By Professor Doom
I’ve mostly
focused on the immense corrupting of public/State higher education, and not
simply because this is what I’m most familiar with. I’ve often thought “everyone knows”
for-profit schools are frauds, and so I’ve put little time into “exposing” a
fraud everyone already knows about, in favor of exposing the fraud that is much
of public higher education. With millions of students trapped in the for-profit
system, it’s clear I’ve been remiss.
A
recent article lists criticisms against for-profit education (or, more
accurately, against certain for-profit schools), but doesn’t really address the
fraudulent component. At times, the article incidentally mentions how its
criticisms also apply to public institutions…but it just doesn’t press hard
enough on the similarities.
So, allow me to
summarize, and expand upon, some real issues going on in for-profit, and “non
profit” education, particularly state schools:
for-profit schools
care more about making money than educating students.
Well, no kidding;
I guess I’m expecting too much from an article that starts like this. Realize,
however, public institutions also care more about making money than education.
The simple proof of this is the huge focus on “growth”—administrators make more
money, via their salary, the more they grow the institution, and so the
pressure on faculty to do all they can to help with the growth is enormous.
Harkin is particularly
critical of the University of Phoenix. He thinks when the school was founded in
1976 it had a "pretty good model." Back then, Phoenix students had to
have two years of college credit already, they had to have work experience, and
they had to be at least 23 years old.
Look at that.
There was a time when University of Phoenix was legitimate: they didn’t simply
scour the gutters looking for anything with an opposable thumb to check a box
for student loans. Instead, they focused their market to those who had an
academic and personal record that indicated a potential for success.
Today, schools
are perpetually lowering standards and opening admissions wider and wider, in
the name of growth, of profits. The reason for this is the student loan scam,
which wasn’t nearly so pervasive in 1976. Back then, to get that loan, you
actually had to demonstrate to the lender that you were a legitimate student.
Today, to get a loan, you just have to check the box saying you’re a student,
and be at a school that has accreditation, which I’ve shown many times has
nothing to do with education.
So what happened
to University of Pheonix once the student loan scam went fully on-line:
But then the school
"kept expanding and expanding and expanding, and so it kind of morphed
into this behemoth that it is now," he says.
Well, gee,
that’s the same thing that’s happened to many public schools, that have grown,
and grown, and grown, not through superior education, but by easing admissions
and lowering standards so that anyone can be a college student, enrolling
in a wide array of courses with no reading, writing, or any other requirements.
All while providing that sweet, sweet, student loan money to administration.
Admin: “We’re going to
have to sacrifice quality for quantity, for a time.”
--“For a time”? It was
ever thus. Every institution I’ve been at has had a focus on quantity, and not
once in 25 years have I seen “quantity” sacrificed for “quality”.
So yeah,
University Phoenix’s insane growth is a big factor in allowing it to have no
standards. Every school with a population over 10,000 or so should be very
suspect. Phoenix has close to half a million students, to give an idea of how
far over the line they are now.
Harkin believes the
University of Phoenix went wrong in 1994 when it became a publicly traded
company.
I disagree; what
went wrong is the student loan scam, which made it way too easy for bogus
schools to rake in ridiculous sums of loot. Get rid of that, and going public
is only viable if the school is legitimate.
Going public
just makes sense today, with the huge stock bubble that the ill-advised “plunge protection team” pretty much
guarantees (until the day comes when it doesn’t---please, gentle readers, be
very conservative with your stock investing, if you must involve yourself in
that immense bubble filled with systemic risks the mainstream media never
mentions). I’m not saying going public helped Phoenix…but it’s just not the
issue.
One of the oldest
for-profits is Strayer University, founded in 1892 in Baltimore as a business
college. For decades Strayer operated as a small, regional school offering
training in skills such as shorthand, typing and accounting. Some of the first
students were farm workers looking for new ways to make a living.
As you can see,
for-profit schools can totally be legitimate. I’m not sure why the article
ignores this data, failing to realize that every time it says something good
about for-profits, it comes from a time BEFORE the student loan scam.
Strayer went from
having fewer than 10,000 students in 1996 to more than 60,000 students by 2010
This is the same
Strayer from 1892, but the student loan scam allowed it to expand greatly,
while simultaneously destroying its standards, going from a job-training school
to, well, a school that teaches nothing useful to people that don’t really care
to learn anything anyway.
For-profit companies
are ultimately accountable to shareholders and investors. To stay in business,
they must produce returns.
This is not
accurate at all. Business enterprises are ultimately accountable to CUSTOMERS. To
stay in business, there must be customers. A bogus business just can’t stay in
business once the customers know what’s going on. Lots of folks know
for-profits are bogus, but the student loan scam provides a steady stream of
“customers” able to get into the scam, and willing to do so since they get a
check for it. The real customer in this case is the Federal government that
provides the checks.
What do
for-profits spend on education per student?
Apollo -- the
University of Phoenix parent company -- spent $892 per student according to the
committee's analysis.
Wow. A student at
this school easily can blow $10,000 a year on tuition. Note that “less than 10%
of revenue goes to education” is also the
kind of ratio we find in public institutions, too. It really doesn’t take
much to see that many of the criticisms of for-profits apply to public
institutions of higher education as well.
That’s a monstrously
wide estimate, so wide that a much lower, lower end, is quite possible, and
sure doesn’t jive with the many calculations I’ve made. I mean, most college
courses are taught by adjuncts, for about $2000 a class. Most classes have 40
or more students (with 1,000 students not out of the question). So, that’s $50
a student, times 5 classes a semester (an above average load)…that’s $250, and
even throwing in incidentals won’t put it at $3,000. I suspect administrators
have cooked the books a bit in our state schools.
Even accepting the low end reveals that a
college education can easily cost less than $15,000; charge $20,000, and that
allows for a very nice profit. Of course, we
know it doesn’t cost nearly so much for a fully accredited degree. Hmm, why
should we believe state school’s claims that it costs a bare minimum of $3,000
a student when a new university can start up and charge 10% of that?
Harkin wants the
University of Phoenix and other for-profits to put more of the money they take
in toward student instruction, and less toward marketing, recruiting and
executive pay.
While certainly
true, keep in mind the stockholders could complain about executive pay, too. Of
course, executive pay at our public institutions are also wildly over the top. Yet
again, a criticism that applies to higher education in general.
Now, because
for-profits are basically bogus (now), they have to search long and hard to get
suckers to sign up for their classes (and those sweet student loan checks!).
They have lots of recruiters to do the searching:
The company will not
say how many recruiters it employs, but Harkin's committee found that the 30
for-profit companies it investigated employed, on average, one recruiter for
every 48 students... they work in big rooms that look and sound like call
centers.
A “recruiter” is
basically a telemarketer, spending full time calling prospective students and
talking them into taking on loans for the glory of the for-profit school. I
grant that public institutions only have a few such recruiters, but they
nevertheless have public relations departments, marketing departments, and a
huge advantage in recruiting, since they have inroads to the public
schools—they get first shot at every high school student, while the for-profits
have to go for the dregs.
I’m hard pressed
to blame the for-profits, they have to look harder for suckers…but both types
of schools are preying on kids as they emerge from high school.
More next time.
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