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News & ArtsThursday, February 23, 2012
Education / Economy For-Profit Universities: The Unfettered Free Market at Work
Posted by Goldy on Thu, Feb 23, 2012 at 3:51 PM
Enrollment at for-profit colleges and universities has boomed over the past few decades, skyrocketing from 18,333 in 1970 to 1.85 million in 2009. Over the past decade alone, the percentage of college students attending for-profit schools has almost tripled, from 5 percent in 2001, to 13 percent today.
So, how are these for-profit schools doing, most of which are significantly more expensive than their public university counterparts? According to a new study, not so well:
Students who attend for-profit colleges are less likely to be employed and have lower earnings six years after enrolling than similar students who attend public and not-for-profit colleges, according to a new study by authors affiliated with the Center for Analysis of Postsecondary Education and Employment (CAPSEE). They also carry heavier debt burdens and are more likely to default on their student loans.
And yes, the survey was controlled to account for demographic differences such as age, income, and ethnicity. For-profit students simply have poorer outcomes and report less satisfaction with their educations, than public and not-for-profit students of similar circumstances and backgrounds.
How could this be? If the market always makes the most efficient allocation of resources, and the private sector always outperforms the public, how is it possible that for-profit universities don't out perform their public university counterparts? If you're a free marketeer, clearly the problem must be the dangerous market-distorting impacting of taxpayer-subsidized public universities. Simply eliminate government funding for our public college and university systems (as we are wisely on our the way to doing here in Washington state), the uber-capitalists might argue, and the market will fix itself.
Or something.
Though, of course, not all government subsidies. While for-profits enroll only 13 percent of our nation's college and universities students, they now consume 26 percent of federal financial aid and 24 percent of GI Bill tuition expenditures—over $1 billion in GI Bill money to eight for-profits alone. Indeed, in 2009, combined federal money accounted for an astounding 91.5 percent of revenue for Kaplan Higher Education (a wholly-owned subsidiary of the Washington Post).
So no, we would want to eliminate all that federal student loan and grant money. I mean, we wouldn't want to destroy all those valuable private sector jobs.
So what explains the extraordinary growth of the for-profit higher education industry when it produces substantially poorer outcomes at a substantially higher price than its public college and university counterparts? Well, they advertise like hell. That's gotta play a role.
But so too must our shortsighted disinvestment in our public college and university system. For example, Washington now stands 48th out 50 states in baccalaureate capacity, annually producing less than half the four-year degrees necessary to meet the needs of our state's employers. So some students must surely choose for-profit institutions simply because the lack of capacity at public ones leaves them no other choice.
And if there's one thing the market inarguably does well, it is generating supply to meet demand... however shoddy the final product.
2
Stupidly, the jobs crisis in this country is mostly a training crisis. The reason people fight over a handful shitty jobs at Walmart while good-paying jobs are going begging next door is because the people don't have the skills. Did you read the recent report about manufacturing jobs in the Rust Belt? There are something like 600,000 industrial jobs -- good jobs, machinists and the like -- going begging because there's no one with the skills they need. That's a huge, huge opportunity to turn around a struggling part of the country. But there's no training program; all the money goes to these bogus private schools.
3
Put another way: if I wanted to advocate for a more free market-based approach to education, I wouldn't be putting up the for-profit colleges that we have as an example of how to do it. And for the exact same reason, using them as an example of how any market based education system is doomed to failure is a bit of a straw man.
Either no job, or in such a low-paying job (with no probability of growth), that their grants or loans were wasted.
My brother is training for a second career in sonography. A friend who works in ultrasound warned us that not only would the for-profit college version cost about three times more than the same courses at the local community college, the for-profit version fell far short of the training, and experience, offered at the community college.
And employers were well aware of that difference
He'd come out of the community college Sonography degree with certification, and an internship at a local facility, that would connect him to that employer, for one.
Meanwhile, the for-profit student might not have either certification or real world experience after paying out $30,000 or more for a half-assed "education."
While the for-profit was offering a suspiciously short 14 months of training.
You be the judge.
Gotta love their ads though!!
"Girl, watchu doin' sittin' at home, 2 babies, no daddies, dead end job…do what I did, get to Everett!"
Who wudda thunk that would work out poorly.
But agree. Student loans, like home loans, should only be given to the worthy, ie. credit worthy, who will pay them back.
So girl, use a condom next time.
8
10
I guess my point (perhaps poorly made) was that the free marketers I know would be in complete agreement with Goldy that subsidies to the for-profits are bad. But I (and they) see that as at least as much of a problem with the subsidies themselves as it is with market-based education per se.
I do think the for-profit colleges need to be regulated. Wasn't there a bill that was going to limit federal money going to for-profit colleges based on the outcomes? That is, if your school only signs away the student loan check and never cares about the rigor of the education or the ability of students to get jobs after graduation, then maybe you don't get the check anymore.
12
Meet kids all the time that got "accepted" by the Art Institute of Seattle. It's a freaking racket, from the financial aid(Loans from the Fed) to the mandatory housing they must pay for, renting from the AIS. Sad, because there's art to be taught and art to be learned, but a whole lot more money to be made, and not by the students.
14
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Because that would be exceptionally stupid.
19
@14: AiS is accredited, but it's still a shit school. In fact, I would argue that accreditation made it worse, at least during my tenure and for several subsequent years.
I was attending the school when they were seeking accreditation, and it made their truly good teachers (ones that worked in the field they taught) leave en masse, because it wasn't worth their time or money to seek a teaching degree while they still worked in their respective industry. Those few that remained were promoted to department heads, because they were they only ones with any clue as to how the classes should be taught. This resulted in a two-fold hit to the quality of the school.
First, teachers who actually knew the industry as it presently was were not there to share that experience. And second, these teachers weren't able to assess students' skills and personalities hands-on, and potentially hire them directly or provide recommendations to industry colleagues who might.
TL;DR: Accreditation isn't a guarantee either.
20
I have an acquaintance who maintains loudly and repeatedly that the solution to education is to allow charter schools & vouchers, then let the wonderful free market kill off underperforming inner-city schools. This, from a person with an MBA in economics.
He lives in Texas. I keep asking him to stay there and keep his stupid ideas down where the rest of the stupid people live.
21
but (um...) do they control for overall academic ability? Obviously the highest calibur students go to universities and are courted by them...
24
College track high school kids often have parents to help them make the decision, but that isn't really the demographic going to UPX, DeVry, Kaplan, et al. We're talking about young adults with mediocre high school educations. They make a lot of poor decisions, but they are seeking to better themselves. Clearly marking the sharks out for their money not only helps the student, but it fosters higher quality educational opportunities for all.
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