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For-Profit, for African-Americans?

April 2, 2010

For-profit higher education has had no difficulty attracting black students. When the University of Phoenix announced its growth to 443,000 students in the fall, it noted that 27.7 percent of its new students are African-American.

On Thursday, a new venture announced that it will seek to become a for-profit higher education company focused on serving black students. Officials were vague about how they would do so, but acknowledged that they would be seeking one or more partnerships with existing institutions that have accreditation. That has been a popular approach of late with investors who are looking to move into new higher education markets -- since accreditation is easier to hold on to (even with a change of ownership) than to earn from scratch, and accreditation is required for students to receive federal financial aid.

One source familiar with some of the exploratory discussions about Latimer Education, as the new venture is called, said that the goal was to align with a private, financially challenged historically black college. One of Latimer's founders confirmed that working with a black college was one idea under consideration, but he said that other ideas were as well.

Latimer's three co-founders are well connected in business and education circles: Scott R. Royster, who spent much of his career as an executive with Radio One, a chain of black radio stations; Brian W. Jones, who was general counsel for the U.S. Education Department during the George W. Bush administration and has also worked in the student loan industry; and David A. Sutphen, who is a partner in a communications firm and formerly held key positions on the staffs of such prominent players in education policy making as the late Sen. Edward M. Kennedy. Jones also spent several years prior to the launch of Latimer working for Dow Lohnes, a Washington law firm that has been brokering partnerships between nonprofit colleges and for-profit entities.

The Web site of Latimer is sparse, and its profile has been decidedly low until Thursday's announcement by Maveron, a Seattle venture capital firm co-founded by the chairman of Starbucks, that it was investing in the company. Maveron was an early investor in Capella Education and has been recently investing in other higher education businesses that focus on providing educational content.

Jones, in an interview, declined to discuss many details about the new venture, including the degrees or programs it would offer. But he said it would probably have a campus and also deliver education online. "We hope to create an institution that will cater to what are often the unique needs and interests of the African-American community."

The founders saw the potential to make a niche in the for-profit sector by focusing on black students, he said. "I think the reason that the for-profits have done well, and it's not unique to African-American students, is that they serve nontraditional students well," he said. "They have been attentive to the needs of the market place, much more flexibility for the unique needs of nontraditional students who work during the day or have other commitments that make it difficult to attend a traditional institution." As for building on that record, he said, "not to disparage anything the existing for-profits are doing," but that he believes the right programming and services would attract more black students.

He said that the education programs would be "more culturally tailored or relevant to African-Americans." However, Jones said that all students would be welcome. The new programs, he said, would let students "be able to leverage all the emerging technologies that deliver a superb experience."

"The bottom line for us is that we are coming into this market because we have the opportunity to transform the higher education experience for a great many African-Americans."

Michael L. Lomax, president of the United Negro College Fund, said via e-mail that he was not familiar with the new venture but was "not necessarily surprised" by it. "For-profit education companies are targeting all segments of the market, including African-Americans," he said. "Competition is a reality of higher education, and no sector -- including HBCUs -- is immune. The fact is that there are increasing numbers of black Americans who are now and will be in the future seeking post-baccalaureate degrees, and new providers will aggressively seek to serve them."

Some advocates for low-income students, who are also critics of for-profit higher education, were alarmed by Thursday's news.

Sara Goldrick-Rab, an assistant professor of educational policy studies and sociology at the University of Wisconsin at Madison who studies student access to higher education, said she was bothered by quotes in the Maveron press release comparing the idea of a black for-profit college to black media companies. Via e-mail, she said: "Clearly, this is the 'business' of education and these folks are making little effort to pretend like it's anything else."

Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, said it was "no secret that the sector disproportionately targets minority communities," and he said this should be cause for concern.

While he said that he does not know specific information about Latimer, the for-profit sector in general operates "in a free-for-all in which you grab as many warm bodies as possible," earn money from the student loans these students take out to pay for tuition, and "ship them out the door."

He said that educators should be "all the more alarmed" if a for-profit is open about planning to focus on black students, many of whom are from low-income families. He also said that educators and accreditors should be much more wary of the way for-profit entities operate within or purchase nonprofit colleges -- and thus are able to use the nonprofit colleges' accreditation.

"It's a form of body-snatching, turning the institutions essentially into zombies," he said. It should be "glaringly obvious" that when a for-profit entity purchases a nonprofit entity, the changes are so significant that there should be no assumption that the values or priorities of the original institution matter anymore. But he said accreditors appear "unequipped or unwilling" to challenge these arrangements.

 

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