October 17, 2021

what if the DOE limited growth rates on for-profit schools

I have been speaking with a number of analysts all of who seem to be focused on the Dept. of Ed and possible changes to the for-profit edu industry. One recent discussion focused on the what if scenario if the capped growth rates for for-profit schools. While I doubt something like that will occur, it would present problems for many in the industry. what are your thoughts on this and on other potential areas they may look to change.


  1. some good comments from the linkedin group:

    It may actually be a good thing for the industry. It may well be that the career college/school business is in the condition of hospitals in the 80-90’s. More beds than patients. There are now just about more seats than students to put them. Moreover, there is quite little product differentiation – CJ, tech, business, health, etc. etc. One school is much like another competing with a copy of itself in the same target market. The community colleges and some 4 years are starting to catch on to the career college time frame to completion idea so they are also entering the same market. There is just so much elasticity in the market for new competition. So slowing the overly raid growth may be good for everyone because too many schools competing in shrinking markets in a touch economy will lead to a shakeout i.e. going out of business. That is not good for anyone and yields bad press and more scrutiny.
    So a slow down could be helpful to the industry.

    I could not disagree more. There is more than ample elasticity in QUALITY online education and opportunities for incredible innovation and new approaches to education that simply does not take place in tenure-bound, faculty oriented ongound schools. Online schools role out programs and concentrations and new degrees based on market studies, feasibility studies, and information about employers and their needs. There is tremendous differentiation among programs and courses and often online folks much harder than onground folks to avoid duplication of courses and topics and to encourage joint endeavors. There is a bit of contest between the side and the academic side but that is often healthy in focusing decisions on metrics and on results rather than simply the academic interest of one professor. Online education gets away from forum shopping and faculty selection based on criteria other than quality teaching and curriculum. My experience is that in multiple sections of the same course, it is the luck of the draw as to faculty and the choice of learning materials. With only 30% of the population in the US possessing a college education, there is plenty of demand and demand for different types of education – especially that which is responsive to the life-styles of folks today. The mention of “number of seats” is even erroneous in that the number of sections and classes are offered based on careful analysis of metrics and demand rather than the need of one professor to offer his or her course topic.

    I will be brief and, first, indicate that I wholeheartedly agree with Mr. Weston regarding the need for expansion of post-secondary education. Our economy is suffering from a lack of post-secondary education in a great many communities. That need can only be met effectively by institutions at multiple levels; proprietary certificate institutions, private 2 & 4 year colleges, and public community colleges.

    Second, we are responsible for managing our institutions and our industry to effectively meet the student and employer needs with quality educational programs and student services. To that end, we must ensue applicants to our institutions have available informaiton needed to make informed choices as consumers. Consumers should always have choices.

    Government regulation should certainly not be the answer to responsible management in our sector.

    I was going to say “this has got to be one of the most idiotic suggestions I have ever heard,” but I wont. Sure sounds like government. If it works, stomp on it.

    So if we start a new on-line college with 100 students, we’re only going to be allowed what? 110 next year? Get real. There is no reason we should not be able to grow as fast as we can add students, instructors, and service capacity. We plan to have strict requirements and will not stand for growth over quality. However, in the end, a degree is only worth what it took to get there. Weeding out the weak ones is one reason for accreditation. You still have to meet standards or the degree and the school are worthless. Let the market work.

    BTW, if you want to see a basket case, look at California Community Colleges. Students can’t get courses they need, In spite of that, thousands of courses are now being dropped due to budget constraints. PBS even ran a special on these specific problems.

    Education is one of the most inefficient industries in the world. There is a lot of room for innovation. The last thing you want to do is stifle growth where innovation can flourish.

    Wow. I had to comment on this one. I agree with Mr. Weston, Mr. Mitchell and Mr. Apple.

    Capping enrollment at for-profit schools is not a good idea for anyone and it will never happen. The demographic shifts in the higher education market space indicate the need for the type of education and services offered by for-profit institutions will only increase in the coming decade. With the % of traditionally “college qualified” students on the decline and the % of traditionally unqualified on the rise in the coming decade, capping enrollment at for-profits will only hurt students who are served by such institutions. Further, having been a part of accreditation visits at both regional and nationally accredited institutions I would assert that most regional institutions would fail a national accreditation visit because they have higher standards.

    One factor impacting this may be the desire of community college districts to offer 4 year degree programs. While high schools shuffel the 2/3rd of the graduating class who are not qualified for college to the local community college, only 20% of those who begin there will achieve some type of degree. Some in government may feel capping enrollment at the for-profits would feed the community colleges. While I personally support community colleges moving to the 4 year degree, I do so with the hope that they improve their retention and graduation rates and place an emphasis on remedial and other student services.

    College students are requiring remediation in increasing numbers, the population of students over the next decade, fits into this category. Over the last decade non-profit 4 year institutions have cut remedial services by 12% while over the same period for-profit “4-year” degree program/institutions have increased remedial services for students by the same amount.

    While some for-profit institutions can do better in terms of outcomes and an increasing number appear quite similiar in terms of program offerings, a far greater percentage of non-profit and community colleges have abysmal retention and graduation rates. There are problems to be solved everywhere and fantastic people working for improvement. Government has a role but perhaps regulation and quality standards should be applied equally to education providers regardless of profit status. If the primary goal of education is to educate, why would we put caps on that? I shake my head reading about states across the country cutting the budgets of colleges and universities, reducing enrollment because the budget doesn’t allow them to take the students. From a for-profit education perspective, this approach makes no sense.

    Both non-profit and for-profit institutions have a great deal to learn from each other with the beneficiaries being students, families and society.

    Here is what we hear from online students themselves at GetEducated.com: Help! Help! Help!

    Potential online students feel overwhelmed by both the amount of undifferentiated choice that exists among online colleges and the hyper-aggressive sales tactics used by many for-profit educational operations.

    12,000 online degrees. 400 online MBAS: that’s a bit staggering, isn’t it? Trust me: It is for consumers who have no set of tools to sort through all these undifferentiated educational options.

    Choice is great. For the first time in history there exists a national marketplace where consumers can choose the type and style of education that best fits there lifetsyles and budgets. That’s most excellent. And it’s what America does best: creating choice along the varied dimensions of all types of products and services.

    I’m not so sure the government needs to regulate growth but I am positive that lots needs to be done to clean up this industry. We’re talking one big dirty underbelly that could use a scrub. Strong-armed student recruitment, financial aid scams, retention numbers laundering, and out-and-out fraud are rampant in the online college sector.

    Much if this has been fostered by a rush to milk the government financial aid and loan system (which is antiquated and ill-prepared to deal with the profit motive that now infuses higher education) combined with rosy double digit growth for this sector on Wall Street.

    Consumers are catching on, guys. For the last decade there’s been a wild west anyhting-goes attitude. That’s normal for early growth stages of any enterprise. But we are at the dawn of a new age of competition and market maturity.

    I don’t think limiting growth is necessary, or the answer, but reforming the system is something that needs to happen in a big way.

    Now that consumers have lots of choice they are looking at online colleges to differentiate themselves. And justify the value of the education they are about to purchase.

    Differentiate or die.

    Old or new: you’ve got to establish your brand as a high quality, low-cost option with career clout. That’s what’s on the horizon these days. According to the potential students themselves.

    And they’re the ones buying — or not.

    Sounds like a GREAT idea! Oh and while we are at it, let’s cap the growth rate for the publics and privates too. Hey this is fun, why limit this cap idea to just education? Wouldn’t American industries do better with caps also? Isn’t this just the idea that we all need to kick start the American economy?

    Has anyone wondered why the government is thinking of capping? Sure some of it is self-protection for public schools and the privates many legislators graduated from, but some of it is because of the fact that a number of career colleges have been less than stellar. The reality is that there are too many schools and companies that has screwed students and the taxpayers. I won’t name any but you know some of them.

    Moreover, when we have so many entrepreneurs jumping into the market with business plans but little education planning or ability, this only extends the problems. Yes, we will claim we care about learning and educating but the real issue is the bottom line for too many schools. The bottom line trumps meeting real needs of students.

    And yes, there are some great schools out there but the government worries that too many get rich quickers are just out for a buck leaving students with debt, weak training , problems and sometimes without a complete program. Some of our companies and corporations are actually just big ponzi schemes draining previously bought schools of money and resources to buy and but and expand and expand. They suck schools dry and destroy them and the education, students’ lives and finances so they can keep expanding. There are some results of this that are so bad that the companies cannot even sell them in this hungry greedy market.

    Moreover, we have all seen the pictures of the feds raiding schools and companies during financial aid fraud investigations. And yes, I know there may not have been convictions but what is a multi-million dollar playback in the eyes of legislators and the public. And the for-profits are doing it based on tax payer funds like Title IV says government. Think of a school that would exist without federal funds….

    If we wish to gain support from government, we need to self-police better. What have we done to show that we are willing to step in and assure quality in our industry. Oh, did I call it an industry? Yuh, that’s what we call it and what we see it as. Business first. Education second. That is a big mistake. When we say we are an education industry or business we are begging for oversight. The not-for profit some of the oversight by eschewing an interest in money while they do all they can to get all they can. Lesson here?

    Finally, my original point t stands. There are more seats than students out there. We can say all we want about there being an “unserved” market but just because they have not gone to college does not mean they want to go. Moreover, when we are opening up two and three an four schools in the same area offering the same stuff, advertising the same programs with the same/similar ads and not hitting enrollment numbers….

    I work with too many failing schools who simply do not know what they are doing. Yes they do learn and get better but for some there is just too much competition out there. There is a big shakeout on the way for all schools – for and not for so expanding into that just does not makes sense. That is a decision we should make I agree but since we won’t because we have too many get rich in education while knowing nothing about education hotshots, we may need someone to slow the expansion down.

    We need someone in this industry to step up and start to self-police the schools and companies that are causing legislators to consider stopping expansion. If we are not for ourselves, who will be? If we are only for ourselves, what is we? If not now, when?

    I have no quarrel with the statement that some schools are less than stellar. I would suggest that it is appropriate to lump all schools under the term “career colleges”. There a number of very fine fully accredited online universities that are full service and provide quality education. One size does not fit all. If there are problems in some schools, then DOE and other agencies have loads of existing authority to regulate as do regional and national accredited organizations. That does not even begin to mention other types of regulation like truth in advertising and the like. The problem with overarching capping and other parts of the suggestions that were made can be likened to taking a sledge hammer on an ant. There are not “too many seats”; there may (and I am emphasize the word “may” ) be too many underwhelming seats; poorly conceived seats. Again that is a regulatory issue. For far too many years, equally poor onground programs have existed and hidden behind the ancient foundations of education like tenure and research. Too many faculty were incompetent to teach or didn’t care about teaching and their students; but produced volumes and were heralded because of the latter rather than their commitment to the students. There is indeed much to herald in traditional education and much to replicate in the online environment; but the new model of online quality (hear the word quality) education continues to offer opportunities to rethink the education paradigm. I have been in post secondary education for more than thirty five years. I have been tenured twice and have served in various decanel positions including my current one. Quality online education focuses on study centered learning and demands things like high leval assessment of courses and even individual in courses which is just beginning to see the light of day in onground environments. Quality onlilng education focuses on accountability of curriculum and faculty for student success and achievement rather than leaving the decision solely to the individual faculty member in the individual classroom. If there is a problem in quality, then let’s address that problem; if there is a problem with too many incompetent college programs, let’s address that rather than attacking all online education as faulted and in need of restruction. Finally, the concept that the low level of college education is not indicative of a need is to demonstrate a total lack of understand of market and employment needs. Every report in the last few years has pointed to a complete lack of an educated work force. We all know that secondary education in this country is simply awful and that what was the standard of high schools 50 years ago is now the standard of community colleges. We are passing students through the k-12 system whether they are qualified or not. Huge numbers of American citizens do new college education – not just for jobs but to be effective leaders, workers and producers. One need only look at the paradign of China and India to see that paradigm.

    Ahhh, now we shift to on-line education. Well of course there are not too any seats in on-line. There are no seats. On-line is fully flexible and elastic to create a class out of any number it wishes.

    My comments were really directed to brick and mortar (BM). In fact, you on-line discussion points out an additional factor calling out the question of do we really need more brick and mortar schools?.. personal entepreneurial desire to make money aside. We can absorb students in the on-line, hybrid and existing BM seats within the existing thousands of schools already created. There are just more seats available than there are actual students. That’s why margins and ebitas are down and not-for-profits are in financial trouble too.

    My comments were not so say that we need regulation though I believe we do need more self-policing to avoid future scandal and black eyes that lead to federal and state regulation. My comments were more directed at the actuality that the market is already full and expanding much more will simply hasten the demise of many schools leading to more regulation. When there are too many schools competing for the same students with the same programs etc, that market gets split into smaller pieces which means fewer students per school. It’s sort of like making too many car brands that are too alike competing with themselves.. say like GM or Chrysler. Or looking for the quick buck and building more houses to sell until there are fewer and fewer looking for houses. It is looking down the road rather than standing in place and saying the 2009 economy is sound.

    The issue I raise is sustainability of the market and success of the industry if it expands too much and too rapidly. My point is that being forced to slow down expansion might have some benefits that we would not see because we all have that “I can succeed and fill my pockets” attitude right now.

    Is more better? Not always so this regulation could have unseen benefits keeping the industry from hanging itself with its own rope.

    There are some career colleges that ARE less than stellar, just as there ARE medical doctors, politicians, cars, people, meals, TV shows, weddings, etc.. that also are less than stellar.

    Do you catch my drift?

    Government as the savior model has not been working too well if you have been paying attention.

    If you do suggest that they proceed ahead with capping the less than stellar career colleges, can you recommend that they next work on less than stellar baseball teams?

    Government is the savior of for-profit. If it weren’t for federal money, there would be no industry. And as for capitalism as a savior, I’d rather start believing in g-d. How well did the banks, mortgage companies, auto, .coms,etc. etc do helping the country out? It may be that the government might have to step in and try to…Oh yuh, it did.

    Moreover, how do we go from capping proprietary colleges growth to baseball teams? Sorry but I do not see the connection? Logical error there I fear. Bull detector in red zone.

    How about looking at my argument that there may be too much growth anyhow in the industry against a fairly fixed market and increasing competition from all sides. Thus, external capping or at least slowing may be beneficial to all finally. Moreover, as more and more extrepreneurs start schools, we increase the probability that there will be failures, cutting corners, closures, students losing money and degrees or gaining questiuonable degrees, all of which will lead to greater regulation than simple capping of growth.

    Unfettered growth has almost always led to problems. Just ask Gulliver – He started Brobdignag Academy I believe, part of the Yahoo Group.

    “If it weren’t for federal money, there would be no industry.”

    That would apply to both the for-profits and certainly the not-for-profits! Goodnight America!

    “Logical error….”

    So where does the government DRAW THE LINE? Sure “fixing” for-profit education, that makes all the sense in the world, right? But our BRILLINANTLY elected officials (Governors Sanford, Corzine & Paterson as a representative crop of current superstars), know that they would never REGULATE the growth of our NATIONAL PASTIME? When does the betting window open on that line of thought?

    “Unfettered growth has almost always led to problems.”

    Is that the same LOGIC that says that we need to TAX the RICH more because they make TOO much money, and cranking up DEATH TAXES because the ancestry of those who took risks and were successful don’t deserve it, after that wealth has already been taxed?

    LOGIC…….I am hearing tortured logic at best. If you at the end of this said that you were pulling our collective legs, I would have a good laugh!

  2. If the not-for-profit sector was operating ethically with the mission of really preparing students for meaningful careers instead of meaningless courses designed to increase their own revenue, the for-profit sector would not be gaining traction. It’s time for an education wake up call regarding the absolute necessity of a 4 year $100K+ degree as being the holy grail of success in life.

Speak Your Mind