Is Sudden Decline Of For-Profit Colleges Good For Education?
Career College Central Summary:
Though most for-profit college programs will remain open under the new Obama administration gainful employment regulations, the brand value of the for-profit college industry has been significantly hurt by intense scrutiny at all levels of government. Investigations by 37 state attorneys general, the Consumer Financial Protection Bureau, the SEC and the Department of Justice (DOJ) have heaped a world of financial pain – enrollment at for-profit colleges is down 9.7% this year – and negative publicity on the sector. While some for-profits will fight the administration’s new regulations in court — or hope that a newly Republican Congress will block spending for the mandates – many for-profits have already decided to opt out of the market altogether.
Last week, the Pittsburgh-based Education Management Corporation (EDMC) decided to go private, in part to avoid quarterly scrutiny by investors of its sizable legal issues. Moreover, Grand Canyon University (GCU) – whose spirituality-inflected curriculum, sports teams (Go Antelopes), and profitability set it apart from other for-profits – is considering going nonprofit in part to avoid the “stigma” that is attached to the “for-profit college” label. Then there’s the case of Corinthian Colleges, which was forced to “teach out” or sell most of its North American locations.
Other for-profits might decide to either close or go private when the full bureaucratic weight of the new governmental regulations – which include tracking former student wages, default rates, and debt loads – finally hits home. While no one outside the Obama administration is completely happy with the new GE rules, the implications that arise from their existence – and the new task force created to regulate compliance — go far beyond the for-profit college sector.
As the pendulum of public opinion swings hard against even the notion of for-profit education, the ultimate casualties could be the high-risk pool of academic rejects and dropouts – the perennial “structurally unemployed” — that the for-profit education industry was created, in part, to serve. It is hard to imagine how this high-risk population will be better served by nonprofit institutions, which lack the market leverage – especially as state governments cut spending – to pick up the slack.
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