Is the For-Profit University Bubble about to Burst?
I have been intrigued for a number of years about the business model that has allowed for-profit college programs to be so successful and more specifically the online versions. I know what it takes to produce an online course that if done right can be more effective then a classroom model. I also know that the larger for-profits had the resources to produce a high quality online courses with sufficient faculty and teaching support to be credible. So I had to give for-profits like University of Phoenix credit for creating a business model that catered to a real student need. And I believe in some situations they have, but there are also many more universities coming under this umbrella. The profits are still soaring but I have not gotten the sense that more student lives are improving. Now more stories are surfacing about students being misled and debt that they have no way to pay off.
Watching the PBS Frontline special College Inc. you get a more complete picture. It may be best summed up as another subprime loan crisis. It is about our changing economy that must steer toward knowledge industries for any hope of a future. And the political future of the leaders in federal and state governments that have to push education as a solution. But unfortunately these are the same governments that are run by the lobbyist who help to finance the politicians that will make sure that the government dollars keep flowing into an unregulated loan process where the ultimate responsibility rests with the taxpayer. The victims again are the people who have been led to believe that they are entitled to America’s riches. I have always known that student loan debt in this country is huge, I did not realize it challenged that of credit card debt. The difference being that you cannot escape this debt with bankruptcy. What a dilemma, we need to provide a college equivalent education for the masses. Traditional educational models such as community college or investing in existing public institutions does not carry voter support. But we can believe that the for-profit model is the answer and why else would we not believe that when they spend such a large percentage of their operating budget on marketing.
The bubble is unstable, regional accreditation providers now understand what has been happening with for-profits buying up failing institutions for the value of the accreditation they may hold. The growth of for-profit education may slow, it may settle back into a regulated valuable commodity. What scares me the most is that at a time when our nation needs to transition a population to knowledge based professions we may have again allowed unregulated greed to mortgage their future. And we do have the means by which to provide this education based on our existing public and private non-profit model, but we may have sold out again.