A Philosopher's Blog

Educating for Profit

Posted in Business, Ethics, Law, Philosophy, Politics, Universities & Colleges by Michael LaBossiere on January 13, 2012
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In the face of the economic mess, American states and the federal government have been cutting education spending. In some cases, this is no doubt a matter of legitimate necessity. In other cases the economic woes have been used as a cover to “justify” certain policy changes. Regardless of the cause, American public schools are experiencing serious budget woes. Interestingly, college enrollment is up and this makes things even worse since schools must do ever more with ever less money for the actual process of education. As might be suspected, the administrative side of most schools is generally doing great in terms of numbers employed and salaries.

In contrast to the woeful state of public funded schools, the new for-profit schools have been doing quite well. For example, 20 for-profit schools saw their income from military benefits alone (acquired by taking military personnel as students) increase 683% over four years (from $66 million to $521 million). These for-profit schools also get a significant percentage of their income from public money, namely federal student aid.

Given that for-profit schools are making profits off public funding, one might wonder why public schools are suffering budget cuts and are thus less able to serve the public good by providing high quality education to students. After all, it does not seem to make any sense to funnel public money away from public institutions so that for-profit schools can make a profit at the expense of taxpayers.

Of course, one can try to counter this sort of concern by the stock mantra of the private sector proponents: the private sector is better than the public sector. That is, the for-profit schools are doing a better job and hence it makes more sense to turn public dollars into private profits rather than turning public dollars into public education.

If the for-profit schools were doing a better job, this would make at least some sense. After all, if the goal is to get the most education bang for the public buck and private schools delivered a bigger bang, then perhaps they should get the bucks. However, this is not the case. The average graduation rate for the for-profits is around 28% and this is about half that of the nation average. The big state schools often have excellent graduation rates. Also of concern are the facts that those who graduate from the for-profit schools seem to have a much harder time securing employment and graduate with far more debt than students at traditional schools (half of all student loan defaults are from students who attended for-profit schools). As such, the for-profit schools cannot claim that they are providing a better return on public dollars than public schools. In fact, they are doing far worse.

The United States congress recently focused its attention on the severe problems with the for-profit schools. However, intense lobbying on the part of the for-profits succeeded in watering down legislation intended to make such schools more accountable for their effectiveness in order to continue to siphon public money into their coffers. This has apparently been a bi-partisan effort with Republicans and Democrats answering the call of the lobbyists.

One particular egregious practice of the for-profits has been targeting  military veterans. Holly Petraeus, wife of General David Petraeus, has written that veterans are “under siege” by the for-profit colleges. These colleges have even been accused of targeting veterans who have brain injuries, which is particularly reprehensible.

Veterans are a very desirable commodity for the for-profits. As noted above, there is a lot of money available from military benefits and these can spell major profits for schools. More importantly, there is a “90/10” rule for these schools: at least 10% of the revenue for a for-profit must not come from federal financial aid funds. Coincidentally, military benefits do not count as federal financial aid funds, so this money can count as the 10%. This entails that for every military student enrolled by a for-profit, they can have 9 other students who are paying 100% using federal funds. In short, with the right number of military students, a for-profit can get 100% of its revenue from federal funds.

This, as might be imagined, bodes ill for higher education in America. First, federal funds will continue to be diverted from public education to the for-profits. This means that the public schools will continue to suffer. To give a concrete example, enrollment at my university has increased significantly while our budget has dropped significantly. Faculty salaries have stagnated, class sizes have increased dramatically, financial aid has been significantly reduced, and so on. In short, public schools such as my own will see underpaid faculty teaching oversize classes packed with students who often must struggle to pay for their education. Meanwhile, the politically connected for-profits will be making profits on public dollars. Second, while a for-profit education need not be inferior to a traditional public or private college education, it (as a matter of actual fact) has been markedly inferior in terms of graduation rates, job placement and the debt students graduate with. As such, it seems reasonable to conclude that federal funding is being misdirected in ways that are not conducive to providing students with the best education, the best chance of graduating, the best chance of getting a job, and the lowest debt upon graduation.

Unfortunately, the for-profit schools for profit model means that they have plenty of money for lobbying and hence they seem to have been able to get their way in Washington. As such, it seems likely that education will continue to decline in the United States. But, at least some folks (including lobbyists and politicians) will be making some sweet profits. That is what really matters, right?

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20 Responses

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  1. anon said, on January 13, 2012 at 10:02 am

    Duh, Profit = good and is more important than anything else you big government, socialist, communist, marxist. How dare you question the “free market” and how good for-profit schools are at teaching people. Government can’t do anything good at all, its completely obvious that only for-profit, free-market people who don’t have to follow the rules they set are the only ones capable of producing anything.

    Did I do this right?

    • Michael LaBossiere said, on January 13, 2012 at 11:58 am

      Bravely done.

    • Douglas Moore said, on January 13, 2012 at 12:54 pm

      Lost count of the straw men. Again.

    • T. J. Babson said, on January 13, 2012 at 4:44 pm

      This one is for you, anon:

      WASHINGTON, D.C. — Americans’ concerns about the threat of big government continue to dwarf those about big business and big labor, and by an even larger margin now than in March 2009. The 64% of Americans who say big government will be the biggest threat to the country is just one percentage point shy of the record high, while the 26% who say big business is down from the 32% recorded during the recession. Relatively few name big labor as the greatest threat.


  2. Anonymous said, on January 13, 2012 at 10:32 am

    This excellent video explains it all. People in the “Fortified Towns” are fighting back against the “Ruthless Invaders.”

    • dhammett said, on January 13, 2012 at 12:52 pm

      Did I hear him right? Did he say government corrupted the invaders. In no way were the invaders corrupt before government corrupted them? Life among the ruthless invaders was Edenic, then government came along? Right?

      Does Adam ever mention large multinational corporations?

      • T. J. Babson said, on January 13, 2012 at 3:56 pm

        Genghis Khan Academy, anyone?

        • dhammett said, on January 13, 2012 at 4:38 pm

          Modeled on GK, minus big corporations. And Gengi–as he was probably called when he wasn’t around –didn’t need a big ol’ bureaucracy to rule his ‘people’. Ah, the good ol’ days.

          • Michael LaBossiere said, on January 16, 2012 at 8:31 pm

            But he could not build an enduring empire. Alexander had a similar problem: he could conquer, but when he died his empire fragmented.

    • Douglas Moore said, on January 14, 2012 at 9:27 am

  3. Douglas Moore said, on January 13, 2012 at 1:06 pm

    “The average graduation rate for the for-profits is around 28% and this is about half that of the nation average.”

    Many people, including soldiers, take online courses from for profit schools like Phoenix. Their goal is often times not to graduate, but to obtain a sufficient amount of college credits for promotion points. Also, most enlisted soldiers are formally counselled by their supervisor to enroll in college courses and at promotion boards, the members will ask the soldier if he is enrolled. Graduating from college while working full time in the military is very difficult. I think that most people whole enroll in these schools are not that serious about obtaining a degree. The for profit schools are much more aggressive in recruiting and thus pull in people who would not have otherwise considered furthering their education.

    The ultimate question comes down to this: Are the individual classes taught by professionals who know their subject and are the students gaining the same benefit from the individual classes at for profits as they are at regular universities. I believe the answer in both cases is usually, yes. But it is an entirely different demography of student.

    • dhammett said, on January 13, 2012 at 5:06 pm

      “The for profit schools are much more aggressive in recruiting. . .”
      In terms of the common meanings of aggressiveness , it would be easy and inexpensive for public schools to be more aggressive than for- profits. They could just go out there and recruit with vigor.

      Is there anything in your application of the word aggressive that does not involve more money? Individual classes would likely be more costly than large classes of 20-30+ . Offering more curricular choice would require more money.

      Public education is limited, to a great extent, by what the public is willing to pay for educating its children. Opinion: As long as removing children from the public schools for home schooling or private schools or cyberschooling or whatever*# does not reduce the tax base to a point where public schools are not funded at the same rate as for-profit private institutions there would seem to be no reason to object.

      *# Also, minimum standards in certain important areas must be achieved and documented .

      • Douglas Moore said, on January 14, 2012 at 9:08 am

        In terms of the common meanings of aggressiveness , it would be easy and inexpensive for public schools to be more aggressive than for- profits. They could just go out there and recruit with vigor.

        True. they put most of their recruiting effort into athletes.

        • songary said, on January 14, 2012 at 9:46 am

          Apologies. I was off the topic here. I was focusing on public schools v for-profit schools at the secondary level.

          • dhammett said, on January 14, 2012 at 9:49 am

            That’s dhammett.
            I need more coffee. . .

    • Michael LaBossiere said, on January 16, 2012 at 8:27 pm

      That is a point worth considering-perhaps there is a mutual using going on: the for profit schools want the federal money, while some folks just need credits that are really not intended to result in a degree.

  4. Matt daly said, on January 13, 2012 at 6:48 pm

    The average graduation rates at for profits is around 28% which is about half the standard universities is completely false most for profits have required graduation rates based on the length of their programs while many abuse the system there are a few serving an underprivileged demographic that are very effective. I think the non profits could learn a few things from the for profits

    • Douglas Moore said, on January 14, 2012 at 9:23 am

      I’ve seen news segments on for profits and it felt as if the news agency were showing me a piece on Scientology, as if the journalists had penetrated a cult, which I doubt is the case.

      I’m currently enrolled with a for profit school: American Military University, which is part of the American Public University System. I transferred from Maryland University for a couple of different reasons. Number one, the courses offered at AMU fit my military profession. They offer majors that are very military oriented which is difficult to find at most school. Where else but perhaps MIT or Georgetown could I take a class on cyber war?

      I came across AMU through a co-worker in Afghanistan. He was a PHD military historian who teaches classes at AMU and he explained to me that the professors there do everything they can to help military people with their difficult schedules. This is AMU’s policy.

      The online format for the class is essential for my continued education. With a family and full-time, demanding job, I would not be able to attend classes regularly otherwise.

      So far, I have nothing but good things to say about AMU. The school has so far provided all the texts for my classes for free. And the books have been top notch. Most surprising to me has been the rigor of the classes. They are not easy. They require a lot of time–8-20 hours per week per class.

      So far I have nothing but good things to say about my for profit experience.

  5. Anonymous said, on January 15, 2012 at 4:15 pm

    Maybe Colbert is reading Mike’s blog. “If corporations are people, then Mitt Romney is a serial killer.”


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