for-profit colleges in the news

Some recent stories on for-profit colleges caught my attention and made me think about how states and the federal government increasingly have some important regulatory decisions to make regarding this sector.  The first story involves proposed rules seeking to address concerns over student loan debt levels and default rates of those enrolled in for-profit schools.  Proposed “gainful employment” regulations would withhold funding from for-profit institutions enrolling too many students likely to earn salaries that wouldn't be high enough for them to repay their loans based on projected student debt levels.  Not surprisingly, for-profit institutions are challenging the expanded regulation and argue that distinctions shouldn't be made between for-profit and non-profit institutions.  While for-profits can point out some similar problems with non-profit institutions, the default rates are indeed much higher among for-profit schools.

Even as the latest wrangling over regulation of for-profit colleges goes on, other stories made me think about how the growth of this sector has and will continue to change higher education.  Wal-Mart has announced plans to partner with a for-profit school to provide classes to its employees (they would get a reduced tuition rate), and I suspect that a number of non-profits wouldn’t look down on the up to $50 million that Wal-Mart reportedly may spend in the next three years on this venture.  Given Wal-Mart's size, this may be a model that influences other corporations so it's something to watch. I also noticed that one of the two-year schools in Kentucky has announced that students can now earn some credits through StraighterLine, which offers pre-packaged classes at $39 a pop after an enrollment fee of $99, according to the company's website.

While many in the non-profit higher education world like to ignore these institutions and would just like to have them go away, this doesn’t seem likely and ignoring them is becoming harder.  For-profit colleges account for up to 10 percent of the students enrolled in higher education.  Just look at the University of Phoenix to better understand this trend in the growth of for-profit schools.  It has enrollment numbers that are flirting with the half million mark, and I’ve noted with interest how I now see cars with Phoenix bumper stickers. . . . And don’t forget the University of Phoenix Stadium.

So, no grand observations on my part for now, but the stories reminded me of the growth of for-profit colleges, how the for-profits are continuing to alter the higher education landscape, and how some really important regulatory issues exist regarding these institutions.



Comments

[Bruce Vandal]

Thanks for the heads up about your post. It does appear that there a whole host of issues related to for-profit colleges in the media right now. The Walmart arrangement could be an interesting harbinger of things to come. With employers continually frustrated that higher education is not graduating students with the skills they need, it only makes sense that they might consider working with institutions that share their corporate mindset. I look forward to hearing more from you on the topic.

[Trace Urdan]

Default rates track not to the governance structure of the institution but to the profile of the students being served by that institution. The real discussion we need to have is how to pay for all the educating we wish to do. The lower a student falls on the socio-economic ladder, the more likely they are to drop out of school. They drop out of community colleges in greater numbers but states and municipalities pick up the tab. So if we restrict their access to for-profit schools where they bear the responsibility of the cost of their education themselves, they will have to go to community colleges instead and this cost will be transferred to state governments. But the states are increasingly engaged in a process of privatizing state-funded institutions raising tuition dramatically each year. So if we're not going to let them borrow, then we are effectively, regulating them out of the market. So just as we have accepted the meme that not everyone can own a home. We must then be prepared to accept the meme that says, not everyone can receive training to improve their skills.

[Neal Hutchens]

Well, the feds, while imposing some new regulatory requirements, are going to delay issuing ones dealing with "gainful employment." My hunch is this will mean a toning down of some of the standards that it initially appeared might be imposed. But we'll see. Still, the larger issue of the place of for-profits in the higher education landscape remains and represents an important issue.

[cornerstone university lakeshore]

I just read you post. This is one of the blogs that i happen to read whenever i can. Regarding Walmart's partnering with a for-profit school for the benefit of their employees that is really something to look foreward to.Also are community colleges declining in terms of quality education?