THE FOR PROFIT COLLEGE SCAM

THE FOR PROFIT COLLEGE SCAM

This is first few pages of an essay I wrote for the journal NEW POLITICAL SCIENCE
called "Lowering the Basement Floor: Community Colleges and the For-Profit Revolution you can read the rest of it here

For profit education is the fastest growing sector of American Higher education, rising exponentially in the last decade from 3.1 percent of undergraduate student enrollment in 1999 to 9 percent in 2009. The share of bachelor's degrees during the same period, increased at an even higher rate, going from 1 percent to 5 percent.[1]  For-profits have become significant players in higher education,

For-profit colleges have been around for a long time. They arose in the 19^th century to teach trade and business skills when the demand for skilled workers could not be met by apprenticeships.  These schools appealed to lower class students and women and focused on narrowly defined practical skills. For-profits expanded into professional areas throughout the 19^th century but during the progressive era these schools declined in influence. Progressives sought greater regulation and professionalization of higher education. For example they regulated medical training and eliminated the earlier system of for profit medical training which varied widely in standards.  Thus the role of for-profits was largely taken over by the new community college system. For-profits remained a small but steady segment of college students until recently.[2]

The rapid rise in enrollment in recent decades was triggered by two developments. The first was the so-called 90/10 rule. Since 1972, for-profit schools have been eligible for federal funds such as Pell Grants and Federal Student Loans, under title IV of the Higher Education Act. However in the 1980’s a number of well publicized examples of fraud and abuse of student aid and loans, especially by proprietary (for-profit) colleges, lead to calls for reform. Designed to crack down on unscrupulous operators who exploited federal eligibility for aid, the 90/10 rule stipulated that any college or university had to get at least 10% of its revenue from non-federal sources to be eligible for federal student aid. If an educational institution was valuable at least 10% of students should be willing to pay tuition to attend -- a standard was easily met by traditional colleges. This low standard, however far from protecting students from fraud, allowed for-profits to expand on a low cost basis using the large percentage of grants and student loans.

The second factor is the shrinking funding provided to colleges and especially community colleges, which has left them struggling to fulfill their missions. Along with criticism of the effectiveness of community colleges, has created a crisis of confidence in public higher education. Overcrowded classes, more limited offerings and loss of flexibility to accommodate older or nontraditional students in community colleges have driven students to look for alternatives. For-profits have exploited this lacuna.  

For-profits have  replaced community colleges as the basement floor of higher education. However the basement is not a bargain. They offer a  career training programs and career oriented degrees funded largely by student loans without however any record of success in graduation or job placement, and burden students who often are left with huge student debts. The for-profit model is an instrument of financialization of higher education which provides substandard education and maximized profits.[3]

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[1] David Glenn, “Annual Portrait of Education Documents Swift Rise of For-Profit Colleges,” Chronicle of Higher Education May 26, 2011 http://chronicle.com/article/Annual-Portrait-of-Education/127639/

[2] Anna Kamenetz, “The Profit Chase”  Slate Posted Wednesday, Nov. 16, 2005, at 3:18 PM. On the history of for profits see Craig A. Honick, “The Story Behind Proprietary Schools in the United States”  New Directions for Community Colleges 91 (Fall 1995), 27-40

[3] For example see Sheila Slaughter and Gary Rhoades,  Academic Capitalism and the New Economy: Markets, State and Higher Education. (Baltimore: Johns Hopkins 2009) ; Jennifer Washburn, University Inc: The Corporate Corruption of Higher Education. (New York: Basic 2006); Gaye Tuchman, Wannabe U: Inside the Corporate University. (Chicago: University of Chicago Press 2009)