Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments.” 

In the entry describing the coming technology tsunami (#319), I suggested a way to help mitigate the impact of the inevitable tsunami was increasing support for public education. Here’s another aspect of public education that needs more discussion.

Do for-profit universities help prepare students for the coming technology tsunami? My view? No. First, let’s define for-profit universities, or FPU`s. These are institutions with a primary purpose of making a profit for investors. In an FPU, education happens to be the product. The product to generate a profit could just as easily be processing waste – e.g., Waste Management Incorporated – or selling coffee – e.g., Starbucks.

While doubtlessly some FPU’s are well-intentioned and focus on educating students, let’s not forget the primary purpose of any for-profit company. Duh, sell a product/service, make a profit and return money to investors.

But you ask, “What about private colleges and universities? Aren’t they in business to make a profit? I mean, Harvard has a huge endowment — maybe $10 billion or something?”

Harvard’s endowment is more like $35-40 billion.

“Alright, lots more endowment than I thought. I’m confused. What’s really the difference between Harvard or MIT and say Trump University? Maybe Trump University is a bad example, but what about say University of Phoenix? It’s for profit and from what I can tell, University of Phoenix does more public good for lower-income people than either Harvard or MIT. University of Phoenix educates a lot of people who otherwise could not attend college. Your argument against for-profit universities sounds elitist.”

Agreed that University of Phoenix seems a lot more affordable than many private education institutions. But such an argument creates a false equivalency. Realistically, 99.9% of the students attending University of Phoenix could not qualify academically to attend the top-end academic institutions in the US. Not being qualified academically does not mean these students are dumb; they lack demonstrated skills in key areas.

Maybe the better question about public good is, “When all the costs are taken into account, is there a less costly and more effective alternative to teach basic skills than such places as University of Phoenix?” Let’s also be honest about education and skills. Not everyone has the same skills or can even acquire the same skills. My crayon jungle drawing from grammar school might have won 2^nd place prize at the county fair, but no amount of training is going to make me a successful professional artist.

From a public good perspective, how can we… the proverbial societal “we”…make sure all students have an opportunity to learn basic skills that will enable them to secure and retain a reasonably well-paying job? While everyone in the US is supposed to have access to free public education through high school, a remarkable percentage of students do not complete high school.

As of 2016, the high school drop-out rate was 25% or more in some states. (When reviewing the data by state, reported graduation rates in some states seems highly inflated…or the standards to graduate in those states are exceedingly low.) Lots of reasons for not finishing, including recognizing that not all students learn at the same rate or the same way. In addition, some families have such limited income that children must work to help support the family as soon as possible, even if it means dropping out of high school.

While the reasons may vary for dropping out, should society ask these students to pay to finish their education, especially through for-profit institutions? Asking them to pay a very high price just to finish their high-school education is a disincentive to complete the degree. Plus the cost of attending remedial classes at a for-profit institution creates an excessive financial burden on someone who’s likely to be earning low wages and have little or no savings.

Wouldn’t society be better off to pay for their education? Paying to complete high school would provide those who didn’t finish a better opportunity to secure higher-paying jobs and, with those jobs, pay more taxes for their entire life. Providing an opportunity to complete high school and maybe two years additional education at no cost could likely help reduce crime and the cost of incarceration.

As noted in Entry #326, the estimated cost of incarceration per prisoner per year ranges from roughly $30,000 to $60,000. Based on the analysis described in Entry #326, paying for prisoners to secure a technical degree or college degree while incarcerated resulted in a return on investment to taxpayers of 400-700%, and possibly higher.

“OK, I’ll buy your logic but what’s wrong with using for-profit universities to offer such some education? Besides, the private sector is always more cost-effective than government.”

Why use public education rather than private for-profit institutions?

1. No additional facilities required to host classes. The remedial, technical and early college classes could be held in the evening and/or weekends using existing high school, junior college or some government buildings. Virtually all of these buildings are used more during the day and have surplus capacity in the evening and on weekends.
2. Alternative teaching methods in place. Virtually all public school systems have implemented alternative teaching methods, which could be adopted for older students who learn differently.
3. Public education does not add additional financial burden on the student. University of Phoenix, for example, charges about $1,200 per course. For student needing say ten classes to complete high school (equivalent about one year), the cost using the University of Phoenix rate would be at least $12,000. What may be even more of a problem for these students is the course material for what is usually a semester course – say 3-4 months – is crammed into five (5) weeks. Cramming material into five weeks leaves virtually no time for course material to “sink in.” Think of drinking out of a fire house. If a student does not fully grasp the idea when presented, the student is immediately behind. For institution like Phoenix, this approach can lead to the same person attending yet again…and another tuition payment.
4. Class content can be tailored to help prepare students to continue their education in community college programs, whether technical training or prep for college.

The question posed in the title of this Entry, “Do for-profit universities help prepare for the coming technology tsunami?” I continue to say, “No, these institutions do not.” As frustrated as we sometimes are with the public education system, the system is designed for the public good…and not to generate a profit and provide (some believe maximize) a return to investors.

The US needs to prepare for the oncoming technology tsunami. One key component of preparation is to increase the number of qualified workers. Much like educating prisoners, providing classes/remedial training to those who have not completed high school is in the public interest by increasing at very low-cost, the pool of skilled workers. A larger pool of skilled workers is essential for the US to maintain production of goods and services and remain competitive worldwide.

What about for-profit institutions designed to train people to become technicians, designers, hairdressers and a host of other occupations? Don’t these for profits offer a benefit to the public? Possibly but maybe a more cost-effective approach is to the scope of public education to include such training. (The question is a bit off-line from the more serious issue of preparing for the technology tsunami. I might offer a few thoughts in one of the next couple of entries.)