Obama's school spending brings out the carpetbaggers

With the Obama administration pouring billions into its nationwide campaign to overhaul failing schools, dozens of companies with little or no experience are portraying themselves as school-turnaround experts as they compete for the money.

A husband-and-wife team that has specialized in teaching communication skills but never led a single school overhaul is seeking contracts in Ohio and Virginia. A corporation that has run into trouble with parents or the authorities in several states in its charter school management business has now opened a school-turnaround subsidiary. Other companies seeking federal money include offshoots of textbook conglomerates and classroom technology vendors.

Many of the new companies seem unprepared for the challenge of making over a public school, yet neither the federal government nor many state governments are organized to offer effective oversight, said Jack Jennings, president of the Center on Education Policy, a nonprofit group in Washington.

“Many of these companies clearly just smell the money,” Mr. Jennings said.

Rudy Crew, a former New York City schools chancellor who has formed his own consulting company, said he was astonished to see so many untested groups peddling strategies to improve schools. “This is like the aftermath of the Civil War, with all the carpetbaggers and charlatans,” Dr. Crew said.

The Obama administration has sharply increased federal financing for school turnarounds, to $3.5 billion this year, about 28 times as much as in 2007. Secretary of Education Arne Duncan is pushing to overhaul 5,000 of the nation’s 100,000 public schools in the next few years.

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The Assault on For-Profit Universities

President Obama and Education Secretary Arne Duncan want the United States to lead the world in the percentage of people who graduate college by 2020, which will mean increasing by at least 8 million the number of students completing college over the next 10 years. President Obama noted in a speech yesterday that by “making college affordable … we’ll reach our goal of once again leading the world in college graduation rates by the end of this decade.”

But new proposals for regulating the for-profit higher education industry outlined by the Department of Education could actually have the opposite effect. For-profit higher education is serving the needs of students, as evidenced by the significant increase in enrollment over the past two decades.

According to a new report by the Center for College Affordability and Productivity, since 1986 alone, enrollment has increased nearly sixfold and has now reached nearly 1.8 million students. While traditional public universities and nonprofits have grown just 1.6 and 1.4 percent (respectively) each year, for-profit institutions have enjoyed an 8.4 percent annual growth rate. This growth rate has been achieved because for-profit universities serve a wide range of student needs, from more traditional degrees to vocational and technical schools. According to a new report:

Traditional universities are configured as non-profit organizations whose stated mission often invokes a service of the public good. In contrast, for-profits are structured as profit-maximizing firms whose success depends of providing a valuable service to the student/customer. For-profit institutions can only be profitable if they are able to provide a service that is valuable to the student.

While there are likely bad actors in the for-profit industry, the Department of Education has proposed capping costs at any for-profit that receives federal subsidies. This would affect virtually all for-profit, private higher education institutions since nearly all of them accept students who receive federal subsidies in some form.

But what would this mean for achieving the Administration’s goal of increasing the number of college graduates? For-profits have been particularly popular among those students historically underserved by the traditional college model. African-American and Hispanic students are enrolling in for-profit universities at a greater rate than in traditional universities, and female enrollment in for-profit institutions has skyrocketed in recent decades. For-profit institutions also serve non-traditional students who are often older and have to work full-time jobs outside of their academic pursuits.

But the Obama Administration argues that increased regulation is also needed in the for-profit sector because students attending these schools tend to default at higher rates than students in traditional four-year institutions. This is true: Average default rates for students attending for-profit schools stood at 11 percent in 2007, compared to just 5.9 percent at public universities. But some argue that these higher default rates are a function of serving a student population that has been shut out by public and nonprofit institutions.

Neal McCluskey over at the Cato Institute points out that in a recent Congressional hearing about the for-profit industry, Senator Tom Harkin (D–IA) stated that “GAO’s findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight.” But findings from the GAO’s investigation, released just last week, found that “results of the undercover tests and tuition comparisons cannot be projected to all for-profit colleges.”

So the question becomes: Is it the profit in for-profit that has the Administration uneasy?

Federal subsidies for higher education have increased significantly over the past several decades. But—probably as a result of those increases—so has tuition. It has become a vicious cycle whereby the federal government increase subsidies for college, increasing students’ purchasing power, in turn allowing universities to raise tuition, which increases the demand for student subsidies. For some students, the for-profit market has broken this cycle, eliminating a barrier to entry to postsecondary education.

While there are certainly bad actors—as with any industry—the answer isn’t to expand federal control and regulation over an industry that is meeting the needs of millions of students. The answer is to increase transparency and information about what students can expect to get in return for their investment in these schools. Vedder et al. said it best in their report:

The roots of market-based education stretch as far back as classical Greece in the fifth century B.C., when proprietary schools and traveling teachers for hire … provided instruction to students willing to pay for their services. The Greek citizenry’s growing demand for educational services combined with the freedom of educators to establish private for-profit schools led to the emergence of a nimble educational system. … In response to the needs of the students and their families, educators taught the subjects students wanted to learn.

One-size-fits-all approaches don’t work in education, and they certainly don’t work in the higher education industry. If the Administration really wants the United States to lead the world in college graduates, all options should be allowed to flourish to meet the needs of students.

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British university funding cuts of 35% will be worst since the Great Depression

Students face a major increase in the cost of studying for a degree as universities prepare to be hit with the worst cuts to their budgets since the Great Depression of the 1930s.

Undergraduates face being taught in 'crumbling' lecture theatres or at home over the internet, despite having to pay more for a university education.

Universities have been told to prepare for a cut of 35 per cent to their funding over four years – equivalent to cash per student being slashed from £5,441 a year to £3,537. The cuts would represent the biggest loss of resources since the 1930s cutbacks, higher education experts claimed yesterday.

Universities say they would be forced to scrap courses, crowd more students into lecture theatres and neglect facilities such as libraries and computer suites. Thousands more undergraduates would be required to study at home using internet resources.

Institutions are also likely to look abroad to recruit new students to help compensate for the loss of public funds. Meanwhile home students face a significant increase in the cost of going to university, to be repaid after graduation. Fees for 2010/11 are £3,290 a year, up from £3,225.

The cuts warning came in meetings between Cabinet Secretary Sir Gus O'Donnell and university chiefs, according to the Times Higher Education magazine.

Chancellor George Osborne will confirm the scale of cuts for all Whitehall departments in October but Sir Gus has told universities it would be ‘prudent’ to prepare for a 35 per cent cut between 2011 and 2015. Ex-BP boss Lord Browne will report on the future of student finance in the autumn.

Professor Roger Brown, an expert in higher education policy at Liverpool Hope University, said cuts would lead to ‘increased student-to-staff ratios and greater pressure on physical resources, such as libraries’. The prospect of cuts to facilities budgets spells a ‘nightmare scenario’, he added.

‘You are charging students more – assuming fees will go up after the Browne review – and at the same time they are being taught in crumbling lecture theatres.’

Professor Gareth Williams, a higher education expert at London’s Institute of Education, said: ‘If the numbers quoted are realised, it would be far worse than anything universities have experienced since the 1930s. ‘In terms of expenditure per student, it is far worse than anything in recent memory.’

Students could increasingly be taught via distance learning, studying mainly at home and attending campuses less frequently, he suggested.

‘It probably would be possible to provide the basic training that goes on at most universities at the sort of price that is being talked about. ‘But it would be a very different student experience from what we take for granted. It raises big questions about the nature of a university experience, what a university is for, why people go to university.’

A Cabinet Office spokesman said: ‘The Cabinet Secretary’s advice to everyone in the public sector is that, until we find out exact budgets in the autumn spending review, it would be prudent to prepare for cuts at the higher end of the range.’

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