For-profit colleges

For-profits lag behind other colleges in student outcomes

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New research attempts to better compare the performance of for-profit colleges with nonprofits by controlling for differences in student populations, with largely negative results for the industry.

Rejection from state regulator seals fate of Charlotte School of Law

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Abrupt closure of Charlotte School of Law appears to end months-long saga over program's access to federal aid. But questions remain over which former students will be eligible for discharge of student loans and liability for taxpayers.

Charlotte School of Law missed deadline to remain open

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The Charlotte School of Law missed two deadlines set by state regulators and has asked for an extension to stay open.

Dev Bootcamp, which Kaplan bought three years ago, is closing

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Dev Bootcamp, an early skills-training provider for software developers, struggled to find a viable business model. Experts predict other boot-camp closures or consolidations.

What it will take for for-profit colleges to recover (essay)

The election of President Trump and shifts in the regulatory environment due to Republican control of Congress have, of late, been sparking speculation that regionally accredited for-profit higher education institutions would be poised for a comeback. The acquisitions of Kaplan University by Purdue University and of EDMC by the Dream Center add another dimension to this landscape, as the online nonprofit competition grows and the pressure becomes greater for those remaining for-profits to stay viable.

There is an important niche that for-profit institutions can fulfill, and the opportunity is available for these institutions to jump (back) into this niche under potentially relaxed regulatory circumstances. The full spectrum of postsecondary education can benefit from proprietary education returning to its roots while still looking toward the future.

Yet for the enduring for-profit institutions to make a comeback, they will have to reinvent and reinvigorate themselves and recapture public trust damaged by a mix of ill-conceived business models, bad behavior and years of harsh regulatory scrutiny. That’s easier said than done.

To execute, for-profit institutions can’t just articulate a new vision for the future, but will have to live it. That will require a commitment to stronger student outcomes and a commitment to transparency in practices and measurement, regardless of the regulatory landscape. But it also requires that for-profits return to their roots and modernize their commitment to the twin origins of offering programs that lead to jobs and innovating in the ways those programs are delivered.

Connecting Students to Jobs

For-profit institutions have always made it a priority to offer programs that lead to employment, but as the current jobs landscape and new nondegree credentials keep evolving and growing, proprietary institutions must redevelop the programs they offer to stay ahead of the demand curve. It’s time for these institutions to refocus on adult learners who need to skill up for the jobs of the current era, and who may be less employable in the industries of their former occupations. For-profit institutions in the past were very adept at championing quality programs that were practical and vocational in nature, and there is a need for updated practice-oriented programs today that these institutions can help fulfill. Growth and variation in the general education space have not led to success for many for-profits. These institutions would be better served with a solid focus on new and more employable categories of study.

A first step toward this redevelopment is sunsetting existing programs that are no longer meeting current needs and whose enrollments have steadily decreased over the past five years. For-profits must then introduce new fields of study based on future-oriented employability research. There has to be an increased recognition that part of enrollment and academic advising is the guidance of students, especially adult students, into fields that will increase or augment their present-day and future employability.

The proprietary higher education sector may find new opportunities in contracts for government-driven job markets such as defense, public health care, cybersecurity, environmental solutions and infrastructure development. To serve these areas, the institutions will need to bring on new faculty members expert in these areas, as well as in other much-needed disciplines such as artificial intelligence and machine learning.

Another credible area of growth for proprietary institutions is in offering career-oriented programs targeted to Section 127 of the tax code, which makes employer education benefits tax-exempt so that they aren’t counted as employee income for tax purposes. As the overarching barrier to education for adults is cost, employer-paid tuition can alleviate some of the cost burden for working adults -- particularly given that many do not qualify for federal Pell Grants.

By expanding program offerings for which employers are more likely to pay the learner’s tuition, proprietary institutions can grow their own portfolios while assisting students with means to pay tuition other than through the use of financial aid. This expansion can help for-profit institutions fill market gaps not currently being addressed elsewhere in the postsecondary education ecosystem.

Program Delivery, Systems Innovation and Cultural Shift

For-profit institutions were among the original pioneers in online education and yet seem to have stalled in their position as unique program-delivery innovators. Now is the time to innovate again not just on delivery modalities, but on how to make sure students are successful. Doing that requires a cultural shift.

A good lever for revamping both programmatic approaches and reprioritizing student outcomes would include a next-generation student information system that is integrated with a learning relationship management system. The new system would provide end-to-end student metrics and tracking data that can be used to improve retention, completion and placement outcomes. These systems integrations, including learning assessment and employment outcomes tracking, would ideally integrate with vehicles for alumni tracking.

The idea would be to create a feedback loop so that real-time, continuous data about alumni employment could be fed back into the “engine” and inform both new program development and student advising over time, not just at the moment of enrollment and admission to the institution. Technology and information systems advances would once again bring proprietary institutions into the foreground of innovation in higher education, where a number of such institutions were positioned in the early days of online learning.

And yet, for all of this to happen, fundamental cultural change and change management in the for-profit space will need to occur. The extreme focus on profit has led to the downfall of several proprietary institutions in recent years. Although a number of for-profit institutions have always had, and have maintained, strong reputations for student-centeredness and a dedication to student outcomes, pressure to produce profits has led some institutions astray.

The original primary intent in the for-profit sector of providing programs to support students in their professional development has in some cases given way to extreme vocationalism. In some cases, a rush to enroll large numbers of students without paying sufficient heed to their retention, completion and employability has cast a shadow over the sector more generally. Dissolution of this shadow will require both cultural change within and evolution of perception without. A more favorable policy climate cannot -- and should not -- by itself solve these issues for the sector.

There will have to be a melting of the silos that traditionally exist within the proprietary environment between academic and support departments. Although this may be representative of the higher ed environment more generally, siloing of academic departments from support departments can often be seen more intensely in the proprietary space because of the nature of the for-profit drivers at play.

The newly culturally healthy proprietary institution will encompass stronger institutional research, which will be necessary to elevate student completion and employment outcomes. One approach to achieving stronger, higher-quality outcomes would be through distribution of responsibility for outcomes throughout the institution. Ownership of student outcomes by the various academic and support departments, now newly collaborating through cultural change and reinvention, would provide a stronger base for the institution’s achievement on a holistic scale. The internal networks created would be more powerful than the research and reporting of one institutional research department alone for the entire institution.

For-profit institutions have a distinct history of being on the cutting edge of new delivery models in higher ed, and this history should be retained and continued. The structure of these types of institutions allows them to experiment and take risks not usually found in the public sector. There remains a potent opportunity for the proprietary sector to remain a leader in new delivery models and thoughtful market research.

Transforming public perception and trust will of course be an important factor in this, but through a focus on updated, quality programs and improved metrics, as well as new models for revenue generation and student outcomes tracking, over time the transformation is possible.

Deborah M. Seymour and Michael B. Horn are principal consultants at Entangled Solutions.

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Large for-profit chain EDMC to be bought by the Dream Center, a missionary group

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The Dream Center Foundation, a religious missionary organization based in Los Angeles, plans to buy EDMC, a struggling for-profit chain that enrolls 65,000 students. The resulting nonprofit college group will be secular. 

The impact of the new economy on for-profit colleges and their students (essay)

When people talk about for-profit colleges, they often do so with disdain. If you are concerned about vulnerable people making expensive educational decisions with little information, then you might disdain the “predatory” for-profit schools. If you think that a strong work ethic can trump all manner of troubles, you might disdain the “weak” people who go to a “predatory” school. What is interesting to me is how much disdain is spread among students and schools and how little disdain there is for labor markets.

More than any other kind of college, for-profit colleges are judged by their ability to get their students jobs. And, given their high dropout rates and poor job-placement rates, we often blame them for what are, in fact, labor market failures.

Today’s lingo to describe how we work is “the new economy.” This new economy has produced a new breed of for-profit colleges that constitute a parallel education universe I have dubbed “Lower Ed.” Unlike the mom-and-pop for-profit colleges of yesteryear, these for-profit colleges are massive corporations and have generated billions of dollars in advertising revenue for broadcast and digital media. From the start, they were quite clear with investors and regulators that their market niche was contingent upon deteriorating labor market conditions. Poor labor market outcomes for their graduates (and nongraduates) are part of their business plan.

Job data has become the grounds on which we not only judge the quality of for-profit colleges, but also wage regulatory battles on behalf of the public (consumer) good. Some of this emphasis is due to how we regulate for-profit colleges. The job-placement data is part of the federal gainful-employment regulation that, to summarize, says programs that advertise as pathways to jobs must actually lead to said jobs and provide job-placement data to help students make good choices about their education.

For-profit colleges spend a lot of money pushing back on gainful-employment regulations. Yet through interviews with for-profit college executives, I have discovered that gainful employment is treated more like an unavoidable cost of doing business than the heated political rhetoric would suggest. As one vice president of a national shareholder chain told me with a sigh, “Well, gainful employment is the cost of dealing with the feds.”

The public fights over job-placement data and gainful-employment regulations keep lots of people in business. Politicians look tough when they issue a statement in favor of gainful employment. Regulators relish press releases of cases filed against predatory for-profit colleges based on job-data manipulation. For-profit colleges look like they’re being led by the U.S. Department of Education to add a layer of expensive regulatory compliance against their will. They write to their investors and financial regulators about the “necessary requirements” of complying.

But does regulating job-placement data and gainful employment protect the public interest amid the turmoil of the new economy? It is hard to see how it does. The premise is simple: data makes for better choices. But this assumes that better choices are available, and I’m not sure that they are.

Consider Janice, a 28-year-old black registered nurse who worked in a hospital and enrolled in a for-profit college bachelor’s program. Janice was caught in the middle of a professionalization shift among nurses. Whereas the field had formerly only required a post-high school certificate in nursing, it was increasingly more common to earn a bachelor’s degree in nursing.

That kind of professionalization and educational inflation falls under the “declining internal labor markets” rubric of the new economy. Unlike in the past, when experience and subsequent licensures might be obtained through an employer -- in this case, a hospital -- the expectation now is that workers will increase their human capital at personal expense to “move up” the professional ladder. Janice’s choices for promotion were limited: she could hope for favorable reviews from a sympathetic management culture (a risky proposition) or earn a bachelor’s degree in nursing.

Janice described her workplace culture to me as one where people formed alliances with people who were similar to them. That meant the white nurses congregated with each other at work and sometimes socially. They attended the same nursing program and shared a common knowledge base, all of which felt like a form of exclusion to Janice.

Janice only indirectly attributed this dynamic to race, a distance that is probably similar to how that exclusion feels: ambivalent and hard to identify, but easy to feel. It could be about race only to the extent that so few black R.N.s had their bachelor’s degrees in nursing or had gone to the same nursing program as the nurses who had more management power. And that dynamic could be about race only to the extent that one might be less likely to have the financial means to enroll in the competitive nursing program. Because the program is one of the only ones in the local area to offer the degree, it is routinely at capacity. That means one could apply and be on a waiting list for a year or longer.

Janice felt that she couldn’t afford that kind of time off from greater earnings or promotability. Her ability to “afford” time could be about race and certainly about class and was likely about how all of those are always interacting at the same time. For Janice, time and access were expensive in ways that the debt she incurred attending a for-profit degree program in nursing was not.

Janice’s “choices” were instructive. In fact, of the 109 students formerly or presently enrolled in for-profit colleges that I interviewed between 2011 and 2015, no one talked about the context of their college choices in ways that would suggest that more accurate or clear job-placement data would have changed their circumstances or decisions.

Instead, they talked about a credential as insurance against risks they could not continue to bear alone. JJ, a military veteran at a for-profit college, was particularly exasperated by the nonchoices available to him. Community college was infantilizing. Traditional four-year colleges were impractical. Why should people who have served their country have to “start over,” was the gist of his argument.

I’ve led grown men in the battlefield. I’ve managed over $1.5 million of mission-critical assets at any given time. I’ve taken weeks strait [sic] of leadership development courses. I’ve been directly responsible for soldiers’ lives. I needed a piece of paper that would translate my expertise to employer terms.

What JJ really needed was to not need a credential at all. It was only when the conditions of the labor market devalued his and Janice’s experiences that they considered college. Job statistics won’t change the conditions of the labor market for people.

A Negative Social Insurance Program

Political wrangling over job statistics looks like action, but it is mostly a distraction. Sociologist David Brown has shown that credentials can be created without jobs to justify them. We produce risky credentials when how we work changes dramatically, and the way we work shapes what kind of credentials we produce. If we have a shitty credentialing system, in the case of for-profit colleges, then it is likely because we have a shitty labor market.

To be more precise, we have a labor market where the social contract between workers and the work on which college has previously relied has fundamentally changed and makes more workers vulnerable.

Substantial evidence suggests all of the changes have shifted new risks to workers. Employer tenure for young workers has dropped at the same time that part-time and temporary work has increased, meaning many workers expect to change jobs more frequently. Essentially, their employment is constantly temporary. As the rhetoric goes, the new economy values knowledge workers with cognitive skills, and degrees represent those kinds of skills. If that’s the case, the new economy has shed high-paid but low- to midskilled cognitive work in favor of high-skilled labor and low-wage, low-skilled labor. The best-case scenario proposes that this is a decade-long labor-market correction. The labor market will catch back up and millions will find themselves back in “middle-skill” jobs with middle-class wages and work conditions.

In this best-case scenario, workers have taken on debt waiting for the market to correct itself. Depending on the kind of debt and who took it on, it’s either manageable or crushing. And for the most vulnerable workers, the only way to remediate some of that debt is to accrue more of it by going back to school. If for-profit colleges like ITT are no longer around, then another form of short-term, on-demand credentials will respond to consumer demand by extracting profit from student loans and education savings accounts.

It is not an accident that financialized shareholder for-profit colleges expanded in the 2000s. Changes in how we work created demand for fast credentials. The federal student aid system made those credentials “cheap,” in the sense that students do not pay much for them up front. The new economy, by all accounts, will require all of us to maintain near-constant skills training so as to be employable and put a far greater onus on individuals to extend their education.

So far, our policy has been to rely on the student loan system to finance that onus. To the extent that has fueled for-profit colleges, our government response has positioned them as social insurance against labor-market innovation (or disruption, depending on your perspective). Let me be clear: these are all conditions that are expected to sustain, if not accelerate, individual costs for job retraining repeatedly over the working life course.

Our national response has been to increase public money to private profit-extraction regimes. That is, in effect, a negative social insurance program. Whereas actual social insurance, like Social Security, protects citizens from the vicissitudes of predatory labor-market relationships, negative social insurance does not.

A negative social insurance program positions private-sector goods to profit from predictable systemic social inequalities, ostensibly for the public good. How did for-profit colleges define their market? They said that greater inequalities in secondary schooling produced demand for higher education without a viable means for millions of people to attain it. They said that employers were less interested in providing in-house corporate training and more desiring of credentials to certify work experience. They said that the military and other public-sector employers were shedding jobs. These aren’t secrets.

If the new dominant work arrangement divests employers of the cost for their employees’ training or certification, workers will pursue certification and credentialing schemes. If we know the cost of those schemes is primarily funded through taxpayer-supported federal student aid programs, then we already have a mechanism for providing social insurance. But when we facilitate spending that benefits institutions that maximize cost to extract profit, we have perverted the public-good mission of social insurance.

Early in 2016, I attended a conference where people in education technology offered everything from online platforms for massive open online courses to financing schemes to help people borrow private money for short-term coding boot camp courses. In their presentations, they depicted a future of work where employers couldn’t find enough “on-demand,” “skilled” labor for “the jobs of the future.” They showed earnings gaps between those with credentials and those without. They described how inefficient graduate programs at traditional universities are because they ramp up too slowly, cost too much and take too long to finish.

Yet we know that tech jobs are disproportionately filled with white and Asian men and that the tech industry has demonstrated problems hiring and promoting women and ethnic and racial minorities. Like the early days of for-profit colleges’ Wall Street era, the new credentialism promises credentials in high-wage, high-demand jobs that have statistical discrimination baked into them.

New institutions and new credentials are by definition lacking in prestige, the kind of prestige that lower-status workers and students need for their credential to combat discrimination in the labor market. Opening the federal student aid spigot without paying attention to how this ends for the poorest makes us all vulnerable. And turning on the spigot is precisely where we seem to be going.

In 2015, the Education Department launched a pilot program to help people like those boot camp coders use federal student aid money to pay for their programs. Organizations that participate in the program could apply for a special waiver of regulatory and statutory requirements usually associated with gaining access to federal student aid. They didn’t have to offer a degree or a certificate, usually defined by some standard credit hour of attendance, or be accredited. This program -- the Educational Quality Through Innovative Partnerships (EQUIP) -- is said to encourage and reward “entrepreneurialism” in the higher education sector. The impetus? The jobs of the 21st century need mobile workers with specialized skills that employers will not pay for. It is the same pitch that shareholder for-profit colleges made to investors in the 1990s.

The proposed future of higher education looks a lot like the start of the Wall Street era of for-profit college expansion: occupational credentials in narrow fields, paid for through public financing schemes that start with exemplars of high-status white men in high-pay jobs and offer little hope for anyone else. By 2016, we knew how this ended for shareholders of for-profit colleges, but we’ve not yet fully counted the social cost. Meanwhile, one wonders how high student loan defaults, constrained choices, predictably poor job outcomes and negligible upward social mobility for those trapped in Lower Ed serve the public good.

Tressie McMillan Cottom is assistant professor of sociology at Virginia Commonwealth University. This article is adapted from Lower Ed: The Troubling Rise of For-Profit Colleges, just published by The New Press.

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Q&A with author of book on rise of for-profits in a new economy

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A new book argues that the focus on credentials and growing inequality led to the rise in for-profit colleges. 

For-profits say Obama administration data error undermines borrower defense and gainful employment

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For-profit-college advocates cite Obama administration data goof on loan repayment rates as justification for revisiting borrower-defense and gainful-employment rules.

Laureate becomes largest college to become a benefit corporation

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For-profit Laureate Education becomes a publicly held company and the first such company to adopt benefit status, signaling its intent to focus on mission as well as money.

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