Sunday, April 26, 2015

Don't Gloat When the Canary Dies

Robert Kelchen won Twitter yesterday with his observation that Corinthian Colleges’ move to close all of its remaining campuses will strand 16,000 students, in contrast to the closing of Sweet Briar College, which will strand about 700.

The coverage given Sweet Briar, as opposed to Corinthian, is telling.  And Corinthian isn’t the only one.

On Friday, DeVry announced that it will close 14 campuses, moving those students (or at least, those willing to move) to its online programs.  The University of Phoenix recently announced its fifteenth consecutive quarter (!) of enrollment declines.  Given that for-profits are more purely enrollment-driven than any other sector -- they don’t have endowments or subsidies -- they feel every single percentage point of that drop.

Within the higher education world, it’s easy to look at the for-profits’ recent struggles as just desserts.  In some cases, that’s substantially true.  But it misses some key points.

First, and most basically, for-profits found ways to serve students that nobody else bothered to serve.  Some of those ways were unseemly or unethical, but some were just practical.  For obvious reasons, for-profits have powerful incentives to enroll students, so they tend to take a cold, hard look at student success.  After all, a retained student is a repeat customer.  In my time at DeVry, for example, I noticed a distinct lack of application fees, a small number of majors, and a real reluctance to consign students to developmental or remedial courses.  It took the rest of higher education another decade to catch up to some of those ideas.  

Second, just because the organizational logic of for-profits is often coldly mercenary, it does not follow that everyone who works there is coldly mercenary.  Some of my erstwhile colleagues at DeVry were wonderful, dedicated educators who honestly tried to do right by their students, even when it involved butting heads with upper management.  They (and I) found their way there because nobody else was hiring, at least at the full-time level.  Given the choice between adjuncting at a traditional college and making an adult living at a for-profit, there’s a pretty good argument for the latter.  That’s especially true when the for-profit in question actually does a decent job at what it says it does, as DeVry did during the tech boom of the late ‘90’s.  In 1998, you could do a lot worse than graduating with a degree in telecom or CIS.

Third, for the most part, the for-profits aren’t in trouble because of stellar performance by publics or private non-profits.  They’re mostly in trouble due to varying combinations of regulatory issues, demographics, and flawed business models.  Many non-profits are struggling for similar reasons.  If the failure of the for-profits happened because the publics and non-profits raised their respective games and made for-profits unnecessary, I’d be the first to celebrate.  But for the most part, that’s not it.  I wish it were.

An already-awful academic job market just gets that much worse when entire swaths of campuses close.  In Corinthian’s case, announcing on a Sunday that it would close within 24 hours just adds insult to injury, for both students and employees.  To the extent that its former students are pushing for loan forgiveness, such treatment gives them ammunition.  I wish them success.  For its soon-to-be former employees, though, the picture isn’t pretty.

For-profits are more volatile than their public counterparts.  They charge more than the cost of production, which means that in good times, expansion more than pays for itself.  But their income is entirely enrollment-driven, so in bad times, there’s no cushion.  To the extent that publics’ budgets become more enrollment-driven, they’ll become more volatile, too.  Don’t gloat when the canary dies.

I won’t mourn the loss of Corinthian, but I won’t gloat, either.  Some very good people lost their jobs this week, at both Corinthian and DeVry, and I’d guess that some of the survivors at DeVry are running scared.  Sweet Briar was shocking, and a real loss.  In their ways, these are real losses, too.  My condolences to the employees.