Can For-Profit Colleges Save Higher Education?
September 8, 2011
For-profit colleges are on the ropes. Damaging congressional investigations, a bruising fight over new federal regulations and a stagnant economy have all combined to reverse what had been unprecedented growth in for-profit enrollments. As Bloomberg BusinessWeek reported last week, financial analysts now see an outlook for proprietary colleges that ranges from uncertain to gloomy, says
Andrew Kelly, a research fellow at the American Enterprise Institute.
Consumers and investors have reason to be wary.
- Federal statistics indicate that 25 percent of all for-profit students who started repaying their loans in 2008 had defaulted three years later.
- In public colleges, the comparable figure was just 10 percent.
- Although for-profits enroll only about 10-15 percent of all students, their students make up about 47 percent of all three-year loan defaults.
- By 2015, new federal regulations will cut off student aid dollars to for-profit programs whose graduates struggle to pay back their loans.
So what do the for-profits have to offer? Kelly sees three things:
- First, the for-profits have shown an ability to grow and expand their capacity.
- Second, for-profits have experience serving higher education's "new majority": nontraditional students.
- Third, the for-profits have shown a knack for getting students over the finish line in their two-year programs.
This is not an argument for or against for-profit colleges as currently conceived. Providing expertise, infrastructure and services to willing, entrepreneurial partners in the non-profit and public sectors would enable for-profits to accomplish two goals.
- First, the model would shift much of the risk inherent in educating nontraditional students to their partner organizations and provide for a more politically stable revenue stream.
- Second, this new arrangement would clearly harness their wealth of knowledge and innovative spirit to the nation's new higher education goals.
Source: Andrew P. Kelly, "How For-Profit Colleges Can Save Themselves -- and Higher Education," The Atlantic, September 6, 2011.
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