation doesn’t even address the issue of these abuses
So we should be against regulations that prevent some abuses in the for-profit sector because they ignore other abuses in the for-profit sector? This is a defense? Also, I’m pretty sure that non-profits and public institutions don’t actually engage in boiler-room style recruiting tactics. Davis continues:
Liberals who cite the excess “cost” of student loan defaults among the lower income and minority students ignore two inconvenient, indisputable facts: first, billions of dollars of taxpayer subsidies that go to non-profits and public colleges are not available to for-profits; and for-profits cost taxpayers substantially less per-student each year than non-profits and public colleges.
Liberals (and everyone else) who cite the cost of student loans are most concerned about the cost to students, not the taxpayer, since students are the ones who get stuck with unmanageable, undischargable loans that metastacize with fees and penalties over time. Davis then says:
According to the Department of Education’s own data released last month, its proposed “gainful employment” regulations are so poorly crafted that if applied to non-profits too (which they currently are not), Harvard Medical School, D.C.’s famous minority school, Howard University, and 93 of 100 Historic Black Colleges in the U.S. would all fail the so called loan repayment test.
Presumably the fact that the regulations would catch Harvard Medical School et al are the main reason that, as Davis notes, they don’t apply to Harvard Medical School et al. Lurching for the finish line, Davis says:
The third explanation appears a classic example of ideology trumping facts: the instinctive negative reaction of many liberals to the word “profit” when associated with providing education. This seems uncomfortably similar to opposition by most liberals to private “charter” schools within urban public school districts…
That makes perfect sense, except for the fact that charter schools are public, not private, and don’t make any profits. Otherwise, a wonderful analogy.
Generally when Exxon / Mobil or the American Federation of Teachers or whomever want to publish opinion pieces expressing their views in journalistic publications, they pay for space that is clearly demarcated as such. Why does the Huffington Post allow lobbyist shills to use its space this way?
12 Responses to What Do For-Profits and Horrible Despots Have in Common?
mdefusco - October 4, 2010 at 8:29 am
Maybe this Huffington Post opposition is more qualified.http://www.huffingtonpost.com/william-tierney-and-guilbert-hentschke/post_975_b_745981.html
betterschools - October 4, 2010 at 10:47 am
Kevin,There is much more factual and inferential error in this piece than I have the time to address this morning. I’ll address one:– “Also, I’m pretty sure that non-profits and public institutions don’t actually engage in boiler-room style recruiting tactics.”Believing this clearly disqualifies you from posting on this topic. I work with this moment or have personally worked with in the recent past more than 20 large, church affiliated independents that either outsource lead-generation, sales, and (sometimes) related pre-matriculation services to exactly the kind of front-end systems to which you vaguely refer. I am only commenting on the ones for which I have personal knowledge. Second-hand, I am are of dozens more. Additionally, many public universities engage in this kind of outsourcing for recruiting foreign students. What you appear not to know about loan values and payback rates would fill volumes. I can provide you with a few dozen good starting places if you are interested.I have enjoyed many of your posts. They were always those in which you stuck to topics upon which you had reasonably comprehensive knowledge. It is irresponsible to report on practices of which you have no industry-wide knowledge.
dank48 - October 4, 2010 at 11:22 am
So it would all be okay if the same questions were being asked of all institutions of higher learning? Or not?Why is it worse to be an un-gainfully employed graduate of Noname Forprofit College than an un-gainfully employed graduate of Harvard Medical School? Yeah, right. There’s a puzzler. Yet, really, what does the answer really have to do with education? The game is up. The players just don’t all realize it.
formerprof05 - October 4, 2010 at 12:02 pm
I keep asking the following question, but I have yet to receive ANY responses, not to mention compelling answers: Why should much-needed funds for education, whether publicly backed student loans or student tuition dollars, be siphoned off as profits to line the pockets of private investors? Why shouldn’t those profits be directed, instead, to public and private not-for-profit institutions?
betterschools - October 4, 2010 at 1:02 pm
@formerprof05,There are many answers to your question. The easiest answers appeal to economic considerations. To offer two: (a) the federal government makes a net “profit” from the student loan business; if I understand your question, this fact would undermine your concern, and (b) as a society we have determined it to be in our economic interest to facilitate postsecondary educational opportunities for our citizens, whether those citizens secure their education at a public university where the taxpayer costs are conservatively in excess of $16,500 per student per year, including that segment’s loan default costs, or in a for-profit university where the taxpayer costs are conservatively in the area of $3,500 per student per year, including that segment’s loan default costs.This is a complicated area. Considerable knowledge is required to make sense of the current situation. I can direct you to a few dozen technical papers, each of which will answer your question from slightly different perspective. You might start with this one: http://www.intered.com/storage/deptofed/Sonecon_PublicCostsHigherEducation.pdfFinally, a part of your question may appeal to political ideology. One interpretation of your question is that you are implicitly assuming the values of a centrist socialist ideology, such as is prevalent in Europe. If so, many of the facts pertaining to taxpayer cost and type of control will be of no interest to you.
12100026 - October 4, 2010 at 4:05 pm
Hey Betterschools, like Lanny Davis, you can cite all the rhetoric but you ignore the obvious outcomes, students ripped off by for-profits and the great burden they now face. Also, your $16,500 per student to $3500 per student ignores that real universities actually engage in research, some of it even useful to society, and significant public service. Pray tell us about all the Nobel Lauretes working for Phoenix, et al. Tell us about the useful medical or agricultural research that Kaplan has supported. Oh by the way, those European universities you sneer about, the ones in Great Britain, France, Netherlands, and Germany, they are really pretty good. Your arguments about defaults would have worked equally well for the sub-prime mortgage industry SIX MONTHS BEFORE THE MELTDOWN!
formerprof05 - October 5, 2010 at 12:37 am
Well, betterschools, I appreciate your enlightening me on the “considerable knowledge” that I need to understand the for-profit situation. Since I am a former academic vice president and provost, however, I am quite familiar with the federal student aid system and I can say, quite knowledgeably, that your account is a gross distortion.In addition, as 12100026 points out, for-profits do not bear the burden of research and other ancillary educational support systems that public and private non-profit institutions do. Not only does society benefit from such research, but the quality of instruction in non-profit institutions is vastly superior as a result. Your response completely overlooks the matter of quality of education.Speaking of quality, for-profit institutions save a lot of money by hiring mostly part-time faculty and paying them paltry sums to teach their classes. Is that how we can promote higher quality of instruction? By hiring PhDs who have earned their degrees at enormous financial and personal cost and then paying them $1,000 to $2,000 per course? Sounds like a race to the bottom to me.It is perhaps telling that you raise the issue of political ideology, since my question can be answered without referring to that. Might your own ideology reflect the sort of unbridled capitalism that advocates privatizing nearly all social and government services? Finally, I return to my original question which you have still not answered: why should money needed to support instruction and research be transferred to the pockets of private investors? Sounds wasteful to me.
betterschools - October 5, 2010 at 1:05 pm
formerprof05,I offered a serious response to your question. There is no need for the sarcasm that is prevalent in these blogs. Also, no need to claim credentials in place of facts. Blogs are overrun with anonymous folks who claim to be the president of this or the provost of that but their rhetoric is commonly that of an old guard professor and not a senior decision-maker, the latter being focused on facts and devoid of snide remarks and sarcasm. So long as a poster chooses to remain anonymous, I think it best to center the discussions on facts. You are right that a specific political ideology is not entailed by your question. I was careful to point that out. You did give enough indications, and also in your response, to suggest that this was a possibility.In this forum, I assume we all know that some universities have substantial research functions while others do not, and that these research functions cost money. Public universities are rich and diverse contributors to our culture and communities. They often receive too little credit for the many things they do, large and small. I am a strong supporter. Based on hard numbers, I also find their current path to be unsustainable. They need to redesign substantial portions of their functions. That said, what does any of this have to do with your question and to the data in the documents to which I provided links?If you represent a public university, you stand on multiple levels of weak ground when you make claims such as you have about adjunct faculty. I can give you considerable detail on public universities with respect to percent of classroom hours taught and work assessed with scientifically invalid tools by TAs, RAs, adjuncts, instructors, assistant professors, etc. and trend lines along these dimensions, including a 50 year decline in professorial productivity. I would be careful about my claims. I’m neither defending nor criticizing the for-profits. I’m asking you for hard evidence such as I provided in the links, most of which is derived from the Department’s own databases.If you do not accept the information I provided to you as a plausible partial answer to your question, subject to validation, then your question may be more a statement of belief than an empirical inquiry. Wondering this, I tried to parse your original question:”Why should much-needed funds for education, whether publicly backed student loans or student tuition dollars, be siphoned off as profits to line the pockets of private investors? Why shouldn’t those profits be directed, instead, to public and private not-for-profit institutions?”No offense intended, but the more you study the above “question” the more incomprehensible it appears. Reworded with judgments and prescriptions removed, and terms clarified, your question becomes:”Should the portion of the funds for higher education that represents the profits made by the for-profit colleges that serve 12% of higher education’s students be taken away from them and given to public and private not-for-profit institutions?”I’m certain you don’t mean anything this silly. If you can take another stab at framing an objective question, I’ll take another try at providing and answer.(NB: This is where the pusillanimous types I mentioned above resort to ad hominums and other diversionary tactics. Senior administrators are more likely to grapple with the facts and advance the debate in good spirit.) I really would like to know what kind of evidence you would accept as an answer to exactly what question.
12100026 - October 12, 2010 at 4:32 pm
Betterschools,
For all your snide judgments of anonymous posters and assumptions about their identities,if they disagree with you, I notice that you remain anonymous.
Also you urge us to read the Sonecon report on cost. That is nice but you fail to mention that Sonecon is a lobbying firm and that is does exactly the sort of work that Kevin Carey is criticizing in his article. So when you find legitimate and objective research, rather than the propaganda of a hired gun, please let us know. Oh, and I am a sitting dean to claim a credential. And I agree with formerprof05, talking about quality of education really lies at the center of this controversy.
betterschools - October 12, 2010 at 8:18 pm
@12100026,
If something I said appeared snide, I apologize. My intent was and is to move the portions of this discussion that rest on factual assertions to consider those facts. I am aware of the sourcing of the paper you mention but you did not identify any of its factual claims for which you have evidence of falsity. To dismiss a paper of this technical merit in one sentence, as you did, is to me more snide than any of my remarks. Additionally, I mentioned (and you did not) that this was merely one of many such technical papers, each admitting of a different perspective. I’ll stick with my recommendation that this paper is factually correct, with assumptions clear, and that it is useful to this debate. If you find errors, they will be welcomed, not criticized by me.
Separately, I would be absolutely delighted to debate “quality” with you as it applies to higher education. The topic is among my favorite and longest standing in terms of conceptual and empirical inquiry. What do you have to say about it beyond the fact that you agree with ‘formerprof05′ when he mentions the term but makes no substantive remarks with respect to it?
formerprof05 - October 14, 2010 at 10:39 am
Betterschools, I must begin my final comment by reminding you that my sarcasm that you dislike so much was in direct response to your condescending tone toward all that I continue to dislike. Nevertheless, I will offer one more attempt.
Following the single link (not several) that you provided, I read the study, “Taxpayers’ Costs to Support Higher Education: A Comparison of Public, Private Not-for-Profit, And Private For-Profit Institutions,” by Robert J. Shapiro and Nam D. Pham. Strangely, and as 12100026 points out, you neglected to mention that their research was financially supported by Kaplan.
The authors conclude that for-profit schools are a good deal for taxpayers for several reasons. For example, they emphasize (pp. 3, 4, 6, etc.) that such schools pay more in taxes than they receive in “direct support” from the government. “Direct support,” however, means only government grants, appropriations, and contracts that largely support research, laboratories, instructional support for students, etc.—services for which for-profit schools spend almost nothing (table 22, p. 44). The authors never get around to admitting that for-profit schools derive the vast bulk of their revenue from government-backed student loans that far outweigh any tax liability they might incur.
Shapiro and Pham also argue that for-profit colleges enroll more traditionally underrepresented students and more economically disadvantaged students proportionately than do not-for-profit colleges. On the other end, they indicate that completion rates for such students at for-profit schools are often superior to such rates at not-for-profit schools. They conclude that all of this is good for society, since many students who are ignored, excluded, or shut out are afforded an educational opportunity.
While admitting that some students take advantage of such an opportunity, I suggest an alternative interpretation of the data, viz., that students are denied admission to traditional schools usually because they have not completed high school (or GED), because they are unprepared for college-level work, or because the institution lacks facilities (space or instructional personnel) to accommodate them. That these students are often able to complete programs at for-profit schools (when they do) might well reflect a lower standard of academic rigor than is the case at traditional schools. Since Shapiro and Pham never address issues of academic quality or rigor to any extent, this alternative interpretation remains plausible, even likely.
Regarding faculty, Shapiro and Pham admit (p. 10) that the University of Phoenix has no tenured faculty. They regard this as a good thing insofar as it allows the UoP to be flexible in shifting personnel to meet student demand. Since UoP faculty conduct no research, the institution is spared that expense. Whether such a situation impacts quality of instruction or of the educational product receives no further attention.
I contend, on the contrary, that the accelerating decline of full-time and tenured faculty at traditional schools is alarming enough and that having all instruction delivered by contingent, mostly part-time faculty at for-profit schools is deplorable. At this point, you will surely cite statistics of declining “faculty productivity” (what does that mean?), but I fail to see how paying contingent faculty a pittance—even less, in many cases, than what they might receive at not-for-profit schools—does anything to enhance educational quality. For all kinds of reasons, full-time faculty will, on balance, do a better job.
Finally, you reformulated my original question thus: “Should the portion of the funds for higher education that represents the profits made by the for-profit colleges that serve 12% of higher education’s students be taken away from them and given to public and private not-for-profit institutions?” And you go on to say, “I’m certain you don’t mean anything this silly.”
In truth and contrary to your once again condescending presumption, I do mean something just that “silly.” Rather than take away the profits of for-profit colleges, however, I would deny them those profits from the beginning. Anecdotal evidence from former employees indicates that the owners of for-profit schools determine their profits in advance and skim them off the top of the revenues received; whatever is left is used to deliver the educational product. I continue to believe that is not a good deal for society, for taxpayers, or for students. You will surely consider my views “socialist.” So be it. I’m not afraid of that word.
betterschools - October 14, 2010 at 5:02 pm
@formerprof05,
The link should have taken you to a repository of nearly 200 documents, mostly reactions to various source documents but a dozen or two source documents as well. I meant to paste it but somehow pasted the target instead. http://www.intered.com/for-profit-regulation gets you to the right level.
This said, I have no quarrel with our differences of opinion and agree with you about a portion of the ATB issue.
Perhaps I was being more literal than accords with your rhetorical style, but your initial prescription parsed to an action that was either a logical impossibility or a criminal act. As you have reformulated it today, you are saying that you would “deny them those profits from the beginning.” Since the notion of profits is derived from and is contingent upon revenue, I assume you are saying that you would rewrite basic law (and possibly amend the Constitution) to prohibit the private sector from providing higher education. (The only other thing you could be saying in this reformulation, logically speaking, is that you would allow them to operate but would not allow them to make a profit. I assume you do not mean that because no that would probably be a constitutional issue as well to say nothing of the fact that there would be no takers in that game.)
With a little final reworking, what you are saying is now clear. And you are right, I disagree with you on a few counts. My intention, however, was not to change your mind . . . or even to try. My goal was solely that of understanding what you were trying to say. Thank you.