Tuesday, August 19, 2014


Corinthian Learner

(Readers of a certain age should imagine Ricardo Montalban reading the title.)

Now that Corinthian College is on the ropes, and several other large for-profits have vultures circling overhead, is there anything we can learn from their rise and fall?

Yesterday’s IHE piece noted, correctly, that both regulators and most policymakers around higher education have exactly zero experience in for-profit higher ed, and therefore miss some real basics.  (For example, when I was at DeVry, the Admissions office didn’t report to the campus president.  It reported directly to Home Office.  You can imagine the tensions that created…) That’s true, but it’s only part of the picture.   

Hint: to understand for-profits, you can’t just look at for-profits.  

Within traditional higher ed, the story we usually tell about for-profits is based on deception.  They conned their way into existence, we say.  They exploited loopholes, rounded up students under bridges, and advertised like nobody had advertised before.  

I’s not false, exactly, but it leaves a lot out.  And it doesn’t paint a terribly respectful picture of the students who weighed their actual options and decided that for-profits made sense for them.

Yes, the for-profit surge was enabled by changes in financial aid rules, and yes, the sector was often quick to cut corners and ignore ethics in pursuit of higher stock prices.  But none of that would have mattered if not for student demand.  

Put simply, for-profits rushed in to fill the void left by the publics.  Decades of relative neglect of public higher education, combined with a certain (ahem) narcissism within the sector itself, left entire populations underserved.  Perhaps for impure reasons, for-profits figured out how to reach students nobody else bothered to reach.  They pioneered evening, weekend, and online delivery.  They built schedules around student needs.  They focused on a few distinct majors that both students and employers could understand.  And for a while, in some sectors, some of them got decent results.  In the late 90’s, you could do a lot worse than graduating with a degree in CIS.

For-profits filled a void.  If you want to prevent the next catastrophe, tend to the void.

That means consciously and aggressively using the public sector -- both community colleges and four-year regional campuses -- as hedges against future disaster.  It means making a dramatic and sustained turn away from the long-term trend of austerity for the publics and an open spigot for for-profits.  When you include the cost of bailouts, the “efficient” for-profits wind up inflicting a far greater fiscal burden on the public than more generously funded publics would have.  That’s even more true when you factor in student loan debt from students who never graduated, or who graduated but never earned salaries commensurate with their debts.

In other words, while there’s certainly merit in tightening some rules and the enforcement thereof, the real issue is student demand.  As long as the demand is there, someone will find a way to make a buck by filling it.  Trying to tamp down the demand -- the Peter Thiel approach -- is preposterous at scale, and most people know it.  My grandfather was able to own a house and raise a family having dropped out of the ninth grade, because unionized blue collar work was easy to find back then.  That’s not true anymore, it hasn’t been for a long time, and everybody knows it.  Sure, Zuckerberg dropped out of Harvard and got rich, but that’s not an option for folks who don’t get into Harvard in the first place.  For most Americans, a college education is the best available insurance policy against poverty.  It isn’t perfect, but it’s a hell of a lot better than not having one.  

If dampening demand isn’t really an option, and diverting demand to the private sector leads to financial catastrophe, maybe...stay with me…we could fund the public sector well enough to meet the demand itself.  Keep student cost down, get quality up, and learn some valuable lessons from for-profits about meeting students where they actually are.  Prevent the next wave of for-profit megagrowth by choking off its air supply.

That means getting away from flat or declining operating budgets supplemented by “targeted” grants that fade away in three years, and instead pouring a fraction of what a for-profit bailout would cost into the public sector.  When I was at DeVry, I didn’t see fear of the government or fear of lawyers.  I saw fear of the nearby community college.  There was a reason for that.

As long as for-profits are considered in isolation, we’ll continue to miss the point.  Yes, close loopholes, prosecute liars, and enforce regulations, but those amount to fighting the last war.  If you want to prevent the next bailout instead of the last one, you have to address the demand side.  Give community and state colleges the resources -- and, yes, the flexibility -- to flood the zone.  It’ll cost some money upfront, but it’s cheaper, more humane, and far more productive than bailouts and legal fees after the next collapse.  We don’t have a great record of learning from catastrophes, but this one should be easy.  

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