Educational Profit and the Common Good?

Vice-President of Instruction, San Bernardino Valley College
Riverside College, Executive Committee

In August 2009, California Community College Chancellor Jack Scott terminated a Memorandum of Understanding with Kaplan University that had become unpopular and was vilified even before it was initially signed nine months earlier. Initial conversations between Kaplan and the Chancellor’s Office had begun with now-retired Vice Chancellor Carole Bogue-Feinour. When Chancellor Scott signed the MOU, he understood the agreement to be uncontroversial and a potential benefit to California’s community college students, especially those struggling to get a last required class or two in the midst of the broadest cutbacks to California community college access in memory. It appears that virtually no students took advantage of the “opportunity” provided by the agreement, largely because of questions about course articulation with CSU and UC, and cost.

Reflecting on what community colleges might have learned from the experience, it is now clear that the entire affair served to magnify awareness of the potential pitfalls of proprietary education and has initiated a lively discussion among members of the Academic Senate, Chief Instructional Officers, and even local Trustees. As it turns out, Kaplan is only the tip of the iceberg, or rather, multiple icebergs rising-up in the path of our students. The Kaplan agreement has much broader significance on at least three fronts: affordability and access, diversity, and accountability.

Affordability and Access

Using the Kaplan Agreement as a starting point, Kaplan fees were not very alluring for most traditional community college students. The Kaplan fee came to about $650 for a three-unit class as compared to $78 at a community college. The gap in fees constituted a sizeable difference. For students who need only one or two more classes to complete a degree or certificate at their local community college, taking a course at a proprietary institution, where sections are available, could be tempting. The temptation is all the greater due to the slick advertising and aggressive marketing of so many “for-profit” colleges. For those who chose to attend Kaplan, perhaps the fee difference was tolerable because it meant that they were able to graduate or transfer a semester or two earlier than would have been the case waiting for access to a needed community college class. The difference in cost for a full-time semester would have been substantial, costing $3,240 at Kaplan and $390 at a community college, a difference of over $5,000 per year.

It is no secret that many proprietary colleges boast of their affordability because they persuade students that they can afford high fees through the use of federal financial aid, especially in the form of loans. Nudging community college students down the very slippery slope of borrow today and pay—whenever! (if ever)—is hardly the form of financial education we should aspire to for our students. Additionally, the past decade has seen a general shift of federal resources (in the form of financial aid) away from public higher education toward the support of “for-profit” institutions. Even as our State Legislature is debating 6 – 14% reductions in funding for community colleges, institutions such as University of Phoenix have grown over 200% in the last five years… with fully 80% of its operating revenues coming in the form of federal financial aid. Who is “footing the bill” for this shift? Taxpayers. Taxpayers, who are financing the growth of “for-profit” education, sometimes to the tune of 600% per section more than at a public institution. Who else is “footing the bill?” Students. Students like those at Everest College, a “for-profit” trade school consortium whose San Bernardino campus suffered the largest percentage of federal loan defaults of any two-year college in California last year.


It is also no secret that for several years now, African American and Latino students have been transferring in large number to University of Phoenix rather than CSU or UC. Not only are private proprietary institutions more costly than community colleges, but CSU and UC are also more expensive, so it would be more difficult to defend public four-year colleges compared to private proprietary schools solely on the basis of cost. Nevertheless, heavy, targeted marketing promoting the myth that “private” institutions offer superior quality instruction to that of public institutions, along with the promise of job placement, have led to the financial ruin of thousands of ill-prepared students and the awarding of many dubious degrees and certificates.

For some students and some programs, it might be that proprietary institutions—the Argosys and Phoenixes of the world—are a better fit. Part of a college education, however, is also the experience that students gain outside the classroom, and virtually all of that experience is lost for students who transfer to primarily online proprietary institutions. It seems a significant inequity for African American and Latino students to bypass that experience through disproportionate reliance on proprietary colleges.


Anyone who has been on a California community college campus recently can attest to the relentless emphasis on “accountability,” whether the result of state mandates (Accountability Reporting for Community Colleges) or accreditation guidelines. Those community colleges which have been sanctioned by the Accrediting Commission for Community and Junior Colleges (ACCJC) in the past few years could no doubt account for thousands of tax dollars spent, not on educating students, but on complying with accreditation standards. In this climate, it is beyond comprehension how colleges lacking basic facilities (counselors or libraries) and abysmal completion and loan repayment rates, could be regarded as a credible alternative in American higher education when California community colleges are sanctioned for infractions that are miniscule by comparison. The fact is that many proprietary schools lack accreditation. While these unaccredited institutions do not qualify to receive federal financial aid, they draw students with promises of “scholarships” and private bank loans. For students and parents not versed in the vocabulary of higher education and unaware of the relative worth of the degrees and certificates they are pursuing, these institutions can appear to be centers of prestige and opportunity.

In August, 2010, the General Accounting Office (GAO) released a report titled, “Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.” The report was challenged by a number of political and corporate interests, leading the GAO to submit an amended report just a few months later. Nevertheless, both reports provided “eye-opening” information that begs greater scrutiny of “for-profit” institutions. Beyond the claims of fraudulent practices, like applicants being encouraged to falsify financial aid forms, the report revealed that in 2010 alone, students at “for-profit” institutions received more the $4 billion in Pell Grants and $20 billion in federal loans. The sheer enormity of federal tax dollars suddenly flowing into proprietary schools is cause for concern about the value both students and citizens are getting from this investment. The report revealed that the growth in “for-profit” education has been dominated by fourteen corporations worth more than $26 billion. While there is nothing inherently wrong with proprietary education, the GAO investigation pointed to the dangers wrought by a system in which employees rely on their continued employment through a marketing and recruitment cycle built on continuous growth and retention. In fact, just two months after the termination of the agreement with California Community Colleges, Kaplan University laid-off nearly 800 employees nationwide. Instability in the business model of many “for-profits” raises questions about the quality and sustainability of their product.

Most recently, the Department of Education has proposed “gainful employment” regulations which would eliminate federal assistance to institutions whose graduates have high debt burdens and low loan repayment rates. “For profit” lobbyists are opposing the new regulations with a multi-million dollar advertisement campaign. However, even a casual observer would recognize that spending $30,000 for a certificate for a job that pays $32,000 per year, and saddles that student with $3,500 in debt payments per year for the next decade, is a losing proposition. Yet, this is precisely the deal many students find themselves in when attending a “for-profit” institution.

The Bottom Line…

It is clear that Americans have developed something of an infatuation with proprietary colleges, which is the result of an ideological assumption that activities taken under the profit motive will automatically produce superior results. Americans have long appreciated free enterprise, but we have also considered some areas of life as not driven primarily by the profit motive. The recent shifting of so much of our education system to large corporate entities has not made Americans better educated any more than the growth of corporate health care has made us healthier. The process has simply refined the art of narrowing services to those most able to pay for them or obtain federal assistance to finance them, a system that is not sustainable over the long run. Increasingly, we run the risk of promoting a system in which only the wealthiest and most educated members of society will have access to the best and most storied institutions, while the poor and least educated will only have access to third-tier for-profit schools, along with their debt, all to the detriment of accessible, quality, public higher education.

Given the history of institutions like privatized prisons and community services, the rise of private corporate interests into the world of higher education is not an auspicious sign, for students or for society. It is not the case that all human activity is best motivated by the desire to profit. Of course, proprietary education is not intrinsically evil. There are many legitimate and quality for-profit institutions that have served students well in California for decades, some for the better part of a century. The task for community college faculty, administrators, and advocates is to assist our students and communities in understanding the potential pitfalls and risks posed by attending for-profit institutions. Actively educating and protecting our students from the actions of deceptive, questionable, and fraudulent “competitors” has not historically been a necessary priority. However, in these turbulent and uncertain times, our vigilance in defending our students and the mission of California Community Colleges has never been more crucial.