Predatory Ed: The Conflict between Public Good and For-Profit Higher Education
61 Pages Posted: 10 Jan 2012
Date Written: 2011
In October of 2009, two employees from for-profit University of Phoenix visited a homeless shelter in Cleveland to recruit students for enrollment. Men like Benson Rollins, an unemployed, recovering alcoholic and high school dropout who had been homeless for ten months, received repeated phone calls and emails urging him to register for classes. Not to be outdone by the University of Phoenix, administrators at for-profit Chancellor’s School of Professional Studies invited managers of Cleveland social service agencies to a lunch to discuss “new plans to recruit the economically disadvantaged and at-risk groups” through “on-site recruitment at local transitional housing, halfway houses, and other human service facilities.” Do these two vignettes illustrate savvy and much-needed business entrees into untapped markets or predatory behavior at the expense of the vulnerable?
As in housing, healthcare, and even public financing, the reception of the for-profit motive in higher education has been mixed. Supporters celebrate the movement as promising, citing rapid growth in the industry as affirmation of the good the institutions provide in responding to a niche student market neglected by nonprofit institutions (NPIs). Detractors, however, critique the movement as ultimately incompatible with notions of public good and certain to produce casualties in the race to maximize profit. Investigations have revealed that for-profit education has, indeed, produced casualties, and that those casualties are disproportionately borne by the disadvantaged: first-generation, minority, poor and working class, and veteran students. Recruiters from the University of Phoenix, for example, were not likely to explain to Benson Rollins that graduates of for-profit institutions of higher education (FPIs) bear a disproportionate number of student loan defaults; that FPIs have gained a reputation for fraud and abuse in recruiting and business practices; and that recruitment officers at the schools are trained to target and prey upon the vulnerabilities of students who consider their institutions.
The argument I make against FPIs is both practical and normative. Regulation of the for-profit sector is ultimately futile because higher education is difficult to define or measure, and legal recourse for a poorly delivered education is often inadequate. Normatively, for-profit higher education is the latest in a troubling trend of introducing market dynamics and private interests into areas that should be shaped by a commitment to public ideals and collective responsibility.
Part I explores the for-profit business model and the niche market the industry targets. Part II establishes higher education as a public good essential to promoting democracy and societal equality, and characterizes for-profit higher education as the latest merge of private interest and public good. In this merge, the for-profit motive undermines the public good of higher education, and in pursuit of the federal monies to which low-income students have access, FPIs capitalize on information asymmetries and valuation problems in the sector. This strategy results in predatory education — negative educational experiences, rent-seeking behavior, fraud, deception, and the absence of legal remedies — at the expense of the public and the marginalized student population for-profits purport to help. Part III explores whether this market failure can be directly attributed to the for-profit motive, assesses the law’s current response to predatory education, and notes the futility of regulation in the area. The article concludes that the “problem is in the premises,” an issue that most of the literature on for-profit higher education has ignored. Accordingly, although the for-profit sector might be able to educate students in a few limited areas, federal loan monies are better spent to support programs administered through the nonprofit sector where at least the absence of the for-profit motive eliminates an incentive to exploit vulnerable students in pursuit of investor wealth.
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