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Protecting Higher Ed as a Public (Not Private) Good

By Neal Modi | February 28, 2012 | No Comments

There is more than one reason to invest in public higher education.  Public higher education is, as the name suggests, a public good.  Thus, it should receive appropriate, if not full, public funding.  But there’s a new, equally important reason why our public schools need to be funded.

In a new study out of the University of California, Berkeley’s Center for Studies in Higher Education, John Aubrey Douglass has found a compelling, unique reason why public education requires a renewed focus: the rise and state support of for-profit higher education institutions.  (See NDPPAC’s recent Strategy Paper, “The Engine of the Future,” which laid out as a fundamental principle the need to strengthen public education and reinforce government as “the essential player in higher education.”)

Named the “Brazilian Effect” after the similar phenomenon in Brazil where over 50% of colleges are for-profit institutions, Douglass points out a severe supply-and-demand crisis affecting our universities.

As our higher education system, built around expansive public college and university systems, continues to receive less and less money from state coffers,  those institutions, he finds, cannot keep pace with growing public demand for programs, certificates, and degrees.  As a result, governments across the country have permitted for-profits to satiate the demand.  At times, these for-profit institutions, which have received much negative publicity and even recent Congressional investigation, become the dominant education provider for a particular region, if not the only provider for a particular skill set.

On the surface, this might not seem concerning.  We are meeting the demand (the argument goes) for all of those who wish to pursue a higher education.  Yet upon closer review, this is a worrisome trend.

While some states have used tax-payer money, tax-breaks, incentives and other measures to encourage the rise of for-profit institutions to fill the demand left unfulfilled by public schools, they have not tied any form of accountability to such incentives.  In other words, many of the nation’s for-profits have poor graduation rates, poor quality of their degrees and simultaneously leave students in severely high debt and with few employment prospects or opportunities even while they receive state support.

Certainly, this is troubling.  As we place less emphasis on our public schools, our state governments have subsidized for-profits to emerge. But this is poor higher education policy since no accountability exists. John Douglass says it best when he comments: “The result now, and in the future, is a kind of policy default: the future tertiary [higher education] market will not be the result of a well thought out policy at the national or state levels, but a quasi-free market result that will foster lower quality providers and fail to meet national goals for increasing the educational attainment levels of Americans.”

In the past decade, the for-profit education sector grew 235%. Here in Virginia, we have a number of such schools (e.g., ITT Tech, Everest College in Newport News, and Centura College in Virginia Beach among others).  According to one VCU report, such schools have the highest loan default rate of any institution-type in Virginia, with some as high as 23%.

At a minimum, this important trend raises serious questions and calls for our state to support our public institutions even when quasi-free market alternatives seem more enticing.

Overall, quality should not come at the expense of profits. While for-profit schools benefit from government money and continued enrollment, many of their students have not benefited. The rise of for-profits is a trend we must all look after and as the facts show, they do more harm than good.  These schools have serious consequences for socioeconomic mobility and economic competitiveness in our society.  At best, they present a new, strong argument for why more money in public higher education is crucially necessary.


Disclaimer: The opinions expressed in this post are those of the author, and do not necessarily reflect those of members of the NDP Steering Committee.

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