Wednesday, May 13, 2015

A Shakeout Dividend

The latest stories about ITT, EDMC, and Corinthian’s struggles -- and I doubt they’ll be the last -- should actually give community college fans some hope.

We may see a shakeout dividend.

For-profits’ enrollments largely came from two populations: those who otherwise wouldn’t have gone to college, and those who otherwise would have gone to community colleges.  They mostly don’t compete with four-year colleges, and certainly not with the more prestigious ones.  

When I was at DeVry in the late 90’s and early 00’s, we didn’t see ourselves competing with Rutgers, even though it was about a mile away.  We saw ourselves competing with the community college up Route One..  

Since then, for-profits first got much bigger, and then they started to shrink. Community college budgets have become much more enrollment-driven (or performance-driven) than they used to be.  

That didn’t matter much at the crest of the recession-driven enrollment boom, when students poured into both sectors.  But with the recovery gaining steam, and the number of 18 year olds dropping in much of the country, the issue is becoming hard to ignore.  When your funding shifts from states to students, and then students go away, you’re in a spot.

With so many for-profits either going under entirely or shedding campuses at a rapid clip, though, community colleges in many areas may get a welcome bump in enrollment.  It really couldn’t come at a better time.

I should note that I’m writing in the Northeast, where waitlists and seat shortages are rare.  In areas that are still growing, and where community colleges’ capacity is maxed out, the point is probably moot.  In much of the Northeast and Midwest, we have the capacity to add students.

It’s probably too early to know if the shakeout dividend will be substantial.  I’m guessing it will be unevenly distributed, showing up most conspicuously in the areas that combine a significant for-profit presence with significant capacity in the publics.  

The shakeout dividend may also depend on the degree to which the movement for loan forgiveness for former for-profit students succeeds.  A student who can wipe the slate clean and start over is probably more open to trying again than a student carrying tens of thousands of dollars of debt.  

Ethically, I’m much more comfortable with rerouting stranded for-profit students to community colleges than with routing them to remaining for-profit competitors.  

Have folks on the ground seen a shakeout dividend yet?