Profit Is Good

A common defense that some conservatives make of for-profit schools is that these schools are a reflection of the market; tecent criticism of the for-profit education industry is driven by some fear and loathing of profit itself. Or, as Andrew Ferguson wrote, in a piece called “Obama’s Crusade Against Profits,” in the Weekly Standard:

What brought all this on? Like an idiot, the proprietaries have been making too much money—and making it, moreover, at a moment that promises to be a hinge point in the history of American higher education.

Is it really too much money, however, or is it just the wrong sort of money? A GAO report issued earlier this week suggested widespread recruiting abuse across the industry.

At almost exactly the same time, however, the Center for College Affordability and Productivity released another paper about America’s proprietary schools. Proprietary schools have a long and distinguished tradition all over the world, the paper explains:

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, known as sophists, 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, which was particularly prominent in Athens.

Ah yes, Athens, cradle of both democracy and, um, the University of Phoenix. In fact the sophists, who were notorious for for teaching youth how to argue convincingly without regard to logic or factual accuracy, were more like private tutors than for-profit academies. But duly noted, making money on education has a long tradition.

Perhaps the more relevant position comes from recent history, however. In yesterday’s hearing of the senate committee on Health Education, Labor, and Pensions (HELP) the committee’s chairman, Sen. Tom Harkin (D-IA) spoke for a moment (begins at 233) about the history of America’s proprietary schools. As far as he could recall,

When I was a young man, we had a lot of for-profit schools. In the 50s, 60s, 70s. These schools were schools that provided an avenue for students that didn’t want to go to a four-year college to get an engineering degree or a liberal arts degree or something like that. They wanted an occupation. And so we had these schools that—well at that time—taught women to be secretaries and stenographers and nurses’ assistants, and taught men to be welders and truck drivers. Not every student was suited for a four-year college or a general degree but they could do an occupation.

And quite frankly a lot of these for-profit schools did a good job in that area. But also in the 60s, 70s, 80s in transitioning the workforce in America. A workforce that was moving from one type of employment to another type. These were older people. Older workers. Maybe their skill set was no longer needed; they needed to learn another skill set. These for-profit schools provided that and helped us transition from one economy to another.

But that was then. Today we see a different system and setup with these for-profit schools. Because at that time we didn’t have so many Pell grants and guaranteed student loans and all that.

This is an interesting point. America needs for-profit schools. They’re innovative and convenient. Businesses need schools to train people to do the jobs that exist.

But it’s very hard to raise money for this sort of thing. It’s hard to gather private funding; no millionaire gets excited about a center for automotive repair named in his honor. Even public funding is difficult to raise because a vocational center just doesn’t look that attractive to a community.

And in order to build these institutions it’s good to offer some financial incentive. If someone can make a buck off a school and the school gives the community what it needs, that’s a success.

Is that the common situation now? In fact it increasingly appears that for-profit colleges have highly socialized profit margins and mixed–not awful, just mixed–results.

It’s okay if people make money. Making money is great. But who’s losing money?

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer