The Meaning of the Failure of the Online For-Profit Universities

Corinthian Colleges have been forced to close their “doors.”

As I reported in this blog several years ago, the Washington Post Corporation, which had derived between 50% and 60% of its annual profits from its ownership share of Kaplan University quietly sold off its stock just ahead of the formal release of the Harkin Report which signaled the bursting of the online for-profit “bubble.”

This week, the stock price of the Apollo Group, which operates the “flagship” institution of the online for-profit universities, the University of Phoenix, declined by almost 30% in a single day—charted hour by hour in the following chart from CNN Money:

Appolo Stock Price Decline

The stock price fell on the news that enrollment at the institution has fallen from 460,000 to 213,000 over the past five years. That’s a decline of 53.7%.

One wonders how many of those students currently identified as “enrolled” are actively enrolled, how many of those students are full-time, and how many of the full-time students are enrolled in certificate and associates programs, as opposed to baccalaureate or graduate programs.

This is the institution and sector that was supposed to transform higher education—that was supposed to put all of our institutions out of business.

So, in light of this news, I would like to ask several pointed questions:

1. Are any administrators at our institutions ever going to admit that they were dead wrong about this supposed existential threat to our institutions?

2. Are any administrators ever going to be held accountable for being so incompetent that they did not recognize the business model of the online for-profits for what it has always very clearly been—a sham effort to squeeze as much profit as possible from federal aid to students?

3. Are any administrators ever to be held accountable for so over-responding to this supposed threat that they have made us more like the University of Phoenix than we ever should have become?

4. Are any administrators going to engage in some fresh strategic planning that begins with this simple question: If the online for-profit institutions are not the existential threat that we described them as being, how much of what we have been doing in response to that threat is actually necessary and, furthermore, how much of it has been of any substantive benefit to our institutions?

5. Are any Far Right governors or legislators ever going to admit that this sham provision of higher education was made possible by the perpetuation of an unquestioning ideological belief in the privatization of public services and in the relentless reduction of state support for public education?

6. Is anyone in government, at the federal or state levels, going to step back from an unquestioning acceptance of the assumption that technology can solve any problem and improve any human endeavor?

7. In light of the abject failure of the online for-profits to achieve anything beyond a remarkably uniform disappointment of all expectations, is anyone going to start reconsidering any number of other, subsequently introduced “innovations” touted by the “educational reformers”? What about charter schools, standardized testing, MOOCs, competency-based education, and the de-professionalization of teachers and faculty as a necessary prerequisite for improving teaching?

Is anyone going to step away from the ideological talking points and the billions of dollars of potential corporate profits in the “educational sector” and reassert that education is a public “good”– not in the sense of a commodity but, instead, in the sense of one of the fundamental moral obligations that we must meet as a free and an egalitarian society.

Although we obviously cannot turn back the clock, that reality should not mean that we are now doomed to perpetuating the same fundamental errors into perpetuity, or until we have wrecked everything.


6 thoughts on “The Meaning of the Failure of the Online For-Profit Universities

  1. The privatization of public functions has been going on for quite some time, with little benefit to the public, and often a diminishing of basic rights. Consider the notion of for profit prisons which are contractually guaranteed an occupancy right but which are not covered by the rights prisoners held by state or federal officials are guaranteed, for example. We saw a private toll road built in Virginia that had to be bailed out by the Commonwealth but not before enriching its founders. The charter school movement has been totally perverted to the point that operators of charter school chains have been able to successfully claim in court that when it comes to transparency and audits they are NOT public even though the vast bulk (if not all) of their input funding is from tax dollars. Oh, and the sham of being “non-profit” in name only when ALL functions are done under contract to for-profit entities.

    Then we have what the previous administration did in Virginia, which was to require the taking of an online course as a condition for graduation from a PUBLIC high school in the Commonwealth, even though the providers of such courses are by and larger PRIVATE for profit entities.

    Why voting matters. And why the corruption of our politics by the mass of money of those who seek to feed themselves in one way or another from the public trough while taking away any benefits for those without their wealth and power, is leading the destruction of this nation as a liberal democracy.

  2. One more point. When I use the term “liberal democracy” I am using it as a technical political science term.

  3. As Ken says, this has been going on for some time, and represents a kind of white-collar welfare – fraudulent diversion of gov’t resources by gaming the system (although I’m a little uncomfortable with the implicit demonization of welfare in that sentence, I’ve been sitting here for several minutes & can’t come up with a better formulation).
    I’m afraid to say that personal responsibility/accountability never applies to administrators, or really the upper middle class in general, so I expect this transfer of wealth from the goverment & student debt to corporations will be swept under the rug. As for the propagation of the scam, and the alacrity with which politicians got on board, I think we can point directly at journalism-by-press-release.
    Thanks, Martin, for taking things I’ve been grumbling about incoherently for months & putting them into words.

  4. Pingback: Sound-Bite Pronouncements on the Present and Future State of Higher Education | The Academe Blog

  5. Pingback: Because I Am Apparently a Masochist | The Academe Blog

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