This is part five of my annual review of the year in ed-tech
Trump University and the History of the Future of For-Profit Higher Education
On November 19, just eleven days after being elected President of the United States of America, real estate mogul and reality TV star Donald Trump settled a class-action lawsuit, agreeing to pay $25 million to put to rest fraud allegations from his now-defunct for-profit education venture, Trump University.
The President-Elect refused to accept any wrongdoing. But the New York State Attorney General Eric Schneiderman certainly saw otherwise, as was clear in his statement:
In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of millions of dollars through a scheme known as Trump University. Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university.
When I included for-profit higher ed as one of last year’s “Top Ed-Tech Trends,” I suggested that, despite predictions that “the for-profit-education bubble is deflating” and despite events like the closure of Corinthian Colleges, it was unclear to me that we were really witnessing a collapse of the industry. If nothing else, it seemed as though for-profit higher ed was poised to rebrand itself, embracing “coding bootcamps” as the new vocational education and career training. I briefly mentioned the ongoing Trump University lawsuits in that article. But little did I imagine that one year later, the savior of for-profit higher education might just be Donald Trump, whose administration seems likely to roll back many of the regulations put in place over the past eight years in order to curb the predatory behaviors of these businesses.
There were several points in the presidential campaign that some pundits argued the Trump University scandal would torpedo Trump’s political aspirations: when news broke that Florida Attorney General Pam Bondi had sought a donation from Trump before nixing a fraud investigation into Trump University in her state, for example. Or when Trump had to pay an IRS penalty because his foundation violated tax law by making a $25,000 campaign contribution to a campaign group connected to Bondi. Or when Trump said that the federal judge overseeing the Trump University lawsuit had an “absolute conflict” in handling the case because he is “of Mexican heritage.” But none of these controversies – the accusations of fraud with the Trump University lawsuit specifically or the unprecedented number of lawsuits involving the candidate more generally – were enough to stop voters from supporting him.
In February, Slate sneered that “The People Donald Trump Allegedly Ripped Off Through Trump University Look a Lot Like Trump Voters.” I say “sneer” because that’s often been the media’s attitude towards students who pursue their education at for-profit universities, those who – for a variety of reasons – might not understand the way in which the prestige market or “signaling” works. The headline echoes too the media’s attitude towards some imaginary Trump voter – the one who’s been fooled by a con-artist making wild promises about a path to economic prosperity.
Court filings from the fraud trial did provide some insights into how Trump University operated – high-pressure sales tactics detailed in the the company’s “playbooks” that revealed how Trump University employees sold its course packages – these cost up to $35,000 – targeting vulnerable populations in particular and feeding on their socioeconomic anxieties. Students were encouraged to use their credit cards to pay for classes – a terrible idea – and to sign up for as many credit cards as possible in the process. “Based upon my personal experience and employment, I believe that Trump University was a fraudulent scheme, and that it preyed upon the elderly and uneducated to separate them from their money,” Ronald Schnackenberg, a one-time sales manager at Trump University, testified.
Throughout the presidential campaign, Trump insisted that students consistently gave the seminars positive reviews and that the Better Business Bureau had given Trump University an A+ rating – a claim that the BBB clarified, pointing out that when it was in operation, there were multiple complaints by consumers and the rating dropped as low as D-. Students say they were pressured to give good reviews.
Trump University promised that the instructors for the real-estate and business seminars were “hand-picked” by Trump. According to an investigation by The Associated Press, “dozens of those hired by the company had checkered pasts – including serious financial problems and even convictions for cocaine trafficking or child molestation.” There were some high-profile academic hires however, including John Vogel (Dartmouth), Don Sexton (Columbia), Jack Kaplan (Columbia), and Roger Schank (Carnegie Mellon).
Vogel was one of the professors who stood with Trump at the press conference in 2005 announcing the launch of Trump University. “He was proud of the video lectures he recorded on topics such as variable versus fixed-rate mortgages and how to weigh pros and cons of different properties for an online course directed at would-be real-estate investors.” The Wall Street Journal reported in April. “‘There were some pretty legitimate people involved at the beginning,’ said Mr. Vogel.” But by mid–2007 much of the work that had gone into creating high quality online business courses – by Vogel and other professors – had been ditched to focus on “get rich quick” schemes.
In March, learning scientist Roger Schank published some samples of the courses that he had built for Trump University, prompting WSU’s Mike Caulfield to add that “Trump University’s Online Materials Are a Lot Better Than Your University’s Online Materials.” “It certainly makes a mockery of what Silicon Valley darlings Coursera and Udacity call courses,” Caulfield argued. Funnily enough, many of the very publications who consistently made fun of the offerings from Trump University rarely offer any critical analysis of the structure or content of MOOCs or coding bootcamps. Nor do they reflect on why for-profit higher education – with or without a degree – has such appeal.
In June, Trump promised that he would re-open Trump University when he won the court case. He didn’t win, of course; he settled the lawsuit. But he’ll be President of the United States of America, and the future of for-profit higher education is now the brightest it’s been in quite some time.
For-Profit Higher Education and the Presidential Campaign
Donald Trump wasn’t the only presidential candidate with ties to for-profit higher ed, of course. Florida Senator Marco Rubio, for example, had asked the Department of Education last year to be “demonstrate leniency” during its investigation of the now-defunct Corinthian Colleges.
Hillary Clinton also had connections to the for-profit education industry: President Bill Clinton had been an honorary chancellor of Laureate International Universities, part of Laureate Education, the world’s largest chain of for-profit colleges. According to the Clinton’s tax forms, he’d earned $16.5 million from the company between 2010 and 2015 before he stepped down from his role there. During the campaign, Trump accused Clinton of using her position as US Secretary of State to funnel money to Laureate Education – some $55.2 million in grant dollars. The Washington Post said it found no evidence that that much money had been awarded to Laureate Education. (The State Department did partner with Coursera – Laureate Education is an investor – to promote MOOCs globally. But again, it’s not clear this was any sort of pay-to-play deal.) In an op-ed, The Wall Street Journal described the relationship between the Clintons and Laureate Education as “case study in modern crony capitalism,” alleging that the company had avoided the scrutiny faced by other for-profit universities because of these powerful political connections. (Inside Higher Ed quickly pointed out how dubious these claims were.)
In an effort, perhaps, to demonstrate her commitment to the Obama Administration’s policies surrounding for-profits, Clinton named Rohit Chopra to her transition team. Chopra had previously worked at the CFPB and, while there, had sued ITT and Corinthian Colleges, accusing them of abusive lending practices.
But no matter. Instead of a Clinton transition, we’re in a Trump transition. And the for-profit industry is gleeful. Shares in publicly-traded for-profits shot up with word of Trump’s election – they were all pointing downwards when I looked at this topic this time last year – and observers now predict “regulatory relief” and renewed profitability under the new administration.
The Obama Administration versus For-Profit Higher Ed
From a Buzzfeed article published this fall:
When Barack Obama took office, America’s seven largest publicly traded college operators were worth a combined $51 billion, with more than 815,000 students enrolled at campuses spread across the country. The schools were flooded with with people seeking shelter from the recession, returning to school to pick up new skills.
Almost eight years later, the industry has been decimated. The seven largest listed operators are worth just over $6 billion, and the most valuable company in the sector has spent the last two years desperately trying to become a non-profit. Two of the largest companies in 2009 are now bankrupt, and two more are in the process of being taken private.
A withering war on for-profit schools by federal and state authorities, combined with an improving economy that made trade schools less lucrative, has left the industry a shadow of its former self. It could be one of the defining legacies of the Obama era.
But the industry, despite the tone and headline of that Buzzfeed piece, has hardly been “crushed.” It has, as The Hechinger Report puts it, stayed “quietly on offense,” continuing to spend millions of dollars lobbying Congress, with donations overwhelmingly favoring Republicans. The industry has steadily fought back – in the courts and in the press – against the regulations the Obama administration has attempted to put in place to protect students.
How well these measures have protected students, of course, is up for debate. According to a report by student debt expert Chris Hicks, the Department of Education has consistently treated for-profit higher education as “too big to fail,” despite all the indicators that some of the largest chains are struggling financially and academically (let alone their students struggling financially and academically).
Among the efforts taken by the Obama Administration this year: challenges to the accreditation of for-profit universities, including the move to terminate the Accrediting Council for Independent Colleges and Schools’s powers; attempts to limit mandatory arbitration agreements that prevent students at for-profit universities from suing; the restriction of access to federal financial aid, including GI Bill money, to schools in violation of various regulations, such as misstating job placement rates; the creation of new regulations allowing borrowers to have their student loan debt discharged if they were defrauded by their school; the implementation of “gainful employment” regulations – this spring, a federal appeals court rejected for-profits’ challenge to the latest version of the rules.
Corinthian Colleges, Continued
In April of last year, Corinthian Colleges announced it was closing its doors, leaving some 16,000 students at its Everest, Heald, and Wyotech Colleges without a school to attend. The chain had been under fire for some time, accused of predatory lending and fined for defrauding students.
The fallout continued into the new year.
In March, the state of California won a $1.2 billion judgment against the for-profit for lying and defrauding students. “The judgment includes $800 million in compensation to former students,” Buzzfeed’s Molly Hensley-Clancy wrote, “an amount that the shuttered and bankrupt Corinthian will almost certainly never pay. The little money that was left in the company’s coffers has been doled out to hungry creditors.”
Revealed in emails and testimony in that court case: that Corinthian had actively recruited the homeless and kids with “low-self esteem and few base hits.” Materials in other court cases against Corinthian showed that the school paid recruiters based on meeting enrollment quotas.
Also in March, the Department of Education announced “a path to loan forgiveness” for the former Corinthian students. By June, the department reported that it had approved 11,000 claims for debt relief, totaling more than $170 million. (11,000 out of 26,603 claims filed. There were as many as 80,000 former Corinthian students eligible.) In September, a former student sued the department, demanding that it stop collecting debt payments from all former Corinthian students. As the Obama Administration nears its end, these students are still hoping for immediate debt relief.
Déjà Vu: ITT Tech
There were hints, of course, that Corinthian Colleges wasn’t the only for-profit chain in trouble.
In August, the Department of Education announced that it was banning ITT Educational Services from enrolling new students who use federal financial aid. The for-profit would have to pay Title IV aid to current students out of its own pocket first, before being reimbursed by the government. And it would have to disclose to its current students that it was not in compliance with its accreditor.
In 2015, ITT had reported $850 million in revenue, with almost 70% of that – about $580 million – coming from financial aid.
Less than a week after the Department of Education’s announcement, ITT said it was ceasing all enrollments. A few days later, on September 6, ITT closed nearly all its campuses. Some 35,000 students and 8000 employees were, in the words of The New York Times, “left in the lurch.”
The Department of Education posted “A Message from the Secretary of Education to ITT Students” on its website, informing students that they had two choices as to how to proceed: 1) ask for loan forgiveness or 2) transfer their credits elsewhere.
That’s a raw deal right there. Some California community colleges, KPCC reported, would not accept transfer credits. (Edsurge, for one, promoted coding bootcamps as an alternative, suggesting that former ITT students pursue their education there instead.) Because of the structure of their education benefits, veterans were not eligible for loan forgiveness and feared they’d lose other benefits if they could not continue their education. For many former ITT students, their path to graduation was now unclear. And as the company also owned a chain of charter schools, it wasn’t only college students who had to figure out how to complete their education.
Executives from the company, of course, will be fine – they “walked away after the company collapsed into chapter 7 bankruptcy.” ITT officially filed for bankruptcy in mid-September. Its various campuses went up for sale, and a judge barred regulators like the CFPB and SEC from pursuing litigation against the company while the bankruptcy proceedings were underway.
One might think, based on the headlines, that the bankruptcy of ITT and Corinthians had put a nail in the coffin of for-profit higher education. But there remain over 3400 (Title IV-eligible) for-profit colleges in operation in the United States alone (and still more, like coding bootcamps, that do not currently receive financial aid; there are still more outside the US as well). And there were plenty of other problems this year:
Accreditation: In June, the Department of Education announced that it “recommended that the Accrediting Council for Independent Colleges and Schools (or ACICS) should no longer be recognized by the Department as an agency that can provide schools with an accreditation that makes them eligible for participation in federal aid.” This would send a lot of schools – around 900 – and thousands of students scrambling. In September, the Senate passed a VA bill that included a provision that would allow student veterans to continue to receive GI Bill educational benefits for up to eighteen months after their school’s accreditor loses its federal recognition. (Under current law, student veterans would immediately lose access to their GI Bill benefits, including housing.) The loss – or potential loss – of ACICS’s accreditation would have a major impact on the for-profit sector obviously. But the process to remove accrediting authority is lengthy, and there are bound to be not only legal challenges but, under a President Trump, perhaps a different set of priorities for the new Department of Education. I’ll look in more detail at accreditation in a subsequent article in this series.
Restricting Federal Financial Aid: In September, DeVry University announced it planned to decrease its reliance on financial aid for generating revenue. Zenith Education Group, which acquired some of Corinthian Colleges’ schools, said it would put in place a new financial aid process that included financial literacy counseling. In December, the Department of Education said it would deny federal financial aid to the for-profit Globe University and the Minnesota School of Business.
Targeting Veterans: In January, the US Defense Department lifted its suspension of the University of Phoenix as part of the federal Tuition Assistance Program that provides financial aid to active-duty service members. In March, the Department of Veterans Affairs suspended DeVry University’s participation in program aimed at highlighting colleges that are friendly to veterans on the heels of allegations from the Department of Education and FTC that the for-profit had engaged in deceptive marketing practices. Bridgepoint Education, the parent company of Ashford University, was notified by the state of Iowa that it would no longer approve its programs for GI Bill benefits. At a Senate Armed Forces committee meeting in November, Senator John McCain accused the accusing the Pentagon of a “gross abuse of power” when it placed the for-profit University of Phoenix on probation last year. (Its owner, the Apollo Education Group is one of McCain’s top donors.)
Complaints Filed and Investigations Launched: The Justice Department launched a probe into Bridgepoint Education, which runs Ashford University and the University of the Rockies, to see if it had violated a law that prohibits for-profits from getting more than 90% of their revenue from financial aid. Minnesota education officials said they would review the for-profit Walden University, owned by Laureate Education, following complaints about the school’s marketing practices.
Criminal Charges and Prison Sentences: Three senior for-profit college executives of the Micropower Career Institute were sentenced in January on charges related to student financial aid and student visa fraud. The founder of the for-profit college FastTrain, was sentenced in May to eight years in federal prison for fraud. In October, the owner of the Dade Medical College was charged with improperly closing the for-profit school. He’d already pleaded guilty to charges relating to improper campaign contributions.
Fines Issued and Settlements Reached: DeVry University reached a settlement with the Department of Education and FTC over allegations that the for-profit had made unsubstantiated job placement claims. Now defunct American Career Institute admitted to engaging in deceptive marketing and violating state law in a settlement reached with the Massachusetts Attorney General. (The AG wanted some $25 million in fines levied against the school, but it’s now insolvent.) A judge in Minnesota ruled that Globe University and the Minnesota School of Business would have to close after the schools were found to have committed fraud. The Department of Education fined Bridgepoint Education $137,695 for a handful of financial aid violations. The Consumer Financial Protection Bureau also ordered Bridgepoint Education to forgive all private student loans and to refund all payments made on those debts – some $23 million in total.
Switch to Non-Profit: Non-profits, of course, are not subject to “gainful employment” regulations, and several schools sought to change their tax status. The Department of Education denied such a request from the Center for Excellence in Higher Education, a Utah-based chain of for-profits. Grand Canyon University briefly sought to change its tax status, but its accreditor would not support the move.
Layoffs: In January, the University of Phoenix and its parent company Apollo Education, said it had laid off 70 employees. In April, the University of Phoenix said it was laying off another 470 employees, about 8% of its workforce. In May, Education Management Corporation said it would lay off some 200 employees. In October, EMC announced it was laying off another 130 Art Institutes employees.
Closures: Education Management Corp said it would close 22 out of 26 of its Brown Mackie College locations. Marinello Schools of Beauty, announced it would shut its doors. Zenith Education Group, which bought some of Corinthian Colleges’ campuses, said it would consolidate or close at least ten of them. Brooks Institute, once owned by Career Education Corporation, closed. Cambria-Rowe Business College Career closed. Westwood College closed. Heritage College, a for-profit chain with ten campuses around the US, shut down. Mattia College closed. Point College in San Antonio closed. Colorado Heights University will close next year. These closures were due to a variety of factors, including losing accreditation and losing access to federal financial aid.
For Sale (Or Not): In January, news broke that the Apollo Education Group was seeking a buyer. Apollo is the parent company of the University of Phoenix, the largest for-profit university in the US but one whose enrollments have dropped dramatically over the last few years – from 460,000 in 2009 to 176,000 in 2015. The company had said last year that it would reorganize in order to be in better compliance with new Obama Administration regulations, including ending programs that would not not meet the new “gainful employment” rules. (It appears that some still do not.) The move would take Apollo Global Management off the stock market (meaning that publicly-available quarterly reports – one way that journalists have been able to scrutinize the school’s expenditures on, say, marketing versus instruction – would not longer be required). There was immediately speculation of who the buyer might be – Apollo Global Management, the owner of McGraw-Hill Education and Hostess Twinkies perhaps. Turns out, the new buyers would be a group of investors, including some with ties to the Obama Administration, including former Deputy Education Secretary Tony Miller. Their bid “raised questions,” as Politico put it. “There is at least a taste of unseemliness involved in this,” said one Department of Education official. Some shareholders were less-than-pleased with the potential sale (and/or sale price) – the largest shareholder opposed it, suing to stop the sale. Although shareholders finally okayed the sale in May, the Department of Education was slow to review it, finally doing so but with a list of conditions that might still torpedo the deal. The University of Phoenix’s accreditor, the Higher Learning Commission, still needs to approve the deal as well.
Meanwhile, enjoy the company’s new advertising campaign. Or scream at your television when you hear the University of Phoenix ad that uses Maya Angelou’s “Still I Rise” poem. That’s what I do.
Financial data about publicly-traded for-profits can be found at funding.hackeducation.com.
The History of the Future of Career Education
I plan to devote a whole article to the ongoing attempts to define (or redefine or codify or narrow) education as “job training” – what George Siemens has called “the employability narrative” – particularly around certain ideas of what constitutes “highly skilled.” And I plan to devote another one to efforts to rethink credentialing.
It is impossible to separate both of these issues – careers and credentialing – from for-profit higher education, past, present, or future. The origins of the industry can be traced back to the 19th century, to early “career colleges” established specifically to teach “commerce.” The curriculum of these commercial colleges was largely based around the demands of local employers alongside an economy that was changing due to the Industrial Revolution. Schools offered courses in bookkeeping, accounting, penmanship, surveying, and stenography. This was in marketed contrast to those universities built on a European model, which tended to teach topics like theology, philosophy, and classical language and literature. If these universities were “elitist,” the commercial colleges were “popular” – there were over 70,000 students enrolled in them in 1897, compared to just 5800 in colleges and universities – something that underscores what’s become a familiar refrain today: that “traditional” higher ed institutions do not meet everyone’s needs.
This long history of for-profit higher education – much longer than the heyday of its financialization in the 1990s – suggests that the industry is quite resilient, perhaps because it has so successfully for so long told a story about the promises of career training and credentials.
“Everyone should learn bookkeeping,” early career colleges urged. “Everyone should learn the real estate business,” Trump University insisted. And now, it’s “everyone should learn to code.”
Coding Bootcamps and the History of the Future of For-Profit Higher Education
“In 2016, The Coding Bootcamp Bubble Is Bound to Burst,” Wired predicted in January. It didn’t. In Edsurge, a co-founder of a coding bootcamp invoked the Gartner Hype Cycle, as one does I suppose.
According to Course Report, a Yelp-like review site for coding bootcamps, in its “2016 Coding Bootcamp Market Size Study” (released in June), the number of full-time coding bootcamps increased to 91, up from 67 the previous year. Course Report predicted that the market would almost double to an estimated 17,900 graduates, up from 10,300 in 2015. (Just so you get an idea of how accurate these predictions might be, however, Course Report was completely wrong about its projections in its 2015 report.) As the popularity of coding programs grew, so did their tuition rates, with the average tuition price hitting $11,451 and an average program length of around 13 weeks – that’s up from $11,063 in 2015 when the average program length was roughly 11 weeks. Remember: averages can be deceiving. Many programs are free, skewing the average tuition number down.
Coding bootcamps did open in new cities, and venture capital investment in the sector continued. (The two largest investments were $45,000,000 to Galvanize and $24,000,000 to Andela.) Acquisitions, often by for-profit universities, continued as well. Capella Education acquired Hackbright Academy for $18 million and Dev Mountain for $20,000,000. Strayer Education bought the New York Code and Design Academy for an undisclosed sum. (The for-profit Kaplan bought Dev Bootcamp and the University of Phoenix’s parent company bought The Iron Yard last year.) Fullstack Academy acquired Chicago-based coding bootcamp The Starter League. Bloc acquired DevBridge. General Assembly bought Bitmaker.
Financial data about coding bootcamps can be found at funding.hackeducation.com.
But it wasn’t all rosy. There were layoffs. And there was at least one major scandal:
In October, Inc published “The Strange and Sudden Disappearance of a Coding Bootcamp Founder.” The bootcamp in question was Devschool, whose founder disappeared with some $100,000 in tuition, according to students. Devschool had four stars on Course Report – something to think about when assessing the data that it touts about the size and success of the coding bootcamp market.
Are coding bootcamps worth it? Do they teach the skills they promise? Are those skills enough for a career as a programmer? How do we know? (There were several competing “standards” released this year, created by bootcamps themselves, that promise to measure “student outcomes.”) Do employers value coding bootcamps? Or are these programs just another, new for-profit scam? (A recent story in Bloomberg offers a hint: “Want a Job in Silicon Valley? Keep Away From Coding Schools.”) These questions – ones that echo those raised about the value of certificates from for-profit colleges – remain largely unanswered, particularly without independent evaluation.
Federal Financial Aid, Déjà Vu
“Should for-profit crash courses get federal funds?” The Economist asked in June in an article about coding bootcamps, forgetting, of course that for-profit crash courses already do. But we forget the history; we rewrite it.
In August, the Department of Education announced the selection of eight partnerships between higher ed institutions and “non-traditional providers” as part of its EQUIP (Educational Quality through Innovation Partnerships) experiment. These programs will be eligible for federal financial aid.
Considering the history of for-profit higher education and federal financial aid, particularly student loans, what could possibly go wrong?!
The selected sites:
- Colorado State University Global Campus working with Guild Education (Quality assurance entity: Tyton Partners)
- Dallas Community College System and StraighterLine (Quality assurance entity: CHEA Quality Platform)
- Marylhurst University and Epicodus (Quality assurance entity: Climb)
- Northeastern University and General Electric (Quality assurance entity: American Council on Education)
- SUNY Empire State College and The Flatiron School (Quality assurance entity: American National Standards Institute)
- Thomas Edison State University and Study.com (Quality assurance entity: Quality Matters)
- University of Texas Austin and MakerSquare (Quality assurance entity: Entangled Solutions and Moody, Famiglietti & Andronico, LLP)
- Wilmington University and Zip Code Wilmington (Quality assurance entity: HackerRank)
The “quality assurance entities” are supposed to be the independent evaluators of the program – accreditors of sorts. In August, Edsurge wrote about “How to Reduce Conflict of Interest in Higher-Ed Quality Assurance,” covering a report written by one of these overseers, Entangled Solutions. Edsurge did not go into any detail about the background of this organization, a venture fund run by Paul Freedman, who was himself investigated by the Justice Department in 2013 regarding a partnership between his for-profit company and a university. Entangled Solutions now employs Michael Horn, formerly of the Clayton Christensen Institute and an Edsurge columnist. Golly, hardly any conflicts of interest there at all.
Beyond the EQUIP program, coding bootcamps are also being approved to accept GI Bill money, again perhaps replicating the history of veterans’ educational benefit dollars flowing disproportionately to for-profits. The Nashville Software School was approved by the Tennessee State Approving Agency for Veterans Education and Training; Code Fellows received approval from the VA and the Washington state government to accept GI Bill funds for its coding bootcamp.
“Why Don’t Universities offer money back guarantees?” Roger Schank asked in March, responding to the ongoing Trump University case and questions about his involvement with it. “Does this make them as ‘fraudulent’ as Trump U?”
In fact, there are regulations surrounding these sorts of promises, as Inside Higher Ed’s Paul Fain recently wrote, “State and federal agencies … tend to take a dim view of money-back guarantees in higher education. After cracking down in past decades on colleges that made fraudulent promises of high-paying jobs for graduates, regulators generally prohibit colleges and even nonaccredited providers from offering such guarantees.”
Fain’s article was a response to MOOC startup Udacity’s promises that it first unveiled in January: “Earn a nanodegree credential and we will guarantee you a job within six months of graduation or give you 100 percent of your tuition back.” Udacity seems to have escaped regulatory scrutiny here – perhaps because it charges less than the minimum threshold to have licensing requirements kick in.
As I noted above, I’ll turn to “the history of the future of work” in a subsequent article in this series, but it’s worth underscoring here how powerful these promises can be – powerful marketing to students as well as powerful narratives that might serve to boost the legitimacy of these “alternative providers,” who can ask as Schank does “Why don’t all colleges do this?”
Why do students choose for-profits?
In part, many do not recognize this distinction – for-profit or not-for-profit. There’s little counseling – career or college counseling – particularly for students in low-income and racially segregated schools. There’s a lot of advertising – sigh, Maya Angelou – and after a while, a familiarity with the names you hear in ads on TV, see in ads on the subway. There’s high pressure marketing. There are also incentives – the requirements of other government assistance programs – welfare, GI Bill benefits, for example – that have pushed students towards short-term certificate programs and towards for-profit schools. For-profits were, in the US at least, quick to offer online courses, something that appeals to working students’ schedules.
Mocking these students – those who’ve gone into debt for degrees from the University of Phoenix or for webinars at Trump University – helps no one. Understanding why these schools – including coding bootcamps – are appealing is crucial, even if we know that appeal can be deceptive.
For-profits, as education professor Susan Dynarski has written, “enroll a disproportionate share of disadvantaged students, who are more likely to drop out and default on their loans. But research shows that these schools perform even worse than we would expect, given the characteristics of their students.” Research published this year also suggested that those who enroll in for-profits see a decline in earnings and an increase in debt compared to their earnings before enrollment. That is, students are worse off for attending for-profits. Worse off.
Pre-order Tressie McMillan Cottom’s forthcoming book, Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy, for a sociological ethnography of educational inequalities that these schools and their accompanying narratives rely upon.
In the meantime, here’s what one venture capitalist sees as the future of higher education:
The distinction between #forprofit and #nonprofit #highered is already blurred and will become more so #freecollege https://t.co/wSnwQpCp0x— Daniel Pianko (@danielpianko) August 3, 2016
So you know where ed-tech's money is gonna be.
Financial data – including lobbying and funding figures – can be found on funding.hackeducation.com.