Fixing the lie of "for profit" schools (revised and angrier!)

After my last article about the lie of for profit schools a friend of mine wrote to me saying that while he agreed with most of my take on the Devry's of the world he couldn't completely agree with it. 

Of course this sparked a larger discussion when I saw him a few days later.  Briefly, his position was that while for profit schools may be more apt to focus on their bank account than the curriculum it didn't necessarily elevate public universities to Mother Theresa status.

He related a few key points in his argument. 

•      Nobody's forced to attend a post-secondary school.
•      Non-profit doesn't necessarily mean eligible for sainthood.
•   Schools aren't completely responsible for the success or failure of a student. 

Let's take a look at these...

Yes, education after high school is completely voluntary  but I'd argue completely necessary.  That is unless you think cashiering at your local fast food joint is a career path.  Considering I could barely count change when I graduated from high school, a little extra classroom time was beneficial.

When we're talking about non-profits it's a given that anything touched by humanity is by default corrupted by its ambitions.  Even the Bible couldn't escape that truth and neither does a non-profit school.

He pointed to how non-profits may not offer stocks traded on the NYSE but it never stopped them from wasting millions on something other than their stated reason for being. Admittedly, it's hard to frame the building of a new football stadium at "(Insert State here) University" as a catalyst for advancing education.

Still, at least the money went back into advancing something other than a quarterly dividend to some shareholder.  I'd also remind you that there are plenty of non-profits that don't have their own football stadium. 

His last point goes without saying, we are to at least some degree in control of our own destiny.  If in the pursuit of it we're mislead into making a poor decision, however, somebody needs to be held accountable.  It's the reason we have the Federal Trade Commission.  If you mislead the public about your product expect to pay the consequences.  That's the set of rules you have to accept if you're in the "business" of selling education like Oscar Mayer sells hot dogs. 

Yes, public universities also suffer the sin of selling unnecessary classes too but they're a damned sight cheaper and at least the credits transfer.  Oh yeah, and they're not setting up the curriculum based on a revenue projection.

That's really the crux of the argument.  As I said in the last article, if you're going to just sell education as a product then your focus isn't on advancing knowledge.  Rather it's advancing your bottom line.

So here's the part where my friend agreed with me.

I hold the belief that any educational institution that operates as a profit entity shouldn't have access to public funds.  Yes, I'm suggesting that taxpayer backed student loans and grants shouldn't be given to institutions whose reason for being is the make money. 

I see no reason to provide public funding to someone's private venture with virtually no oversight and dubious value to society.  It's not unlike the uproar over the AIG bailout or the furor over saving domestic automakers.  The difference here is that there's even less oversight of public monies in for-profit schools than there was for the billions we gave to banks and insurance companies. 

If your school is in it for the money then put it where your mouth is.  The Devry's and ITT's of the world  shouldn't be getting the bulk of their revenues from government backed student loans and grants.  If they want to offer financing they should be providing it themselves and not passing it on to taxpayers.

That means your education may still cost $50k for a Bachelor's degree but if it doesn't live up to the hype and you go broke because of it at least there's always bankruptcy. 

It's not that I'm against private schools or even alternative education, on the contrary.  I myself was attracted to ITT Tech and then the University of Phoenix exactly because I didn't want to waste time on classes that had nothing to do with my chosen course of study. 

That's been a failing of public universities in the past and it caused a drop in enrollment which ultimately benefitted alternatives like the for-profit schools.  A problem, by the way,  that's only recently been addressed by many universities adopting a similar program structure to the for-profit schools.

So if the Not for profit schools have been able to adjust their programs to match the profit schools and still be 2 to 4 times cheaper for the same degree then where's the justification for the extra cost? 

As much as I may have enjoyed my time at ITT Tech nobody holds that degree in the same regard as say a year of study at M.I.T.  So how can you justify charging almost the same money for a year of education at an IVY league school ?

The simple answer goes back to that old marketing adage, Sell benefits not features.  Advertising a benefit is essentially selling an intangible product that's almost impossible to challenge.  Where features like power windows, cruise control or Air conditioning are tangible.  Looking Cool, being admired and improving your station in life are not. 

They're the warm fuzzies that you can't quite put your finger on and if you can't define what it is that's motivating you then you can't challenge their value either.   Convincing me that I'm going to be just as valuable to the world as an M.I.T. graduate based on a bare bones"heat and serve" boilerplate curriculum is just a lie.

That, my friends, is exactly what for-profit schools are selling.  Not the quality of their programs but the promise of improving your condition for a premium price.  Whether or not it's justified is entirely subjective but I'd rather not be putting taxpayers on the line for it. 

If you're a for-profit school and your programs fail to deliver you still have the taxpayer's money no matter how successful the students are.  You've effectively conned the government into supporting your corporate bottom line. 

Perhaps it's the biggest con game of all when you can get public money to support private enterprise that by its very nature is set up to only enrich itself.  

I mean at least Boeing has to deliver helicopters that don't crash in the desert for the billions they get from the Department of Defense.  Where's the accountability for the University of Phoenix and Devry's of the world who take billions in public education money? 

Does it make any sense that government financing has turned these schools into multibillion dollar corporations whose only reason for existence is to keep the public money pump primed and flowing?  They can't deny it, their "business" model is set up to support a revenue stream no matter how much it degrades the product.  It really is that simple.  If you're a corporation, you're in it for the money anything else is just marketing.

This actually speaks to the flawed logic of people who believe that government should be run like a business.  It just doesn't work simply because where business exists for the enrichment of itself, government exists for the public good (or at least it used to).

Government that exists for the betterment of itself usually has a dictator at the helm and that's not good for anybody. 

The logic fits for education as well.  Hopefully my point is a bit clearer now.

  

The lie of "for profit" schools

I've had more time than I'd like to watch TV lately which also affords me more time to analyze its content. 

For Example, Have you seen the latest Devry university commercial?

It has all the right elements to properly position the "product."  Stirring music played at a subtle volume, young adults happily traversing an idyllic campus setting and a resolute spokesman delivering a somber message. 

"By 2025 there will be 20 million new jobs and not enough graduates to fill them.."  or something like that, forgive me if I paraphrase.  I'm sure of this much, the statistic comes from the United States Department of Labor in a March 2012 publication.

What they fail to mention is who or where these jobs are going to be located.  In spite of the rhetoric, business is still outsourcing most of its technical work overseas or abusing work visas to suppress wages.

Remember, this is Devry which fancies itself as a "University" now.  Perhaps you aren't old enough to remember when they were just a vocational school producing entry level techs to staff the assembly lines of Motorola, Honeywell and the like. 

A great foot in the door but nobody was ever going to give you a seat at the CEO's conference room table over it.  They were no better than schools like ITT Technical Institute or the Ron Bailey School of Broadcasting.  

They claim to be more than that now but they can't hide from their humble beginnings.   

In fact the term "diploma mill" was coined because of these types of schools.  That was because their programs were usually not accredited by the same governing body as traditional universities.  The admission requirements were more relaxed as well so long as you had at least a GED and the ability to pay.

That allowed them flexibility in their curriculums not to mention the ability to commoditize their programs of study but made almost none of the credits transferrable to a regular university program.  Needless to say, nobody ever asked about your SAT scores.   

In the end you had the equivalent of very expensive vocational training and a piece of paper few took seriously.

Were they diploma mills?  That was entirely dependent on the school.  Sadly, you often had little more than a slick advertising campaign to judge them by.  Most fell by the wayside when the promise fell short of the reality and the law suits starting rolling in.

Your education at any of these institutions would likely be financed by government  grants and student loans.  The exact composition of which was of no matter because the loan payments would be excessive no matter what the amount owed.  Especially true when you could expect to spend the first few years of your career pulling down about  as much money as an assistant manager at Mickey D's.

There's no debating the value of a quality education whether it comes from a University or a vocational school. The broadening of your knowledge base will always pay a dividend even if it isn't in the form of a bigger paycheck.  It's about having options and the more you have the better off you'll be.

If it sounds like I'm contradicting myself I'm not.  I'm a strong proponent of education in all its forms.  What I'm not in favor of is the whole concept of a "for profit" school.

Which is why I have a problem with schools like Devry and the University of Phoenix making promises they can't keep. 

Going to a "for-profit" school changes the education dynamic.  Instead of being about imparting knowledge, it's about selling a product and its value diminishes with every shareholder meeting. 

Oh? You didn't realize that Devry was publicly traded corporation?  Their ticker symbol is DV on the NYSE.  They closed at a bit over $31 a share at this writing.  Down a bit since its $60 average a few years ago.  So what does a company do when it's revenue numbers are down?

Sell more product of course!

When your product is education and you're charging a premium price for it your angle better be good.  

The usual sales pitch is the chance for a better job.  Of course they never emphasize that word "chance" unless you can read that tiny type flying by at 60 milliseconds on your TV.

It's all about the "benefits" of their product.

It's no different than a commercial for hot dogs.  I mean does anyone really think about just what part of the beef is in "100% pure beef" hot dogs? 

Of course not, instead they portray family and friends gathered around the perfect suburban backyard relishing in the perfect summer day with perfectly plump weenies sizzling on the grill.

Trouble is, we're talking about people's futures not weenies.

If your motivation is profit you do whatever you can to protect it.  Capitalism has no conscience.

It shows up in the form of overpriced books, obsolete equipment, instructors with questionable qualifications (which is why most are referred to as "facilitators") and an inadequate curriculum.  Don't even get me started on the "Financial Aid" department...

 The result is a graduating student with tens of thousands in debt and an education that doesn't match what their chosen career demands. 

So if we're going to treat education like hot dogs then there should be some recourse when the product doesn't deliver.  After all, if you get sick from a bad batch of hot dogs the least you can expect is a refund.  Try to get a 50K refund for a useless Bachelor's degree, yeah, good luck with that.

Meanwhile, millions of people have been sold a bill of goods with nothing to show for it but a piece of paper and decades of payments  that rival most people's monthly mortgage.  The final injustice, those loans are backed by the U.S. government which means you can't get rid of them even if you go broke.

There's only one fix for all of this...

Get rid of the "for profit" schools unless they guarantee placement equal to their advertising.  If they refuse then they either need to shut down or be forced to change their ways. 

If they complain, remind them that compared to their "product" hot dogs have a better guarantee and that's just bad business.