For-profit Schools Fight Back

In a string of recent headlines, for-profit colleges and universities are being attacked for their apparent problems in retaining students and in providing efficient services, and in their thirst for larger stock-holder dividends at the expense of effective programming.  In response to a number of government reports and inquiries, the stock value of for-profit conglomerates has fallen in the last several days.  Now the for-profits are fighting back.  Here's how:

• For-profit education companies are recognizing that negative press (generated primarily in response to the government reports) "could have a materially adverse effect" on profit margins. Some of the companies are now offering to buy-back stock from investors.


• The government asserts that loan repayment rates are dramatically low for students who attended for-profit schools. The Obama administration is threatening to restrict financial aid dollars to any school that has a default rate of greater than 65 percent. For-profits are releasing their own statistics on student loan repayment rates which show higher than 35 percent repayment.


• For-profits are reminding us of why they exist: to educate working adults, to provide flexible academic environments, and to focus on student-centered learning.

While relatively new to the scene, for-profit educational institutions aren't infants in the world of higher education. So why are they attracting so much media and government attention now? Traditionally, for-profits have been able to fly under the radar, so to speak. There has been little inquiry into their systematic practices. Unlike a traditional "brick and mortar" school, there is no blueprint that dictates how a for-profit should be operated. This has led many to argue that education should be about teaching and learning and not about generating revenue. But the for-profits disagree. They see no problem with doing both - providing sound educational opportunities in new and technologically-savvy ways, while also providing dividends to stock holders - holders that provide the necessary capital to hire qualified teachers, build infrastructure, and market to untapped, albeit low-income, communities.

So where do we go from here? The federal government isn't likely to stop its investigation of the business practices at for-profit colleges and universities. While stock prices at these for-profit conglomerates is declining, even rapidly, attendance for the Fall semester isn't showing any signs of decreasing. Students are still enrolling at for-profit schools. Here's what the government will need to figure out before it restricts financial aid dollars and other government aid programs to for-profits: Where will those thousands of students receive their education? Obama is calling for a more educated citizenry, a laudable goal no-doubt, but traditional brick and mortar schools cannot meet the needs of a great percentage of today's students - students who are parents, working adults, and/or lower-income high school graduates. Let's work on creating a comprehensive for-profit model. This may be the answer to meeting our nation's higher education woes.

Photo Credit: Michael Daddino