Four Thoughts On For-Profit Higher Education

The Nation has a long look at for-profit education and its lobbying efforts based on a forthcoming book by David Halperin. I don’t follow this issue especially closely because we don’t work on it at BW. You you can’t help but follow it to some extent though if you work on federal ed policy. The revelation that while attacking alternative routes into teaching as low-quality AACTE President Sharon Robinson was making hundreds of thousands of dollars on the board of a troubled for-profit college is surprising, much of the rest is not. For thoughts on the larger issues it points up:

  1. It is often challenging find good information/measured takes about the for-profits because almost  everyone deep on the issue is vested in the outcome, either for or against them. And it’s at once and obvious issue, but a complicated one. The obvious part. Overall these for-profit colleges are not as bad as you’ve probably heard – they’re worse. And they play a disproportionate role in creating student debt. But, that’s not universal. Some do provide an option for students and arguably they’re the ugly ground floor of an approach that will, over time, alter higher education. So the regulatory question is how do you clean up the bad without killing off the good. The current iteration of the “gainful employment” regulation seems to me a modest, arguably too modest, start in that direction. The Whiteboard “Education Insider” survey (pdf) found that a small majority of Insiders think this new version of the regulation will survive an inevitable court challenge (a federal court previously upheld the Department’s authority to regulate but struck down the specific metrics they choose to use).
  2. The Nation article seems well-reported but two things didn’t ring quite right. The short-selling issue (people shorting stocks of for-profits based on information about how regulations affecting them might look or using the political process to create the circumstances to short stocks) seems more of a problem than Halperin lets on.  The Department of Education’s Inspector General is looking at issues around disclosure of information during the regulatory process as well. In addition, while the Washington Post’s ownership of Kaplan, which among other things runs for-profit higher education programs, was awkward the Post has published news items critical of the industry. I haven’t seen any evidence that Don Graham used his paper to punish his opponents on this issue and absent some that’s a very questionable charge to level and an almost impossible one to disprove. Worth noting that some of the Post’s competitors almost gleefully used the issue to punish the Post!
  3. The for-profit colleges make you question everything you think about markets and competition. The better ones, or ones poised to become better ones, could use the regulatory process to skewer their lower-performing competitors. Yet they don’t. Instead there is intense pressure not to break ranks so a strength in numbers/lowest-common denominator approach prevails. Perhaps this makes economic sense somehow, but I don’t see it in this circumstance. Any school that is confident on quality should support a tougher regulation (which has the added benefit of being the right thing to do) and put some competitors out of business.  The for-profits seem to think that everyone is against them so they have to stick together. That posture might have the causation a little mixed up.
  4. Some Hill Republicans are now warning that if the Obama Administration’s gainful employment regulation is enacted it will soon be broadened to cover all institutions of higher education. Quite unclear if that’s the case, but assuming for a moment that it is, isn’t that a benefit rather than a flaw? Too many independent and public colleges and universities have deplorable outcomes, too, and so some accountability, even just eligibility for federal student aid, seems a good step.

So what does this take miss?

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