Blog: Why For-profit Schools Succeed and Not-for-profit Schools Fail

By Michael Platt
Chairman, Ad Venture Interactive

The incentive to improve in any industry is best driven by a free-market system. Profits drive improvements as competition drives companies to research, evaluate, innovate and constantly improve their product or service. This is where government-run education fails in America.

For-profit schools make improvements on the basis that the better school will enroll more students and make more profits. Schools that do not keep up with those improvements will perish. Simply look at staff-to-student ratios in the for-profit schools vs. the not-for-profit schools, and you will easily determine which sector is focused more on students and student outcomes. The numbers do not lie. This is why for-profit career colleges have significantly better placement rates than community colleges and significantly better gainful employment ratios than private university undergrad programs (as well as out-of-state tuition paying students). And yes, more for-profit career college students default on their loans, but if you stop listening to the rhetoric of Secretary of Education Arne Duncan, Senator Tom Harkin and short seller Steve Eisman, you would easily understand that this has little to do with quality of education and everything to do with the demographic the for-profits serve. Common sense, folks.

It is the LACK of profit/incentive that has caused many of the primary and postsecondary schools in this country to fail the students.

If primary schools were profit-driven, maybe they wouldn’t hold onto crappy teachers. Maybe they would abandon the ridiculous agrarian calendar. Maybe they would stop allowing unions to place teachers’ rights above student rights. Our government should not be running the business of education.

If universities were profit-driven, maybe they would stop misleading students with noted professors who then rarely step into a classroom. Maybe they would strive for better graduation rates as opposed to throwing out challenged students because they are afraid it might hurt their overall outcomes/reputations. Maybe they wouldn’t have one placement advisor for every 2,000 – 5,000 students. Maybe they would warn students who pay $80,000 for their education that their starting salary is likely to be well below DOE-proposed GE metrics. Our government should not be running the business of education.

If community colleges were profit-driven, maybe they would grow in capacity instead of settling for 1-2 year waiting lists. Maybe they would attempt to address their barely double-digit graduation rates. Maybe they offer REAL placement assistance for their students. Maybe they would have enough student services staff to serve students. Our government should not be running the business of education.

My hope is that the lemonade that comes from the Arne Duncan/Obama Administration is that this egregious attack on for-profit schools who have committed the sin of making money will have revealed just how screwed up the not-for-profit education system is in this country.  Because at the end of the day, it is blatantly obvious that the DOE needs to LEARN from the for-profit schools, not vilify and seek to destroy the schools and the people within the demographic they serve.

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