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.