For Profit Colleges Poised To Grow Under Trump

August 13th, 2018

By Richard Scott and Michael Kirst

Traditional public and nonprofit colleges are not constituted to rapidly adapt to changing regional economy contexts, whereas this is one of the major strengths of for-profit colleges. While for-profits enjoy important adaptive advantages, they have also exhibited limitations of their mode of operation, shortcomings that have prevented their rapid increase in market share in higher education. From the 1970s well into the 1990s, the numbers and enrollments of for-profit colleges rose steadily, but in the early decades of this century, these increases have been slowed and, in many cases, reversed. This sector of higher education exhibits high volatility up to the present. But a word of caution: Most studies refer almost exclusively to that subset of for-profits that, perhaps in addition to other types of programs, offer academic degrees. These are the programs that are captured by the official educational data systems. For-profits offering exclusively vocational training and certificates operate under the radar screen, and their investigation would require a different design and data-gathering strategy that will be pursued in the LA region.

Our interviews with San Francisco  Bay Area colleges confirm that for-profit institutions continue to be a key player in the field of higher education. Over time, they have offered a wider spectrum of two- and four-year programs (e.g., criminal justice, education, retail, and hospitality).  Following changing market demands, they alternate between an emphasis on employer-guided vocational training and academic degree programs. Colleges such as the University of Phoenix and DeVry offer more focused programs and provide a range of supports, such as “success coaches”, financial advisors, counselors, and staff to support on-line work and, more generally, student learning.

These distinctive advantages, however, are offset by the heavy emphasis placed by many of these systems on marketing. To succeed, colleges must attract and retain new students (customers). Too many for-profits have employed sales techniques which overstate successful outcomes, including time-to-graduation or employment prospects. Some have resorted to out-right fraud.  For example, California’s State Attorney General levied a $30 million fine against Heald College (with four campuses in the Bay Area), a branch of Corinthian Colleges, alleging the company boosted official placement rates by paying temporary employment agencies to hire students for brief stints after graduation (White 2015). Corinthian College closed operations in 2016, adversely affecting more than 16,000 students in California and other states.

For-profit colleges are structured in ways that depart markedly from public and nonprofit schools.  Rather than being fragmented and distributed, their decision structures are lean and centralized.  Rather than attempting to please multiple stakeholders, they serve a unified set of shareholders. Curricular decisions are centralized at the corporate level and their “delivery model” is similarly centralized. Curriculum is highly structured, offering clear pathways to completion with little to no opportunity for exploratory or elective courses. The centralized model affords more efficiency in the creation, approval and implementation of a new program.  A process taking up to two years in a public college may be accomplished in a matter of weeks or months in a for-profit system.

Faculty at for-profit institutions tend to be non-tenured and exercise little to no discretion over curricular offerings or mode of instruction.  Instructors receive training from college managers. A University of Phoenix informant reported that the college spent considerable effort and time in training and supporting new instructors. He stated that instructors underwent intensive training for about six months before teaching their first class and were continuously monitored and coached after the initial training period.  According to this individual, all faculty were assessed twice a year with student evaluations being a key component of this process. The college thus enjoys much more latitude to remove under-performing instructors, or to replace an instructor with experience in one area with a different one should program priorities change.

For profits have been quick to adopt on-line learning instruction.  Many have a strong technology platform and have expanded much more rapidly than public colleges in offering online and/or blended courses. A respondent from the University of Phoenix reported the popularity of “flex-net” courses, where students are able to work at their own pace online (usually taking one course for six weeks) but come to campus to interact with faculty during scheduled hours to interact and seek instructional support.

Most of for-profits have more flexibility to meet students’ needs, with courses offered in the evening, on weekends, as well as online. For-profit colleges can also adapt to change more easily than community or other public colleges because they own little to no property, foregoing the sunk costs of maintaining a campus with dedicated classrooms, dorms, student unions, or other amenities.  Only a few, such as DeVry, operate (limited) student dorms.  Many lease instructional space in shopping malls or in downtown commercial office buildings.

Yet another important advantage offered by for-profits is their willingness to offer applicants a generous reading of their previous academic accomplishments.  While many public systems are strict in terms of how much academic credit entering students will be offered for their previous efforts in other schools, most for-profits not only grant credit for earlier courses taken, but also credit for “life experiences” (e.g., employment and volunteer service) that count toward the pursuit of a degree.

In spite of these substantial advantages, for-profits have had a difficult time gaining traction. A decade of rapid growth around the turn of this century has been followed, after 2010, with sharp decreases in enrollments and, in some cases as described, failure of the company with severe implications for stranded students.  However, the Trump Administration has taken several policy and regulatory actions designed to enhance for-profit growth. Several large for-profits have merged, and are poised to recover enrollment lost in the last few years.

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