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Jeremy Dehn

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For-Profit Education: Value for Whom?

Posted: 09/20/2012 4:04 pm

It was with great interest that I read David Zorn's recent piece about assessing the value proposition of proprietary, or for-profit colleges. I worked for Zorn at the Art Institute of Colorado, I taught film and video production to some of the students he mentions, and I participated in some of the debates he describes, so the issues he raises are important to me on both personal and professional levels.

Zorn's completely right about the need for clear metrics to evaluate the success of different schools, but the head of a for-profit college making such an argument calls to mind the scene from Idiocracy where Luke Wilson's lawyer goes from defending his client to attacking him because he can't seem to figure out whose side he's on. It's hard to know where to start with Zorn's impressive monument to obfuscation, so I'll just take it more or less in the order it appears:

As soon as he can squeeze in the request, Zorn pleads that we shift the debate from ownership structure to national workforce issues. That's probably because when you look at schools in terms of their ownership structure, it can no longer be denied that for-profit colleges are a tremendously bad investment. This issue has been covered extensively on this site, any number of news outlets, and recently in a 5,000-page Senate report, so I'll just summarize the basics and you can Google if you want the details: For-profits are much more expensive (even when controlling for subsidies to state and nonprofit schools), take far more than their share of federal loan money, and result in astronomical failure and loan default rates. They're a bad deal for students, many of whom see their financial futures irreparably harmed, and few of whom see their career prospects improve much, if at all. And they're a bad deal for taxpayers, who front 70, 80, and in some cases over 90 percent of the cost, and are on the hook in the all too frequent cases when students are unable to repay the loans. And that's before you factor in the impressive number of fraud cases faced by for-profit schools. The U.S. Department of Justice and several states are at this very moment suing EDMC, parent company of the school headed by Zorn, for violations of the False Claims Act.

In what's become the industry's go-to strategy to combat these now-undeniable realities, Zorn argues we should be "factoring in the populations" served by schools when evaluating their performance, a skillful PR gambit, because it makes his school look better by highlighting only part of the story. For-profits serve a much higher percentage of low-income, first generation, minority, veteran, and other quote-unquote nontraditional or at-risk students. Consequently for-profit colleges want things like their failure and loan default rates to be compared to community colleges and vocational programs that serve similar demographics. That's fair enough, but when you talk costs, for-profit colleges want to be compared to expensive private institutions. You can't claim that you're reasonably priced because you're cheaper than ivy-league schools, then also claim to have reasonable default rates because they're on par with community college. That's even if your comparable default rates typically don't include the fact that far fewer students at less-expensive community colleges take out loans in the first place.

Here in Denver, a resident student who flunks out after paying full price for a full-time year at the private, nonprofit University of Denver will pay about $39,000 for the mistake, assuming the extremely unlikely, worst-case scenario that a student in such a demographic didn't get any institutional financial aid. Comparatively, paying for tuition and fees at The Art Institute looks like an excellent deal at around $24,000 per year, but when you look at the state-run University of Colorado at Denver, where students will pay closer to $8,000, it's a lot less of a deal, and AI looks even worse when you place its tuition bill alongside that of Denver Community College, where Zorn and his fellow apologists imply the demographics are most comparable: less than $5,000 per year. And all of this is before you consider the mind-boggling implication that there's no difference in content from an Ivy League to a community college education. Having also taught at both UC Denver and DU, both of which provide students with a much broader general education that makes them employable in any number of fields beyond that of their degree specialization, I can affirm that there is a difference from one program to another.

I will concede this: Zorn calls the demographics in question "underserved," and while this smacks of the for-profits' dickish, guilt-tripping PR strategy of claiming to provide choices in educational opportunity for students who aren't being served well by traditional higher education, there's more than a little truth to this term. Traditional higher ed is not doing enough to reach poor, minority, veteran, and other nontraditional students, and it's to the great shame of the American higher education system that this is the case. But it's to our even greater shame that instead of finding a genuine solution to this difficult problem, we've left these populations with little recourse but to be snapped up by predatory for-profit schools that will gouge them on price, leaving many of them in even worse shape than they were before they attended. By neglecting these students, we've inadvertently created a market in which the students in most need of a fair price in education get the worst possible product in terms of price to value. In what universe is this either ethical or fiscally responsible?

The problem of educational access is a thorny one, and I won't pretend to pose a comprehensive solution, but here's a jumping off point worth considering: 20 years ago the public University of Colorado system received over $9,000 per student from the state, and today that number is less than $4,500 (Source: University of Colorado press materials), figures that have unfortunate parallels across the country. These figures also go a long way toward explaining why tuition is rising at so many state schools, understandably angering most of us who support better access to higher education. If we make a proper investment, we'll have the right to start demanding, among other things, that more of our investment goes toward access. It's also worth considering how much good the $32 billion in federal money currently going to for-profit colleges could do in the much more cost-effective state and community sectors. Zorn acknowledges cuts in state funding, but it takes real balls to acknowledge how state schools are hurting for cash, and then offer as a solution a school that costs two or four or more times as much and has demonstrably worse outcomes.

Speaking of spending, Zorn is proud of the fact that over half of AI Colorado's revenue goes back into the classroom. "Back into our school" is the kind of nebulous phrase that could mean anything, and since I was faculty when I worked for Zorn, rather than budget office personnel, I can't really translate it into anything meaningful. The most complete picture I've seen of for-profit education spending practices comes from a Senate report about Bridgepoint Education's Ashford University, which found that, per student, $2,714 went to recruitment of students, $1,522 went to shareholders, and only $700 went to education.

I don't know how closely the Art Institute and Bridgepoint models mirror one another, but I can affirm that Zorn's failure to mention faculty at all in his article is one of many hints that for-profit colleges may not be prioritizing educational quality to the extent they should. The financial investment Zorn's school makes in faculty is another such hint. Here's the salary comparison from the period when I taught at Zorn's school: for teaching a single course in an 11-week quarter at AI Colorado I'd receive $2,000, but that same 11 weeks at the private nonprofit University of Denver paid $3,000, and a 15-week semester at the state-run University of Colorado was over $4,000. If Zorn wants to claim that his school provides a market-based choice for students (and for this we'll temporarily suspend disbelief and buy into the notion that a college that gets well over three quarters of its revenue from public money can be called a "market-based" institution), he should consider budgeting such that the school can pay a market-based salary to attract and reward talent in the classroom.

On a slightly more personal note, and perhaps as disclosure, I should add that my career ended at the Art Institute of Colorado when I wrote an op-ed making similar points to those I'm making now. Despite consistent employment every quarter for over two years and my excellent annual reviews, there just suddenly weren't any courses for me to teach. Zorn's people apparently expected me to believe that my termination's coming on the heels of my op-ed was just a coincidence. It's more than a little ironic that Zorn's school, which subjects its students to required reviews of their creative work, can't itself take a critique.

So after all of the above it's hard to take seriously Zorn's central argument that we should try to figure out ways to more precisely measure success. I don't disagree with him on this, and I do think we should try harder to measure college success. But again it's very difficult to look past the source of the argument and see anything meaningful as a result. First, Zorn's industry has shown itself adept at manipulating accountability statistics to the point that they're completely unreliable. See various attempts to dramatically inflate career placement numbers and undercount student loan defaults, again to say nothing of recruiters' misrepresentation of costs and student loan terms. I'm skeptical given this history, but if Zorn and his industry are actually serious enough about a truly honest conversation here, I suppose it might work. In Catch Me If You Can, Tom Hanks works successfully with Leonardio DiCaprio when he convinces the master grifter to turn his skills toward catching fraud rather than committing it, and that movie, not unlike many of the statements of for-profit recruiters, is based partially on true events.

The other big problem with for-profit colleges' alleged support of increased accountability across all colleges and universities is that it's yet another position that reeks of PR posturing by emphasizing some details at the expense of far more pertinent ones. I could write plenty about what's wrong at state and private nonprofit colleges too, but to place traditional higher ed's comparatively smaller problems -- things like sometimes bloated tenure structures, troublesomely low numbers of students in science and engineering, and over-reliance on adjunct labor -- alongside the institutionalized predatory behavior and systematic fraud that's rampant in the for-profit sector, and to pretend these problems are in the same ballpark, or even on the same continent, is the very definition of false equivalency.

The idea of equating two things that don't belong together brings me to the quote in Zorn's piece that's most problematic of all:

"We realize that our success is inherently tied to that of our students and alumni. In fact, as part of a for-profit education system, the interests of our investors are aligned with those of our students. That is why we have had the luxury of being able to continue investing in our school despite the challenging economy."

First off, Zorn's school gets the overwhelming majority of its income from federal student aid, the availability of which is unaffected by downturns in the economy. In fact student enrollment, really the only relevant requirement to accessing student loans in this discussion, tends to increase as the un-and under-employed take the opportunity presented by a down economy to beef up their educational credentials. Knowing this, the shameless assertion that AI Colorado has somehow managed to, through sheer force of awesomeness, sail above the troubled economy is ludicrous to the point of being deeply insulting to both students and the taxpayers who invest in them.

Far more importantly, if you look at the many, many cases of enrollment and recruitment fraud, encompassing false claims on everything from costs, to career placement, to the types of financial aid available, to programs and equipment offered by schools, to probably even what kind of food is available in the student cafeteria, you'll see that the problem is that these shareholder and student interests are absolutely not aligned. For-profit colleges are incentivized to enroll students in big numbers, and they're incentivized to enroll the poor, minority, and veteran students who come with the greatest percentage of free federal money. But until the recent adoption of the Gainful Employment Rule -- a rule that was hardly stringent to begin with and was further watered down after a multi-million dollar, mostly-taxpayer-financed lobbying effort on behalf of for-profit colleges -- there was neither carrot nor stick to incentivize outcomes. Outcomes are all but irrelevant to the success of the business model.

What's left is a business model that's become very effective at siphoning money from an education sector already starved for cash. Given this current state of affairs, I'm all for Zorn's idea of improving our methods of evaluating success, preferably with the intent of eliminating funding to institutions with persistently poor records, and redirecting their funding to institutions that clearly do better. I'd even go further than Zorn and take a broader view of what constitutes "success," including obvious factors like the graduation rates and lifetime earnings he suggests, as well as less tangible and harder to quantify factors like personal satisfaction and civic engagement. My belief in education's power to improve lives in these and other areas is the reason I spent so long on my own education and the reason I became a teacher.

But until Zorn and his ilk change their business model to close the atrocious gulf between the needs of students and taxpayers on one hand, and the currently very contradictory needs of shareholders on the other hand -- or more likely, until more substantial regulation is imposed upon the industry to close the gap between student and investor interests, debates about accountability involving for-profit colleges will remain in the realm of creative fiction that I used to teach at Zorn's school.

 

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