Today’s Congressional hearing on for-profit educational institutions is raising questions of finance, accountability, and technology. The most unethical for-profits, who Sen. Franken has dubbed “bad actors,” show us the worst-case scenario of our times.
The bad actors have capitalized on trends of joblessness, educational expansion, on-line learning, and easy access to student loans. A lack of financial regulation and shady accreditation practices allow for-profits to be predatory. They use high-pressure sales tactics and make questionable claims in their advertising as they seek financially and educationally under-prepared adults to enroll. Through targeting this population, the bad actors access billions in federal aid, much of which will never be repaid. In the worst cases, documented by PBS Frontline in College Inc, students are defrauded by educations that fail to provide adequate training, and with degrees that lack professional legitimacy. Low graduation rates, alumni unemployment, and loan defaults are problems that fall to students and taxpayers. In a sick twist, these problems have buoyed profits on Wall Street until recent hearings, which threaten to end unregulated access to federal aid.
According to PBS Frontline’s College Inc.:
• Federal aid accounts for 75% of for-profit revenue
• For profit schools represent 10% of students and 25% of federal aid
• Students at for profit schools carry on average $30,000 in debt, far higher than rates at traditional schools
• While the industry claims a 10% loan default rate among its alumni, other estimates approach 50%
• For profit schools represent 10% of students and 44% of loan defaults
The bad actors certainly need to be held accountable. But I believe we also need to look at the pathological system that structures opportunities for such action. These hearings are not only indicative of the current economic crisis and the predatory lending practices that fuel it. They hearings highlight structural problems that will shape higher education in the years to come — the demographic expansion of higher education, the spread of vocationalism, and how on-line technologies will facilitate the process.
In the next series of posts on Slow Knowledge, I’ll be examining the relationship between slow knowledge and money when information wants to be free. Is the Internet or the market to blame for the “fastfoodization” of knowledge? Are Edpunks “useful idiots” in the privatization of higher education? How can traditional institutions make slow knowledge relevant in a world of fast information? Stay tuned…