5 reasons why for-profits will survive

Jay Mathews
Columnist November 27, 2011

I am biased against for-profit schools. I have long thought of them as diploma mills, without ever having visited one. I like public charter schools, but only if they are nonprofit. When Kaplan, then the most profitable division of The Washington Post Co., built a chain of for-profit colleges, I never wrote about them.

Teachers I admired saw education as a public trust. They weren’t in it for the money. They wanted to help kids. I noticed that Edison Schools, a management network run by some smart and well-meaning people, failed to win the confidence of many parents and teachers because it, too, was trying to make a profit.

Jay Mathews is an education columnist and blogger for the Washington Post, his employer for 40 years. View Archive

Now those of us who think this way have been vindicated. The federal government has tightened regulation of for-profit colleges, including Kaplan’s, in response to criticism that many students were being misled about loans they were likely to need to obtain a degree. This has put the entire industry on the defensive.

Enter Andrew S. Rosen, Kaplan’s chairman and chief executive, with a new book called “Change.edu: Rebooting for the New Talent Economy.” Who does Rosen think he is, extolling the virtues of for-profit schools while his company faces such threats?

I wasn’t sure I wanted to read the book or write about it. As a 40-year employee of The Post, anything bad I say might seem too little too late, and anything good would be taken as trying to protect the company. I was glad Rosen agreed his company had messed up. He did not shake my feeling that profits and teaching are a bad mix, but I did learn things I needed to know.

Despite the industry’s troubles, Rosen convinced me that for-profit educational ventures are here to stay. People who feel as I do will have to adjust to that.

Here are five reasons why:

1. For-profit schools are less of a drain on tax dollars than nonprofit or public schools. Georgetown University business school researchers Robert J. Shapiro and his fellow economist Nam D. Pham found that for-profit schools receive less than 30 percent of the government financial support per student that public institutions and their students do.

2. The public and nonprofit private universities that dominate higher education are doing less with their money. They are building luxury dorms, restaurants and athletic facilities which don’t produce more learning or more graduates. In 2007, the United States spent 3.1 percent of its gross domestic product on post­secondary education, twice the 1.5 percent spent by other developed countries that produce more graduates per capita.

3. For-profit colleges often have better graduation rates for the same kinds of students. U.S. Education Department data show students with two or more key risk factors — such as delayed enrollment, no high school diploma or full-time job — have only a 17 percent chance overall of getting a two- or four-year degree. Their chances are 24 percent at for-profit schools. That’s not a big improvement, but they are doing it with fewer tax dollars.

4. In other industries, the rise of for-profits has sparked great controversy but not for long. In the 1980s, hospitals began to shift from publicly funded or nonprofit to privately funded, with much criticism. Today, most of us don’t know or care how the hospitals we visit are financed.

5. Aggressive newcomers to higher education have historically been labeled as wasteful, low-quality hucksters cheating our youth. That was the rap against land-grant colleges and community colleges when they were created. They are now vital parts of our system.

People like me may want for-profits to disappear, but that is not going to happen. They seem destined to become a significant part of what college means in the United States. While we are cleaning them up, we should think about what our own alma maters can learn from them.

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