Thursday, December 11, 2008


Buying Low

Apparently, the proprietary colleges are in the midst of another of their periodic booms, swooping in and grabbing students just when the public sector is reeling from yet another round of budget cuts.

I've seen this movie.

As regular readers know, I used to work for a proprietary. You've heard of it.

I'd be both more and less worried than the IHE story suggests.

The worrisome part of the return of the proprietaries is that, unlike the public sector, their income rises and falls with enrollments. This means they're immune to the double-bind the public colleges routinely experience during recessions, when enrollments go up but funding goes down. This Fall my cc is experiencing the highest enrollments in its history, and applications for the Spring are even higher than that; at the exact same time, our operating funding is crashing. Say what you want about 'administrators' – I defy anybody to make that math work without pain. It's one thing to do more with less, and another to perform alchemy.

For the DeVry's and Phoenixes of the world, though, higher enrollments automatically equate to higher revenues. This means they can add capacity when it makes sense. In times like these, I envy them that.

That said, though, the relatively narrow focus of most proprietaries – pick one or two hot career fields, and put all your eggs in those few baskets – means that they're incredibly vulnerable to job-market shifts. The Admissions folk at the proprietaries, in my experience, are quite conversant in the job-placement stats (both percentages and average starting salaries) of recent grads. That's what they sell. “Sure, our tuition may be higher, but we'll get you a good job.” When I was there, the Career Services Office was almost as powerful internally as the Admissions Office, and both were far more powerful than the faculty. The entire organization was built as a factory, producing employable graduates. And in good years, it did exactly that.

But as with any factory that churns out a narrow product line, the model only works when the product is in demand. And I don't see a heck of a lot of evidence that new grads in most fields are in very much demand. (Nursing is an obvious exception.)

It's one thing to pay premium tuition and put up with a certain brutality of culture when you think there's a pot of gold waiting at the end. It's quite another to do that when nobody's hiring anyway. If there's no obviously lucrative path to follow, why not study what you actually like?

Now, if someone were to put up a serious chunk of venture capital to establish an upscale, 'comprehensive' for-profit, combining the best innovations of the for-profits with the best traditions of traditional academe...

And wanted to hire someone with experience in both worlds, a commitment to students, and a record of sustained reflection on higher ed issues...

I'm just sayin'.

If someone were to do it right, there's an opening you could drive the proverbial truck through. The public colleges are caught in a cost spiral generated by a productivity trap; the existing proprietaries are generally either far too narrow, or (I'm thinking here of Founders College) hostage to some weird Ayn Rand-ian ideology. (The last time I checked, their economics degree didn't even include any math. What do you say to that?) But a for-profit that actually understood education...

Alternately, if President-elect Obama wants to solve multiple problems at once, he could direct some of the 'stimulus' to enrollment-based aid to higher ed. Come up with a per-student (or per-credit) 'bounty,' and pay colleges accordingly. That way, we could keep the progressivity of the public sector, while emulating the enrollments-lead-to-revenues model of the for-profits. Colleges could start employing faculty again, and all those underemployed people could upgrade their skills. Think of it as a variation on the GI bill, except that it doesn't penalize institutions with lower tuition levels.

My guess is that the DeVry's of the world are sort of the Studebakers and Nashes of this industry. The Toyotas and Hondas are waiting to be born, and I'd guess they won't have to wait much longer. It's axiomatic that the way for investors to make money is to buy low. It doesn't get much lower than this.

The planets are aligning for a really fundamental shift in how higher ed operates. If the publics don't lead the way, the for-profits just might.

Imagine this:

You're 18. You absolutely HATED high school. Who didn't? Each day of 9-12 grade faced you with escalating BS and irrelevance.

You graduate and seek options.

You walk into the local CC and you didn't think it was possible to water down Brutalist architecture, but there it is. ...if only your HS education was good enough that you knew what Brutalism was... A student tells you that each day of class in the computer lab, either a desk or a computer breaks, if not both. (As did with my most recently former classroom.)

It looks like the sequel to high school, only poorer.

Then, you go see the Proprietary with 187 commercials on the TV every day. There, everything shines. The computers stations each have massage chairs. Someone there tells you they'll get you a job.

It's not hard to see what's happening.

The sad part is that I've taught handfuls of students in CCs who already had "Degrees", if you will, from Proprietaries. They couldn't find jobs, felt underprepared, and couldn't transfer their credits. Now laden with debt, they came to the CC to learn, albeit with less shine, and to earn transferable Associate Degrees.

I know there are accreditation agencies that focus on proprietary higher ed. It seems like growing their presence could help.

Then, yes, I would like to join the choir by saying that better funding for CC is the best solution to many problems.
"The last time I checked, their economics degree didn't even include any math. What do you say to that?"

This is totally irrelevant to your topic, but it happened a month ago and I'm STILL seeing red. An acquaintance was telling me she really wanted to get her BA -- at a good 4-year school -- in the social sciences (one that would require statistics) -- but she was having a hard time finding anywhere that would let her graduate without passing ALGEBRA. (Frankly I was upset she was able to find "good" schools that would let her MATRICULATE without passing algebra first!)

She seemed upset and confused as to why a college would require her to learn MATH when she wasn't going to USE it (or so she assumed). The idea of a well-rounded liberal education was foreign to her, and she considered it stupid.

I realize this is somewhat idealistic and probably old-fashioned, but in my mind, a well-educated individual with a liberal arts degree should at least struggle through calculus. (Not necessarily be able to DO it after the fact, but at least have a basic understanding of the field.) If you can't catch up to the up-to-the-minute sciences of 1687 (or in her case, what, 820ish?), I'm not really sure we should be handing you a degree.

I think that people are enrolling in school now because they assume (probably correctly) that 2-4 years from now when they finish their degree, this will let them move up or move ahead with their career. That makes the enrollment boom at the proprietaries make sense.
Wow, DD. Once again I gain both despair and hope by reading one of your posts. I'm hoping (like Ivory's hypothetical enrollments) that in a couple of years there might be a useful place for me to use my M.A. in humanities/writing instruction. I pray some venture capitalist or Gatesian philanthropist has your re-organization model appeal to him. If he does, tell me where to send the CV.
Colleges could start employing faculty again, and all those underemployed people could upgrade their skills.

Ha. Yeah, but that's not what they would do. Instead the colleges would put some kind of policies in place or just make the courses tough enough after a certain interval that they could slough off a ton of students after the deadline for them to be counted, whenever that was, so that they could keep the money and not educate the students.
Whatever happened to

1. Graduate form HS


3. Education as required to advance/specialize

Oh wait- I forgot- here in the usa we cram a 6th grade education into 12 years of schooling . . .
That's a bit unfair, YACP. Not having a college degree really is a significant negative in the employment market, especially for people of college age or slightly older. An ambitious, hard-working 21-year-old, even if knowledgeable, will be passed over in most cases for a less-competent but degreed individual. It's an objective, easy-to-measure checkbox for HR, and college graduates are thick enough on the ground where there's no need to take a flyer on someone without one. Now yeah, you can argue that high school should be more rigorous, and I agree, but what is our hypothetical 21-year-old supposed to do about that? He needs a job now.

My husband and several of our friends are computer geeks with some college, but no degrees. We're of an older generation*, so they've all managed to accumulate lots of documented experience, and their skills are rare. They're still employable. A kid, on the other hand, won't have experience or major skills.

There are still many jobs that don't require a degree, but only a minority of them (the skilled trades) pay much of anything. Off the top of my head, I'd say that only about 10% of existing jobs offer a middle-class salary without a degree requirement. It's not irrational for a teenager to decide that he doesn't want to throw away his chance at the other 90%. Given the realities of health insurance and financial aid, it's also easiest to get the degree out of the way when you're young, as opposed to trying to do it after you hit the ceiling at work.

*OK, that was pretty unsettling to type. I'm not even 40 yet.
I agree completely; it is a sad state of affairs when industry must hire college graduates in order to acquire someone with high school level skills.

Almost as sad as the obverse realization that a college degree is now only worth a high school education . . .

Even for B- schools, the value of *all* degrees has continued to be watered down by the slipping standards and surplus of worthless degrees.

The BS/BA is now an "Order Qualifier" instead of the "Order Winner" it used to be.

(Ahhh to be 40 again!)
I also worked for a prop. u. before venturing into the state system. What ever happened to all those state and federal investigations over the excessive prop. u. financial aid packages?

This topic is really frustrating because as states are shrinking education budgets applications are through the roof. I think it is great for a college to improve its academic standards, but cutting enrollment due to budget issues reduces faculty, therfore allowing for an abundance of adjuncts and not enough full-timers.
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