Thursday, November 20, 2014
CoCo Goes Pro Bono?
When The Dog is resting on her pillow, and she hears an unusual noise, one ear will pop up. She’ll stay down, but the one ear will be at attention. We call it “shark ear.” When the shark ear is up, we know something weird is happening.
The story that a student loan collection agency is buying roughly half of the Corinthian College campuses, and turning them nonprofit, made my shark ear go up.
There’s something weird about it.
ECMC -- not to be confused with EDMC, a major player in for-profit higher education -- is buying 56 campuses for $24 million, which works out to less than $450,000 per campus. It’s keeping the widely-discredited Everest and WyoTech names, but bringing in all new management. ECMC’s entire higher education experience has been in student loan collection; it has never run a college or any other educational institution. When asked why ECMC is doing it, the CEO replied that “we want to help.” Happily, ECMC has been “assembling a short list of qualified individuals” “under the radar” to step in and actually run the campuses.
To which I say, hmm.
Loan collection agencies aren’t generally known for philanthropy. Colleges typically cost more than single suburban houses. Corporate management turnarounds often involve rebranding. And I would think that an agency that had never run a college before wouldn’t start with 56 of them. One, maybe. 56, no.
As far as I know -- and I’m open to correction on this -- ECMC has not allied itself with any particular pedagogical movement or philosophy. This isn’t Founders College, the short-lived attempt to base a college on the writings of Ayn Rand. If it doesn’t have a profit motive, or a religious motive, or a philosophical motive, or a pedagogical motive, what is it trying to achieve?
It “wants to help,” but at what? The value proposition for students is obscure, at best, since ECMC hasn’t said anything about a new academic specialty, or offering something that nearby public colleges and universities don’t already offer at lower prices.
As regular readers know, I’m not necessarily hostile to for-profit education as a concept. I think this piece from the Boston Globe gets a lot right; just because many for-profits have been bottom feeders doesn’t mean that all of them must be, by definition. I remain convinced that there’s room for thoughtful entrepreneurs to add value, particularly through programmatic specialization.
But ECMC is doing it backwards. It’s keeping names that have been tarnished as predatory, and offering to do...what, exactly? Instead of building a new enterprise from scratch, or radically repurposing an existing one, it’s offering to continue to run mediocre programs at slightly less inflated prices. That doesn’t pass the sniff test.
The CEO claims that ECMC’s self-interest has nothing to do with it, since the loans that the new CoCo students will receive will be federal, and won’t be subject to collection through ECMC. Maybe. But if that’s true, then the motive is even more obscure.
I’m having a hard time explaining it through the self-interest of managers, either. Managers in large-scale financial services make far more money than, say, campus deans. I don’t think they’re hijacking capital to buy themselves sinecures.
Wise and worldly readers, am I missing something? Is there some narrative by which this move makes sense? My shark ear won’t stop twitching on this one.