For-profit education
As with any business industry, the education industry is one big and diversified with multiple options ranging from publicly own Universities, private nonprofit colleges to for-profit schools. Today I am going to talk about specifically about for-profit educations. What is for-profit education? what type of product and service do they serve and served? who are the biggest players and how do they affect the industry? what are the methods used.? What are the barrier to entry and exit? and last profitability.
A brief history of For-profit education. For-profit education can be traced back to the time of the founding fathers. In fact, Benjamin Franklin was a big advocate of For-profit schools. According to the American
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Public media in those early days, it was the clergymen or self-taught entrepreneur who teach classes on reading and writing on their spare time in their home and grow from there. In the early days, commercial colleges mainly taught classes in surveying, navigation, bookkeeping, engineering and technical drawing to the part of the population that was marginalized by the traditional colleges and universities such as African American, women, Native American and people with disabilities. At the end, they would mostly award associate or certificate rarely bachelor’s degree (Hanford). In the recent decade, the number of For-profit has tremendously. For-Profit colleges and university such as university of Phoenix, DeVry, Full sail University, Grand Canyon etc.…has been serving a larger portion of the student body. According to American Public media “In 2012, [alone] about 12 percent of American college students attend for-profit schools. The clear majority of them go to schools that are operated by large, publicly traded corporations like the University of Phoenix (Hanford). They offer wide-ranging types of certifications, Associate degrees, bachelor degrees in various medical, business, criminal and other variety of fields. As pointed out by many For-profit education industry have many shortcoming and many flaws. According toThe New York times “’Its recruiters used “high-pressure sales techniques, and inflated claims about career placement to increase student enrollment, regardless of applicants’ qualifications,” ….’’ And it supposedly paid recruiters’ bonuses based solely on how many students they enrolled — which is against the law” (Nocera). Methods such as this that purposefully falsify targets and deceives student into falsify financial backgrounds is widely used to increase or draw larger government grant.
According to the ProPublica “96 percent of those enrolled in for-profit schools who take out student loans” while only “57 percent of those enrolled in four-year private, non-profit colleges who take out student loans (Lee).” Yes, one might be able to argue that For-profit education serves student neglected by public universities and private nonprofit school and offer classes at the students’ convenience and most will go as far as to even promise students they can earn so and so degree at the comforts of your pajamas and sandal or juggling kids and work. But at what cost? Not at the expense of high loan and higher than average tuition with little to no prospect of finding future …show more content…
jobs. As with any type of business sector, there is an intense amount of competition to stay alive in the world of for-profit education industry.
One of the many competitive practices is used by the For-profit firms is buying air on TVs, radio, social media and printed ads and billboards along highways and freeways. They use technology to stay ahead and stay competitive. In addition, for-profit colleges and universities geography as a point of advantage and strategic choice to build campuses near or by a major highway. Today if you drive along any U.S. highway Route. I can assure you will see more than three for-profit school building such as university of Phoenix, DeVry, Everest or any other For-profit colleges. That is not coincidental decision rather it is a deliberate one for advertisement and to catch more eye balls. And drive home and turn on the TV you will see an advertisement every five minutes with insanely convincing graphics and very enticing ads telling you can earn a such and such degree at the comforts of your home. Online or in class whatever suits your need. All if not most For-profit colleges are located across the border of the states which is another point of advantage. According to The Atlantic
"There’s a significant increase in competition in the marketplace, you’re seeing more non-profits and state schools expand their mission beyond where they’ve traditionally been," says Mark Brenner, chief of staff for Apollo Education Group, the company that owns
University of Phoenix and several other for-profit education institutions. "They’ve gone beyond state lines and a little further out there in terms of online education “(Lam). Another method of the For-profit use to their advantage is lobbying. According to the center for responsive politics open secret.org website the for-profit education heavy, heavy presence on the capitol hill and the heavily lobby department of education and Whitehouse. They “spent over 7.4 million in 2010 “and “almost 12.5 million in 2011.” Lobbying. To give you another statistics according to ProPublica “For-profit industry spent 4.2 billion [ with B!!] on marketing, recruitment and admission staffing in 2009” (Lee). What barrier to entry or exit? Regarding with any business, there are many barriers to entry to the For-profit education industry. The first and for most barrier to entry to the For-profit colleges and universities is Money. According to the Slate for-profit colleges and university need “First, raise a lot of money. Without a pile of cash on hand, you won't be able to pay faculty and staff, or buy land, buildings, and textbooks” (Beam). The second barrier faced by For-profit industries is licensed and accreditation. According to the same article on the slate “…Before a college can start accepting students, it needs a degree-granting license. Each state has its own process, but usually you need to submit your university's curriculum to a committee for review” (Beam). And get an accreditation from both regional and national accreditation agencies. In the state of Texas agency such as the Accrediting Commission for Community and Junior Colleges, Western Association of Schools and Colleges (ACCJC) or at the national level you need an accreditation from Accrediting Commission of Career Schools and Colleges (ACCSC). But at the basic level for-profit industries need to according to slate “… meets a minimum standard for recognition by the Department of Education. Without it, a school isn't eligible to receive federal funding nor can its students get Pell grants…” (Beam). which grant is the main source of revenue for the for-profit schools. Many more other more seemingly small but incremental recognitions and requirements ranging from applying for copyright, tax exemptions, financial plans, legal teams to applying the for the affix .edu. This and other steps are supposed to prevent students from diploma Mills from meaningless and fake educational institutes. As to the exit, there is no such barrier as my research conferred. As recently have seen in the TV close your doors to a student as we have seen on TV witnessed done by the ITT Technical Institute school which is one of the For-profit college. Leaving more than as many as 40,000 students in limbo. Profitability, while CEOs and executive compensation are in the millions of dollars comparing to relatively similar position. Again, according ProPublica “$7.3 million average compensation of CEOs at for-profit higher education companies in 2009.” Compared to “$3 million average compensation of the five highest-paid presidents of non-profit colleges and universities in 2009” (Lee). Considering recent of Senate committee hearing and recent media reports have shade into this issue of For-profit industry making a tremendous amount of money while the student are going empty and full of debt. There was a fair amount of regulation in place such as the "90-10 Rule," which says that for-profit colleges can only derive up to 90 percent of their revenue from federal student aid” (Lam). And according to the New York times the previous Education Department under President Barack Obama’s administration has done away with its fair share of regulation that are highly Harish toward the For-profit industries “known as the gainful employment rule, [that] is built in part on the actual earnings of all the graduates of a given for-profit college” (Nocera). in trying to limit the often-crude technique and e folly use of falsified data to recruitment and mislead perspective student in to enrolling. Though this current administration is not clear as to what is going to do with For-profit education. However, judging from the past the current President of United State was a owner of a failed for profit university “Trump University “which according to National Public Radio (NPR) “A federal judge has approved a $25 million settlement deal between President Trump and students who paid for Trump University real estate seminars” (Domonoske). and the current head of the Department of Education has been clear advocate of Privatizations education and subsidizing education. In conclusion, for-profit educations industries have been around and serve a large portion of the student body. Mainly serve minorities that is both overlooked and often marginalize by higher public institutions and universities and nonprofit private higher education. For-profit education industry of use similar if not same techniques for recruitments and method that result in high default rates and higher retention rates, while at the same time CEOs of those major For-profits Universities taking home millions of dollars. But considering recent years’ For-profit industries has engaged in a predatory schemes and activities. It can be concluded that more need to be done to either better the industry or better equip the enrollee or consumers. Works Cited Beam, Christopher. “How Do You Start Your Own University?” Slate Magazine, Slate.com, 16 May 2007, www.slate.com/articles/news_and_politics/explainer/2007/05/you_u.html. Accessed 26 Apr. 2017. “The Center for Responsive Politics.” OpenSecrets, www.opensecrets.org/. Accessed 26 Apr. 2017. Hanford, Emily. “A Brief History of For-Profit Higher Ed.” APM Reports - Investigations and Documentaries from American Public Media, AMERICAN PUBLIC MEDIA, americanradioworks.publicradio.org/features/tomorrows-college/phoenix/history-of-for-profit-higher-education.html. Accessed 26 Apr. 2017. Lam, Bourree. “For-Profit Colleges: Here to Stay.” The Atlantic, Atlantic Media Company, 3 Apr. 2015, www.theatlantic.com/business/archive/2015/04/for-profit-colleges-here-to-stay/389045/. Accessed 26 Apr. 2017. Lee, Suevon. “The For-Profit Higher Education Industry, By the Numbers.” ProPublica, ProPublica, 10 Aug. 2012, www.propublica.org/article/the-for-profit-higher-education-industry-by-the-numbers. Accessed 26 Apr. 2017. Nocera, Joe. “Why We Need For-Profit Colleges.” The New York Times, The New York Times, 17 Sept. 2011, www.nytimes.com/2011/09/18/magazine/why-we-need-for-profit-colleges.html. Accessed 26 Apr. 2017. Domonoske, Camila. “Judge Approves $25 Million Settlement Of Trump University Lawsuit.” NPR, NPR, 31 Mar. 2017, www.npr.org/sections/thetwo-way/2017/03/31/522199535/judge-approves-25-million-settlement-of-trump-university-lawsuit. Accessed 2 May 2017.
When people like Clifford examine education, it is not the worth and value they see, but the opportunity for profit. With nearly $5-billion provided from the federal government, for-profits are able to advertise 24/7 availability, along with quick and easy degrees. As stated in the article, “a quarter of all federal aid goes to for-profits, while they enroll only 10 percent of students” (216). Yet, the cost of tuition at for-profit institutions continues to be significantly higher than colleges and universities—leaving many graduates with a lifetime of debt—while maintaining they do not “have any responsibility whatsoever for how much students borrow and whether they can pay it back” (218). What Carey presents as a measure of success proves to show exactly what damages for-profits cause.
What stands out about American universities today? Is it the academic opportunities offered to students, experienced faculty, or strong sense of community? Or...perhaps they have lost their focus. It is not uncommon for universities to focus their efforts and budgets elsewhere; by building state of the art gyms, for example, remodeling luxury dorms, grooming campuses, or creating more management positions. College students and professors alike are subject to the nationally occurring changes in higher level education. Colleges are becoming commercialized and tuition is rising, but is the quality of education improving? In “Why We Should Fear University, Inc.”, Fredrik DeBoer is able to provide a personal take on the issue of corporate domination
The first political advocate to ever address the issue of education was in 1877 when Rutherford B. Hayes became the first president to make a strong case for universally public education (Sanders). He was a representative for republicans at the time, while many advocates for free education are, contrarily, a part of the Democratic Party in the present day. One of the first cases of a free college education having positive effects of society was in 1944, when the newly issued GI Bill allowed free tuition for World War II Veterans, as well as many other benefits for them, such as benefits in home loans and the unemployment pay (Staff). In fact, Veterans chose to not take advantage of the unemployment pay, but rather use the free education to
“If a college education has value, why give it away?” (Luebke). Most everyone wants to have higher education because it has value in this day and age. It opens up more career options, and lets them have more freedom to pick the career they want. With higher education being tuition-free, students might take their college education less seriously because they don’t have to pay for it (Should College Be Free? Pros, Cons, and Alternatives). Because of this, graduation numbers might drop, or the people who do graduate may not be as well prepared for the workforce. Yes, there are still entry requirements that limit the amount of students allowed into the school, but much of the drive for the students comes from the fact that they are paying a lot of money to be there. Also, giving away college education would almost certainly do the opposite of what people want it to do, which is give more money to students from richer families than from poorer ones. It isn’t that they want to necessarily take money from the richer families, but they want to give poorer families more opportunities to get money. “Without a dramatic overhaul of how we understand student benefits, making college more or entirely free would most likely boost the wealth of college attendees without securing any important egalitarian gains.” (Bruenig). This is because students from well-off families already enjoy a disproportionately successful future than students from poor families,
According to Trade Schools, Colleges and Universities “Many of America's top-performing high school students never apply to the most challenging colleges and universities even though they have the ability to succeed at them. They often come from minority and low-income households and end up pursuing more affordable, less-selective schools instead.” College can be a burden to many students in a variety of different ways, but the most common reason is due to funds. Making college free for students will help this problem by increasing jobs in the work industry that require degrees, they should be affordable to all people at all cost, as well as the funds should be completely cut off because it would increase jobs and help America's economy grow.
There is no doubt that college is expensive, price tags for some universities go over a quarter of a million for just a bachelors degree! (That’s if you graduate in four too). The extravagant price for college is no doubt crazy. Trying to better yourself and your future shouldn’t cost $250,000 plus. If public universities were to be free a plethora of problems could be solved instantly. According to Forbes the National student loan debt has surpassed 1.2 trillion dollars (Denhart )! This number is growing exponentially as more students enroll in to college. Why question then whether college should be free? Well, this number is the total amount of student loan debt from all students that have exited college. Some of these students are freshly graduated while some are aged with the wisdom trying to pay their loans back. If public universities were to be free and funded by our federal government, our government would pay this amount within ten years. Relatively a short amount of time considering that the student loan debt is an accumulation debt from students that have graduated more than ten year ago, also this also greatly increase with the following years as well.
The documentary Starving the Beast is about the current fight going on regarding public higher education in America. The film explains that there has been a shift in how higher education is viewed. It has gone from being viewed as investment in citizens and the future of America as a “public good” to something students themselves must buy into as consumer like any other good or service. It goes on to explore the decline in funding for public universities and the ideological divide that is causing it. One side believes that public universities are something worthwhile for states to invest in because makes it easier for students to attend school, therefore increasing their own worth and ability to contribute to their states' economies.
The following section is a review of literature about managerial decisions in relation to competitive school marketization in the US. Clearly, marketization, a concept that involves the rearrangement, remodeling, and alteration of the publicly-owned organizations or enterprises into the market-based entities, remains to be a collective occurrence, particularly in the present century. Through marketization, popular learning institutions in the US have been changed from being possessed by the government to market-oriented foundations meant to increase quality and key operations (Judson & Taylor, 2014; Cucchiara, Gold, & Simon, 2011). Several scholars and researchers have carried out analysis and evaluation on how marketization impact education in the US (Bartlett, Frederick, Gulbrandsen, & Murillo, 2002; Judson & Taylor, 2014). Consequently, the present study reviews some of the literature
Students who are at a higher risk of dropping out, are the ones who most likely have a hard time payback the loans. According to the report Investing in Higher Education, “The largest increases occurred among lower income and older, independent students who largely attended for-profit and community colleges” (Council of Economic Advisers, 4). They are
Proper school funding is one of the keys to having a successful school. Americans believe that funding is the biggest problem in public schools. School improvements revolve around funding. There needs to be funding not only in the successful schools but also the schools that aren’t doing as well. In documentary, Waiting for Superman, it talks about how smaller class sizes will help students. Funding is what will help the smaller class sizes. State funding mechanisms are subject to intense political and economic scrutiny (Leonard). Studies have shown that funding is inversely related to accreditation levels (Leonard). School funding needs to be increased, but there must be accountability as well.
Odden et al. note that their analysis of spending patterns across the 50 states is supported by the conclusions reached by the Finance Center of the Consortium for Policy Research in Education (CPRE), although the results of their research did diverge in some significant ways. Odden et al. examined spending and staffing patterns at the district and school levels. They also scrutinized staffing patterns of expenditures by function and program and spending across curriculum content areas in California, Florida and New York. Their major conclusion was that while there had been considerable national investment in public education during the 20th century, as a rule the funds were distributed unfairly and used ineffectively.
Initially, educational partnerships were created by school system staff to "foster school-community cooperation, provide incentives for students, supplement curriculum and staff, and obtain equipment" (Clark 1992, p. 2). Business gains from these relationships were primarily in improved public relations and enhanced community image (Grobe et al. 1993). In the early 1980s, school reform reports called for changes that would ultimately transform the nature of education and business partnerships. Schools were faced with the need for educational reform measures that would better prepare a diverse student population for the higher order thinking and reasoning skills required in an increasingly knowledge-based, service-driven economy. Businesses were faced with the threat of an inadequately prepared work force that would jeopardize their competition with other industrialized nations. Motivated to improve the academic and technical skills of the future work force, businesses and schools joined in partnerships of various sizes and types to achieve their common and separate goals.
This is especially prominent in the United States of America, where many colleges and universities pride themselves on having a high selectivity rating. The goal of many of these schools is to be as close as possible to Harvard's low acceptance rate of 5.9% of applicants. This allows them to have an air of prestige and be desirable making students more likely to ignore the high tuition rates to be a part of that educational facility, even though another college that does not have the brand like name could have a similar or better program. These universities are also globalizing their schools by building campuses in different countries, further adding to the idea of a brand name education. For example, Yale University built a campus in Singapore, even though there are civil rights violations, showing that the presence of the school is more important as a brand rather than the quality or
Universities have been established to provide higher quality education to those who want to pursue their dreams and their choice of career, or expand their knowledge. Universities therefore provide positive externalities, or influences, which can benefit everyone in society. Also, education is a merit good that is under-provided as those who consume education do not consider the long term benefits that education provides, such as higher-paid jobs, but rather the short-term benefits possibly because of lack of information or knowledge of what higher education can provide. There are many ways to provide financial resources for universities, such as tuition fees, subsidies, donations and aids, and selling research, to name a few. Fees can be quite
Commercialization in education is not totally wrong, sometimes it is needed to support the process of education. But, when the education is used as a tool to achieve profit as the ultimate goal, the essence of the educational process will no longer be perceived and delivered to learners. Higher education is not supposed to be a commodity, it is a human right. Commercialization in a university could be a threat to future education process. Both government and educational experts are responsible to reduce this threat, then university will still become a place to obtain a higher quality of