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For-profit universities revisited
Thought you might like an update on one our recent hot topics. The government looks to be cracking down on incentive pay for recruiters at these schools. And a former big-name CEO is about to launch a new for-profit school in his name.
Last month, Marketplace and Pro Publica reported on allegations of shady recruitment practices at the University of Phoenix. My posts about it are here and here. The series generated quite a bit of discussion about the value of for-profit education and a business model that leads to a disproportionate number of student loan defaults.
The Department of Education is considering new rules that include a proposal to eliminate the 12 "safe harbors" in incentive compensation for school employees who sign up new students. From the Chronicle of Higher Education:
Consumer advocates and admissions officers from traditional colleges have urged the department to do away with the safe harbors, arguing that the exemptions, which allow colleges to pay enrollment-based commissions under certain circumstances, encourage recruiters to sign up unqualified students.
Officials of for-profit colleges and lobbyists favor keeping the safe harbors, saying they provide much-needed clarity on whether specific types of payments are in compliance with the law.
Clearly, the government wants to get a handle on the for-profit sector ASAP. Looks like it's only going to get bigger. Next month, the Jack Welch Management Institute opens at Chancellor University in Cleveland. Its format is an online "executive MBA for mid-career businesspeople." The program will cost about $22,000 compared to the $150,000 students might pay for an executive MBA from a private university. Here's what Welch, the former GE CEO, told Fast Company:
"I think it's an incredibly exciting market, a great business opportunity worth a lot of money, and an opportunity to do something good for society. People who have negative comments about online schools are being old-fashioned."
Fast Company also talked to the guy who heads up the private equity firm invested in Chancellor, Michael Clifford. I thought Clifford's comments were interesting too:
...Bill Bright, founder of Campus Crusade for Christ, gave him a life-changing piece of advice: "He knew I loved business and did a lot of charity work," says Clifford. "He told me education is the one business where you can help people live better lives and make a lot of money for your investors..."
"I don't even use the term 'for-profit' anymore," Clifford says. "I say schools are 'market-driven' or 'publicly funded.' Everyone has to put their guns away and focus on providing the best experience for the student. Market-driven can learn a lot from traditionals, and the traditionals have a tremendous amount to learn from market-driven best practices."
He may be right about that, but the Department of Education is wise to increase its scrutiny. Giving more people access to education is a laudable goal, but when the bottom line is making money, we all know what can happen.
There are a LOT of "non profit" schools that seem to beleive that BEING a "nonprofit" makes them somehow more "socially noble" in the educations business. Somehow the "nonprofit" or "publically funded" label excuses them from solid financial review, the necessity to make their schooling affordable, or remembering that they serve students. How many University Executives make more than the $500K limit imposed on AIG executives?
I have seen university costs - and student charges just keep going up - and there does not seem to be any "urgency" in making college more affordable..
It, for example, makes no sense to jack up tuition rates - yet tell students that the school is "keeping fees affordable" - because they do increase financial aid to a small percentage of students... Very bad accounting...
--jr
We're not "for profit," we're "market-driven!"
By the way, we'll be passing through the cost of the PR company that came up with that great euphemism to our students.
I can't wait until health insurance companies pick up on this new rhetorical tactic. Then we can have "market-driven best practices" for denying coverage more efficiently! Sure healthcare and profit motive should never be mixed, but tell me "market-driven health care" doesn't sound silky smooth and super sexy.
Welch's entry into the for-profit education field is just another example of the elite trying to loot the underclasses before the nation's completely broke.
Does anyone think adding more MBAs will fix our economy? We're already great at greed. Why not teach people to add value?
Any for-profit “college†that can leverage Jack Welch’s name will do well. Most MBA students would love to become a rich CEO by committing fraud then being lauded for it. Some of us who own GE stock would like to know why Welch is not in prison. John Bogle grouped Welch with Ken Lay, Sam Waksals, Dennis Kozlowski and Bernie Ebbers (The Battle for the Soul of Capitalism).
To call for profit “colleges†“market driven†is semantic legerdemain. Like any euphemism or Orwellian double speak it attempts to conceal unpleasant truth. The people who do this do not aim at “…providing the best experience for the student†but at fleecing them and hoodwinking the public. If PT Barnum were alive today he would do “education†not circuses.
For profit “colleges†reflect the deterioration in the post WWII socio-economic fabric of America. The causes are many and interconnected. They include: stagnation in real incomes for the most Americans since the late 1970s and ensuing tax revolts, a profound ignorance of western civilization and economic growth, the triumph of market mechanisms and the pervasiveness of the consumer Gestalt, the doubling of global labor since 1990 and the concomitant offshoring of middle class jobs, the importing of workers whose education was paid for by their governments.
You won’t catch the upper class attending the Jack Welch Management Institute.
