Tag: higher education

War on For-Profit Colleges Reeks Even Worse

As I’ve pointed out repeatedly, though the sector is no doubt rife with waste and home to some dirty-dealers, attacks on for-profit colleges are almost certainly driven by politics and ideology, not educational concerns. Were it otherwise, all of higher education would be taking a beating for its bankrupting waste and widespread failure.

A recent symptom of anti-profit witch-huntery was the misrepresentation of GAO reporting on what “secret shoppers” found while visiting select for-profit institutions. At the time the findings were released I thought the main problem was that members of the media and Sen. Tom Harkin (D-Iowa) – who has been leading the crusade against for-profit schools – were using the results to smear the whole proprietary sector when the GAO was clear about examining a nonrepresentative sample of schools. Unfortunately, it turns out the GAO might actually be in on the demonization.

On November 30 – without making any announcement that I could find on its website – the GAO released a modified version of its report, and according to a comparison between the old report and new one by the Coalition for Educational Success, the new version contains several changes that cast its for-profit targets in better light than they first appeared.

One vignette, for instance, originally said that a school’s admissions representative told an undercover applicant that she “should” take out maximum federal loans even if she didn’t need all the money. The change says the representative told the applicant that she “could” take maximum loans – a pretty big difference.

Another section went from only reporting that a representative told an applicant that the school has graduates making $120,000 to $130,000 in a job that, according to the GAO, typically makes less than $70,00 a year, to reporting that the representative also informed the applicant that she “could expect a job with a likely starting salary of $13-$14 per hour or $15 if the applicant was lucky.” $15 an hour translates into about $30,000 a year, and completely changes the tenor of the vignette.

According to Stephen Burd of the Center for American Progress, career colleges have been self-servingly crying – or at least whispering – foul over the GAO report for months now. Burd has been a leading for-profit basher, but I’d have been inclined to give only limited credence to concerns about dirty pool, too, until this latest revelation trickled out.

Now, though much needs to be determined about why the myriad changes to the report were made, I wouldn’t be terribly surprised to learn that people at the GAO have actually been in on the crusade to demonize proprietary colleges. I also, unfortunately, won’t be surprised if no one pays attention to any of this, and the shameless, responsibility-dodging war on for-profits continues unabated.

Higher Education Subsidies Wasted

A study from the American Institutes of Research finds that federal and state governments have wasted billions of dollars on subsidies for students who didn’t make it past their first year in college. The federal total for first-year college drop outs was $1.5 billion from 2003 to 2008.

Due to data limitations, the figures are only for first year, full-time students at four-year colleges and universities. Community colleges have even higher drop-out rates, and part-time students or students returning to college are more likely to drop out. Therefore, the numbers in the report are “only a fraction of the total costs of first-year attrition the nation and the states face.” Moreover, it doesn’t include the cost for students who drop out some time after their sophomore year.

Federal policymakers from both parties are fond of lavishing subsidies on college students. Proponents argue that without federal subsidies, an insufficient number of future workers will possess the skills necessary to compete in a global economy.

However, a Cato essay on federal higher education subsidies argues that students wishing to attend college already have plenty of incentive to save or borrow from private sources:

Supporters of student aid subsidies argue that higher education is a “public good” that would be underprovided in a free market. However, that is probably not the case. People have a strong incentive to invest in their own education because it will lead to higher earnings. Those with a college degree will earn, on average, 75 percent more during their lifetime than those with just high-school degrees. That is a big incentive for people to save or borrow in private markets to pay for their own college costs. There is no “market failure” here.

In fact, higher education subsidies drive up tuition prices:

It is matter of supply and demand. More and more Americans have sought a college education, which has pushed prices higher. Ordinarily, such upward pressure would be restrained by consumers’ willingness and ability to pay, but as government subsidies have helped absorb tuition increases, the public’s budget constraint has been lifted. Peter Wood, a professor at Boston University noted that federal subsidies “are seen by colleges and universities as money that is there for the taking … tuition is set high enough to capture those funds and whatever else we think can be extracted from parents.”

But isn’t it great that Uncle Sam is helping put more young folks in college? Not necessarily:

Many of those additional students may not have been ready, or suited, for college. As evidenced by the rising shares of college students who require remedial work. Further evidence of the problem is that institutions have lowered their standards to adapt to the rise in second-rate students. The American Academy of Arts and Sciences reported that from the mid-1960s to the mid-1990s, college grade point averages grew steadily but Scholastic Aptitude Test scores declined. The share of entering college students who complete degrees has also fallen over the decades. In addition, while college attendance is up, overall adult literacy has barely budged over the last 15 years.

The essay also notes that college students devote 3.2 hours to education on an average weekday, versus 3.9 hours to “leisure and sports,” and that the six-year graduation rate for bachelor’s students is only about 56 percent, indicating that many students are not very serious about education.

Just as housing subsidies incentivized people to purchase homes that they otherwise shouldn’t have, higher education subsidies have incentivized people to go to college who weren’t ready or suited for it. In both cases, the cost to taxpayers has been substantial while the alleged benefits have proven illusory.

Enough Community College PDA

Yesterday, President Obama hosted the White House Summit on Community Colleges, and in-your-face love was in the air. President Obama and Second Lady Jill Biden, a community college professor, couldn’t keep their hands off their signficant other, lavishing all sorts of praise on their favorite little schools.

Swooned Dr. Biden about the dreamy things community colleges do for their students:

They are students like the mother who shared her experience with us on the White House website of working towards a degree while raising three children and straddling financial challenges.  Now employed and the holder of a Bachelor’s and a Master’s degree, she wrote, “Community colleges didn’t just change my life, they gave me my life.”

Community colleges do that every day. 

Ick!

The President, too, couldn’t hide his affection:

So I think it’s clear why I asked Jill to travel the country visiting community colleges -– because, as she knows personally, these colleges are the unsung heroes of America’s education system.  They may not get the credit they deserve.  They may not get the same resources as other schools.  But they provide a gateway to millions of Americans to good jobs and a better life.

Like the guy with the locker next to Mr. and Mrs. Lovebird, all I can say is “oh, come on!”

Community colleges might be a good option for some people, but they are hardly paragons of educational success. Quite the opposite: According to the U.S. Department of Education, they have the worst graduation rates of any two-year sector of higher education. Only around 22 percent of public, two-year college students graduate within three years, versus roughly 49 percent of private, not-for-profit attendees and about 59 percent of private, for-profit students.

Wait! What’s that? Private, for-profit institutions outperform super-cute community colleges…by a lot? But they’re the ugliest, meanest, least popular kids in school!  Nobody likes them!

Oh, I know what’s going on here! For-profit schools cost a lot more than community colleges, right? That’s why they’re so disliked.

That’s true if you look at tuition prices. But community colleges get big subsidies from government, especially state and local taxpayers. So they might actually cost a lot, it’s just that they sneak the money out of your back pocket and then congratulate themselves for charging students so little.  

When you look at government expenditures per-pupil, including aid to schools and students, it becomes clear that community colleges are, in fact, just as mean and greedy as for-profits. Indeed, former Clinton administration economist Robert Shapiro has calculated that they are actually more costly to taxpayers than for-profit schools (see table 24). According to his calculations, two-year public schools cost taxpayers $6,919 per student, while private, for-profits cost just $3,628. 

No wonder the summit turned my stomach! At the same time the administration and its allies in Congress are bashing for-profit schools, the President has a love fest with community colleges that are generally much worse. Unfortunately, it leaves you concluding that for-profits could walk on water and it wouldn’t matter: As long as they’re honest about trying to make a buck, they’ll be beaten up in the parking lot and never invited to any of the cool summits.

DREAM Act Would Improve a Bad Situation

The U.S. Senate may vote in the next few days on a piece of legislation known as the DREAM Act. The Development, Relief and Education for Alien Minors Act would offer legal status to as many as 2 million students who are currently in the United States without authorization, many of them Hispanic immigrants who entered the country illegally with their parents.

The act would legalize students who entered the United States at least five years before its passage and were under the age of 16 when they entered. A practical effect would be to make many of these students eligible for in-state tuition at colleges and universities.

The DREAM Act is not a perfect call for those of us who believe in limited government, but in our less-than-perfect world, the act would make a bad situation better. As I wrote earlier this year in a post on the Cato on Campus web site:

Ideally, there would be no reason to propose the DREAM Act if there were more opportunities for legal immigration and if the government were far less involved in providing higher education. Far fewer minor children would enter the country illegally if more work visas were provided for their parents to enter the country legally. In-state tuition and government aid would cease to be a major issue if responsibility for providing higher education shifted more to a competitive private sector.

Given our current system, however, the DREAM Act would somewhat improve a bad situation. It would extend legal status to a group of people who have completed high school, typically speak English well, and are thus able to pursue higher education or better support themselves in the labor market. It would help to maintain a healthy growth rate of the U.S. labor force and provide entrepreneurial spirit associated with immigrants.

The DREAM Act would also extend more equitable treatment to students whose lack of legal status is no fault of their own. Their parents, although undocumented, have usually paid the same sales and property taxes paid by legal residents with similar incomes. The DREAM Act would lift thousands of students out of a legal netherworld and allow them to improve themselves while at the same time contribute to a more productive United States.

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Why I Love, and Hate, American Higher Education

Today, the annual U.S. News and World Report “Best Colleges” guide came out, and as always it is a slightly celebratory occasion for me. Though I agree with many people who critique the guide for its debatable methodology and implicit assumption that all schools can be cleanly ranked from best to worst, the simple fact that the issue exists makes me happy. When you spend the bulk of your time analyzing moribund, monopolistic, K-12 schooling, it’s just refreshing to dive into an education ocean where guides are abundant because consumers have plentiful, powerful choice. It also doesn’t hurt that, in stark contrast to elementary and secondary schooling, the United States seems to be the envy of the world in higher ed.

Unfortunately, my higher ed enthusiasm always ebbs fast, and aggravation quickly slips in, because there is copious, taxpayer-funded rot under America’s abundant ivy. The reality is, while being much more dynamic and consumer-driven than socialized K-12 schooling isn’t a bad thing, it’s hardly a major accomplishment. And as a new report from the Goldwater Institute reminds me, while college students are empowered to choose, they are empowered with massive taxpayer subsidies, both in the form of aid directly to students and government funding directly to schools. The result is major, painful distortions of the market, including the ever-growing administrative bloat detailed in Goldwater’s new paper:

Between 1993 and 2007, the number of full-time administrators per 100 students at America’s leading universities grew by 39 percent, while the number of employees engaged in teaching, research or service only grew by 18 percent. Inflation-adjusted spending on administration per student increased by 61 percent during the same period, while instructional spending per student rose 39 percent.

So today, celebrate that we have a major sector of education that is at least partially market based. And then, like me, get aggravated by all the government funding and control that renders so much of it a waste.

Dear Bill: Why the Distinction Between College and K-12?

At the Techonomy conference last week, Bill Gates declared that going to school would soon be obsolete, and that ”five years from now, on the web, for free, you’ll be able to find the best lectures in the world.” What’s interesting is that Bill was quick to note that he was talking only of higher education. K-12 education should still be tied to physical schools, he is reported to have added.

Certainly there’s a custodial aspect to the education of young children, but there’s no reason that electronic learning options cannot be combined with custodial supervision – and much more affordably than traditional schooling. Homeschooling already consists of hybrids of parent lessons, lessons taught by paid tutors and guest lecturers, web classes, etc. This flexible format could be generalized to serve a much broader range of students. So why not encourage the exploration of these new possibilities at the k-12 level, just as at the higher education level?

What Part of “Nonrepresentative” Don’t Profit-Haters Get?

For the last few days, for-profit colleges and universities have been suffering an even worse hammering than usual, both in the media and their pocketbooks. The proximate cause: a GAO report released Wednesday that has been portrayed as revealing “systemic” and “pervasive” fraud — and otherwise just seamy behavior — by the for-profit sector.

No doubt there is some bad stuff going on in proprietary postsecondary education. But the assault on for-profits reeks of political bullying of the unpopular kid — the kid who’s just different — as well as the never-ending Washington demonization of anyone who honestly pursues a profit. The waving of the bloody GAO report is case-in-point, and one need look no further than the following statement contained on the report’s very first page:

Results of the undercover tests and tuition comparisons cannot be projected to all for-profit colleges.

You mean, GAO investigators went to 15 non-randomly selected schools in six states and Washington, DC, and the results cannot be construed to be representative of the whole sector? And the GAO also, apparently, meant it when it wrote on page two of the report that “we investigated a nonrepresentative selection” of schools? But, then, how could Tom Harkin (D-IA), chair of the Senate Health, Education, Labor and Pensions Committee, have stated in a show-trial hearing that “GAO’s findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight”?

Oh, right: Truth doesn’t matter to Harkin — only scoring political points. That not only explains how Harkin could say such a thing, but why he has targeted for-profits rather than seeking truth and purity in all sectors of higher education, including the coolest of the cool kids, public colleges. With dismal program completion rates of their own, and their imposition of huge burdens on taxpayers, you’d think they’d be worth some investigating, too.

I encourage you to read the GAO report, and you’ll see that it in no way supports a blanket condemnation of for-profit higher ed. And it’s not just because its findings can in no reasonable way be extrapolated to the whole of proprietary schooling. It’s also because many of the supposedly terrible things it discovers, while perhaps distasteful, are hardly abhorent, such as telling prospective students that they ”can” — not “will” — earn a lot of money in a profession even if that amount is well above the average. And then there’s the report’s worthless comparisons of tuition at for-profit and nearby public instituions. Once again: public colleges are heavily subsidized by taxpayers, so of course their tuition is lower. And these comparisons were also not randomly selected.

After you’ve read the GAO report, you should take in a new paper from the Center for College Affordability and Productivity, For-Profit Higher Education: Growth, Innovation and Regulation. It might be a bit too fond of the for-profit sector, which like all of higher education lives far too much off the sweat of taxpayers, but it furnishes lots of terrific data and insights about proprietary higher ed to balance out the ongoing truth-eschewing assaults the sector keeps on suffering.