Sunday, March 29, 2015


The List

If you knew that a college had its access to Federal financial aid money restricted due to concerns about risks to taxpayers and students, would you send your kid there?

I wouldn’t.  Which is probably why the Feds initially sat on the list of colleges on restricted status.  If enough parents and prospective students use the list as a warning, it could become a kind of self-fulfilling prophecy.  

That’s particularly true given that the colleges on the list are either proprietary or very small private schools.  In both cases, budgets are almost entirely enrollment-driven, so a dip in enrollments caused by a Federal scarlet letter could prove fatal.  I’d expect administrators at those institutions to make exactly that argument.

The easy -- and largely true -- counterargument to the “self-fulfilling prophecy” argument is that the prophecy is going to be fulfilled anyway.  The fire alarm didn’t start the fire.

But there’s a larger public interest to address.  When a for-profit closes abruptly, which happens more often than you’d think, the damage to the students is real.  Depending on accreditation status, the work they’ve done may be lost entirely.  They lose access to whatever records the institution kept, and whatever connections they may have made.  The loans survive, even if the college doesn’t.  (I’ve been following with interest the group of former Corinthian students who are on a debt strike.  To my mind, they have a pretty good case.)  To the extent that the loans go unpaid, taxpayers wind up making up the difference one way or another.  At least giving people a heads-up before it’s too late can contain the damage.

If the for-profit sector were savvier -- admittedly, a big “if” -- it would actually push for tighter regulation.  I say this having worked in one.

Tighter regulation could accomplish several worthwhile goals.  

First, it would shift the incentives within the sector.  Instead of racing to the bottom, they’d be forced to compete on quality.  If they did that, I’d have no problem with them at all.  If someone is able to make a buck -- hell, even a lot of them -- by building a better mousetrap, let them.  If an entrepreneurial sort identifies an underserved part of the market and finds a more effective way to serve that part, bring it on; the students will win in the short term, and over time, the publics and non-profits will have to raise their game, eventually benefiting everybody.  RIght now they compete largely on customer service and marketing, often at the expense of quality.  Require quality, and you have something closer to a fair fight.

Second, it would spur improvements in the public sector.  This can only be good.

Third, it would drive out the frauds who only survive by cutting corners.  This, too, can only be good.

Fourth, the reasonably rigorous measures of quality wouldn’t have to be unique to the for-profit sector.  There’s a genuine public good to be served by applying those measures across the board.  But the urgency is greatest in the for-profit sector, simply because of its incentives.

I have no theological opposition to for-profit education.  I do have a serious objection to institutions of any sort that cut corners to exploit students.  For-profits generally have a stronger incentive to do that, in the current system.  I don’t see prohibition as a viable strategy, but some sort of reasonably rigorous quality control could conceivably shift the field of competition to where it really should be.  

Simply releasing the watch list doesn’t amount to upfront quality control or regulation; at best, it’s a sort of rearguard action designed for damage control.  That’s fine, as far as it goes, but we need much more.  The discussion needs to shift from “for profits good” vs. “for profits bad.”  Let’s restrict the realm of competition to actual quality, and then let the best providers win, whoever they are.  In the meantime, I’m glad the list will be public.  The public needs to know.

I looked at the spreadsheet, and if the date columns mean what I think they do, some on that list were only on heightened monitoring for a month or three or as little as one week. It would be pity to publicize institutions in that category, where the issue seems to have been resolved quickly.

I'll also note that I assume the ones listed with "accreditation problems" as the reason (a majority) would already be known to parents and students, but maybe that isn't disseminated widely either.
Public schools' difficulties with budgets and such are pretty widely disseminated in the press.

Private and proprietary schools can keep things to themselves a lot more. But should they? Sure, as businesses, the for profits want to pull as much money out as they can before they dump the students. But the students and public would benefit from knowing.

Maybe set the bar at a month on the list, then publish the name and information?

I don't think the public is as informed of accreditation problems as CCPhysicist seems to think. The people I know who've gone to proprietary schools are generally first generation college students who have little information about how things work; and I doubt even very informed people think to ask about accreditation, or know much what that means.
I for one would certainly like to know if the college I plan on attending (or one where I plan to send my kids) is on that restricted list. Is the school in financial difficulty? If so, this could mean that I could be hit with drastic tuition hikes if I choose to go there. Perhaps the school is in such bad fiscal shape that it could even go belly-up, forcing me to transfer to another school, perhaps leaving me with untransferable credits when I do so. Is the school in danger of losing its accreditation? If I go there and they do lose their accreditation, I could end up getting a worthless degree unless I transfer elsewhere. I could end up losing a lot of money if I go to a school that is on that list.

But maybe I am a faculty member at a school which is on that list. Could layoffs be coming? Is my salary going to remain stationary even if I don’t get laid off? Is my teaching load going to rise to astronomical levels? Is my school in danger of closing its doors? Perhaps the risk is so great that I should get my CV on the street right away. A lot of for-profit schools seem to release fluffy and overly-rosy projections to their faculty and staff, hiding the ugly truth until the very end when the roof finally falls in and the doors finally close.

But as Matt says, the release of the names of the schools on the list might be the equivalent of a scarlet letter, driving students away in droves and perhaps hastening their doom. But I would like to know the truth, either as a prospective student or as a faculty member.

Bardiac @8:58AM, I don't think the wider public knows about accreditation "problems" (hence my closing remark), but they are public and were in the news for one school near where I live. Where a school could challenge whether some financial processing issue rated public censure, they can't say the same about the dual judgment of finances and accreditation.
One might see this as support for the belief that undergrad for-profits are basically a con.

@CCPhysicist: Sorry I misunderstood you. Thanks for clarifying.
Just read that the University of Phoenix requires a Master's to teach, but they're very careful to state that online-only Master's degrees do not count.

This is known in business as "not eating your own dog food."

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