Corporatization of Education

Phil Smith, Executive Committee John Freitas, LA City College

Resolution Referred to Exec• The resolution Limit Taxpayer-funded, Need-Based Financial Aid to

Public and Private Nonprofit Colleges Only was referred to the Executive Committee for further research and consideration Fall 2011.

• Background document on for-profit colleges and universities and financial aid was provided in the Spring 2011 Resolutions packet.

• Rostrum article entitled Paper Towels, Crony Capitalism, and For-Profit Higher Education written for April 2012 issue.

• This breakout entitled Corporatization of Education developed for the Spring 2012 Plenary.

Some Corporate/Government Partnerships

You may have heard of…

$600

Or the…

$225

Maybe they meant this kind of screwdriver…

Medicare Overcharging

• Two California healthcare systems have paid a $2.3 million settlement regarding allegations of overcharging the federal Medicare program for services (Mirando, 2011)

• A Jacksonville medical supply company charged with filing $230,000 in illegitimate Medicare claims. (Cox, 2011)

Public-Corporate Partnerships

Classic “Make or Buy” Dilemma

Not all bad but need to…

Some Examples of For-Profit Interestsin Higher Education

Journal $$: Buy Your Research Back

Textbook PublishersDozens of textbookspublishers in 1980s…

Become a handful by 2012:

• Cengage• McGraw-Hill• Pearson• Wiley

Textbook Costs Continue to Rise

Hiring Outside Consultants

• Information Technology Project Consultants

• Hiring Consultants for a President/Superintendent or Chancellor Search

• Strategic Planning Consultants

New Animal in Higher Education

The For-Profit College orUniversity

The Complete History of Higher Education in the US

Abridged!• First colleges and universities were private and not-

for-profit.

• Typically supported by a religious denomination and gifts by philanthropists.

• Families who were able to afford it paid full tuition.

• Scholarships, if they existed at all, were private awards, provided at the discretion of the scholarship donors or the institution itself.

Public Colleges & Universities

Public Colleges & Universities

• Public colleges and universities are typically funded by state governments.

• Morrill Acts (1862, 1890): States were allowed to sell or develop federal land to create state colleges and universities.

• Public institutions are subsidized by state taxpayers, typically with a much lower cost to students than comparable private colleges.

Public Colleges & Universities

Originating purpose was to: • Provide greater higher education opportunities

(access) to the state’s citizens

• Provide higher education at a more affordable price to its citizens

• Develop and maintain instructional programs that would benefit the people of the state.

For-Profit (Proprietary) Institutions• Early ones were business and

trade schools

• Focus on developing technical or business skills that were not being taught in public or private not-for-profit institutions.

(Bennett, Lucchesi, & Vedder, 2010)

Then: Distinct Curricula

• Private (not-for-profit) colleges and universities provided instruction in the classics and theology

• Public colleges and universities were intended to produce graduates in engineering, science, and agriculture.

• For-profit institutions historically focused on business and technical skills.

Now: Not-So-Distinct Curricula

• Very little difference in the curriculum offerings of Harvard University and UC Berkeley

• For-profit colleges and universities are offering general education, AA, and BA degrees.

• Public community colleges have complete business and career technical education programs.

Higher Education Financial Aid

• Merit-based: Scholarship or grant based upon students’ achievement or talent (e.g., National Merit Scholarship)

• Group-affiliation: Scholarship or grant based upon students’ membership or participation in a group (e.g., 4-H Scholarship)

• Need-based: scholarships, grants, loans, work-study for students based upon their financial need.

Need Based Financial Aid

GOAL: To make college affordable for students from various income levels.

Need Based Financial Aid

Supported with Taxpayer dollars:• Pell Grants• Cal Grants• BOG Waivers• GI Bill

Need Based Financial Aid

Currently, all three types of higher education—

• public, • private nonprofit, and • private for-profit

can received taxpayer-supported financial aid.

The Big Question

Given the limited amount of tax dollars available for financial aid, what amount, if any, should be awarded to students attending for-profit institutions?

For-Profits Cost More

Average Cost for Full-time Student

• At Public Colleges and Universities: $15,600

• At Private Nonprofits: $26,600

• At For-profits: $30,900(Lauerman, 2011)

Higher Default Rate at For-Profits

Nearly half of all federal student loan defaults occur at for-profit schools, although the schools have only 10% of higher education students

(Cauchon, 2011, Paragraph 6)

Deceptive/High Pressure Marketing

There are credible reports that some for-profits use deceptive and high pressure marketing techniques to increase enrollment.

(US Government Accountability Office, 2010)

Pressure to Lower Academic Standards

Faculty at some for-profit colleges and universities have reported that they were pressured to lower academic standards to keep students enrolled.

In a series of interviews given to the Chronicle of Higher Education, “current and former professors from a wide range of for-profit colleges said they were pressured—and in some cases ordered—to offer extensions, forgive plagiarism, and inflate grades to keep students enrolled and the federal aid flowing” (Field, 2011, “Rewarding Retention” Section, Paragraph 14)

Societal Costs of High Tuition at For-Profits

• Students at some for-profits take out large loans that they will have difficulty paying back. Most such loans are guaranteed by federal or state tax dollars.

• Consider: Emily Journey, 26, borrowed $30,000 to pay for a 7-month program in pastry and baking arts. The only job she could find after graduation was an $8/hr job at a bakery, a job that didn’t require a culinary certificate. She sued the for-profit.

(Chea, 2011)

Societal Costs of High Tuition at For-Profits

• Growing concern by Congress that Post-9/11 GI Bill monies are not providing the intended benefits to veterans who opt to attend for-profits.

• Of the $17.2 billion spent on this modern-day version of the GI Bill, 37% of it went to for-profit institutions.

• Consider: Senator Webb (D-Va), the original author of the Post-9/11 GI Bill, is now proposing a bill that imposes new requirements on schools seeking to receive GI Bill monies.

• Webb wants to ensure that veterans’ GI Bill benefits “will not be lost or squandered on an education that fails to equip them with the skills and knowledge they need to be successful.”

(Maze, 2011)

Questions or Thoughts?

References & Bibliography• Bennett, D.L., Lucchesi, A.R., & Vedder, R.K. (2010). For-profit higher education: Growth, innovation and

regulation. Center for College Affordability and Productivity.http://www.centerforcollegeaffordability.org/uploads/ForProfit_HigherEd.pdf

• Cauchon, D. (2011, October 18). For-profit colleges focus of student loan issue. USA Today. http://www.usatoday.com/news/education/story/2011-10-18/student-loans-for-profit-college/50819470/1

• Chea, T. (2011, September 4). Culinary school grads claim they were ripped off. Yahoo! News.http://news.yahoo.com/culinary-school-grads-claim-were-ripped-off-203350240.html

• Cochran, D. (2012, February 14). Testimony of Debbie Cochran, Program Director, The Institute for College Access and Success. California’s Oversight of Private Postsecondary Education. Assembly Higher Education Committee; Senate Business, Professions and Economic Development Committee Joint Legislative Oversight Hearing http://ticas.org/files/pub/Debbie_Cochrane_testimony_2-14-12.pdf

• Cox, J. (2011, January 11). Health caring: Jacksonville diabetic supply company faces Medicare fraud charges. The Florida Times-Union. http://jacksonville.com/opinion/blog/400638/jeremy-cox/2011-01-11/health-caring-jacksonville-diabetic-supply-company-faces

References & Bibliography• Field, K. (2011, May 8). Faculty at for-profits allege constant pressure to keep students enrolled. The

Chronicle of Higher Education. http://chronicle.com/article/Pawns-in-the-For-Profit/127424/

• Lauerman, J. (2011, May 25). For-profit college costs surpass nonprofit peers in U.S. study. Bloomberg. http://www.bloomberg.com/news/2011-05-26/for-profit-college-costs-surpass-nonprofit-peers-in-u-s-study.html

• Maze, R. (2012, March 9). Webb: Limit GI Bill at for-profit schools. Army Times.http://www.armytimes.com/news/2012/03/military-gi-bill-restrictions-for-profit-schools-030912w/

• Mirando, K. (2011). CHW & Sutter Health Settle Medicare Fraud Investigation. http://www.legafi.com/lawsuits/fraud-qui-tam-whistleblower/1029-chw-a-sutter-health-settle-medicare-fraud-investigation

• United States Government Accountability Office. (2010). For-profit colleges: Undercover testing finds colleges encouraged fraud and engaged in deceptive and questionable marketing practices. (Publication No. GAO-10-948T). Washington, DC: US Government Printing Office. Retrieved March 19, 2012, from http://www.gao.gov/new.items/d10948t.pdf [Testimony before the Committee on Health, Education, Labor, and Pensions, U.S. Senate, Wednesday, August 4, 2010.]