For Profit Colleges Failing

Yes, we are in an education bubble that is currently popping. It has been driven by the same motive that the housing bubble was; greed. It is unclear how widespread the fallout will be, hopefully, as I said before, the schools that have operated conservatively and worked to serve their students well will not be affected too severely.

 

They aren't, so let's not.

 

Unfortunately, if the higher education bubble does, indeed, pop, then it will not be just the for-profits. Smaller and weaker non-profits have been biting the dust and many of the non-profits that have been looking a DL as a cash cow will also be affected.

 

Texas was about to close 4 community colleges, until the public outcry caused some shifting of plans. You can read it here.

I think it just highlights what Anthony is stating. Non-profits are not exempt from closure, and have little to no capital to endure hard times.

 

I firmly believe this has more to do with the economy being in the tank than anything else.

 

Yes it is in the tank. I just hope somebody doesn't flush.

 

Touche my friend.

 

I wish they would cut Tarrant County College out or at least down to 1 campus. They have been a drain on the county forever and never seem to be held accountable for anything they do to include going way over budget in building their new campus all the way to awarding non-compete contracts and back handed deals. Yet every year I have to pay into it as a resident of the county.

 

Fact is private for profits have made education available to many. Public universities may have higher admission standards, but is that such a good thing? Perhaps it is to some extent. Moreover, perhaps it can be argued that most state university programs are "better" than some of the private for-profits. In my humble opinion there needs to be an adjustment made in some of the private for-profits student recruiting techniques, tuition cost and financial aid practices. I do not want to see any of them fail because they do offer access to higher education for millions. That is a good thing.

 

It is already happening. The end of the "safe harbors" for student recruiting are causing those institutions who paid a salary differential (i.e. commission) for recruiting greater numbers of students are now having to paid standardized salaries, like the rest of us. New federal regulations regarding financial aid (enacted July 1) are already taking effect. We'll see how (or if) tuition costs go down, as state university tution is going through the roof and non-profit private universities (that tend to be more expensive than for-profits) have not lowered their tution.

 

I see no reason why for profit schools should not be able to gain a strategic edge by being low cost providers. They can offer a narrow range of majors (unlike state schools) and take advantage of economies of scale in those areas. If they were to do this they may not have the profit margins of yesteryear but they will certainly remain viable if not applying downward pressure on many non-profits.

 

Yes, the WSJ is something I consider credible.

 

This may be a viable alternative for some of the schools, since they can organize and scale in a way that non-profit privates do not want to do and that public colleges and universities cannot do. However, since tuition at many public college and universities is skyrocketing (and out of state tuition is no cheaper than a for-profit) and private non-profits tend to be more expensive than the for-profits, there may be less incentive for private sector schools to lower their tuition, unless the current enrollment trend continues.

 

Of course (going back to QED's original post). The mistake that the Wall Street Journal author makes (and the inept Gawker blogger that references it) is treating the largest publicly-traded for-profits as if they were the entirety of private sector education. There are over 3,000 private sector schools, ranging from tiny career schools to privately or family-owned colleges and universities (like mine) to the publicly-traded schools. My institution's enrollments have not seen the same decline as the large publicly-traded schools.

So, some of private sector education may need to make big changes (if they are doing wrong things then they should). Others will see little or no effect, so those predicting the immediate demise of for-profit education are likely to be quite disappointed.