Across the United States, public education has been under consistent assault. K-20 budgets have been cut, teachers’ unions have been attacked, political agendas have been pushed onto education, and educators have been vilified. One reason for this assault is to open the education “market” to allow opportunities for profit. As such, the rise of for-profit schools is hardly surprising. I last wrote about the for-profit university Full Sail back in 2012 and thought I would check and see how it, and other such schools, are faring.
We need to distinguish between the traditional private school, such as Marietta College, and for-profit schools. While for-profit schools are privately owned, they are operated differently than the traditional private schools. The most obvious difference is that their focus is profit.
There is the beloved myth that the profit motivated private sector can out-perform the allegedly inefficient and bloated public sector. However, the facts show that for-profit schools often stack up poorly against public schools and traditional private schools.
Back in 2012 Mitt Romeny praised Full Sail University (whose chief executive was a major campaign contributor). I also checked in on Mitt; he seems to have settled into a quiet retirement from being meaningful in politics. Back when Mitt praised Fulll Sail, I looked up their statistics and found that some Full Sail graduates were defaulting on their college loans at a rate of up to 60-75%. Back then, the government pushed for for-profit schools to achieve a graduate loan repayment rate of 35%, which is not an onerous requirement. As for why Full Sail graduates had a bad repayment percentage, the average debt of a graduate was 300% to 800% of her income. The 2026 data from the Department of Education reports that Full Sail has a 46% graduation rate, which is lower than the 58% midpoint for 4-year schools. The average cost is $38,875 while the midpoint for 4-year colleges is $20,077. Median earnings for graduates are $40,367 and the midpoint for 4-year colleges is $60,377. To be fair to Full Sail, students at public schools are also graduating with debt, which provides an excellent reason to be critical of the cost of education in general.
Under Obama, there were attempts to regulate repayment benchmarks and income-to-debt ratios for for-profit schools. Schools that could not meet these would no longer be eligible for federal funds. However, these regulations were struck down in July of 2012.
In contrast, public schools are subject to intense scrutiny from state legislatures. Back in 2012 Florida public universities were the target of then Governor Rick Scott and the legislature. The professed reason was, of course, to ensure that education funds are being well spent. It is, of course, a point of concern that public schools are subject to intense scrutiny while for-profit schools are allowed to, some might claim, exploit students and taxpayers. By way of comparison, my university has a graduation rate of 63%, an average annual cost of $13,739 and median earnings of $52,657. As you would suspect in the Free State of Florida, my university is always under the state’s microscope and subject to the moving goalposts of performance-based funding. To be fair and balanced, this applies to all public universities in the state.
One obvious reply is that for-profit schools are privately owned and should be less regulated. After all, one might argue, the market should decide (via the invisible hand) what education should cost and what jobs should pay. As such, if students of for-profit schools have debts that far exceed their income, then that is just how the market works.
While this does have some appeal, the easy and obvious response is that these for-profit schools get over $30 billion a year in taxpayer funds. Interestingly, the 15 publicly traded for-profit college companies get 86% of their revenues from public money. This includes federal financial aid, the Post-9/11 GI Bill and the Department of Defense Tuition Assistance money. These “private” schools get most (an average of over 70%) of their income from federal funds. As such, these “private” companies are mostly public funded. This would justify the right of the state to regulate these schools and subject them to the sort of strict performance-based funding standards imposed on public schools. After all, they are publicly funded institutions. This also helps explain the ongoing attack on public education—the for-profits are competing with public universities for the same money and every dollar that goes to a public school is a dollar that a for-profit school does not get. Naturally, the for-profit schools also compete with traditional private schools. However, the traditional private schools are less vulnerable to the efforts of politicians to transform education into a for-profit ideological indoctrination.
There is also a myth that the private sector can provide better services at a lower cost. In the case of for-profit schools, their B.A. degrees are generally more expensive than those of public universities. The for-profit schools also compare unfavorably in 2 year degrees—they charge more than public non-profit schools. Given that the cost of public education has increased significantly (in part because of budget cuts to these schools), for-profit schools are very expensive and compete poorly with public schools. The reality is the opposite of what the free-market fetish ideology claims: the for-profit institutions underperform and overcharge relative to public schools. But the free-market is, as we all should know, about maximizing the enrichment of the rich. By that metric, for-profit schools outperform public universities.
It might be replied that for-profit schools charge more because they are providing more for the money relative to public schools. However, a look at how the money going into for-profit schools shows this does not seem to be the case.
Based on a 2009 study of 30 for-profit companies, 22.4% of their income goes to marketing, advertising, recruiting and admission staffing. 19.4% goes to profit, which is rather impressive. In contrast, 17.7% goes to actual instruction. As such, these schools charge more than public schools and spend less on education. This suggests they are not providing students with a good value for their money.
While top public university administrators are well paid (for example, the president of Florida A&M University make $650,000 a year plus bonuses and perks), the CEOs of the for-profit schools have an average salary of $7.3 million, while delivering an inferior product at a higher price than public schools.
Our education system is under concerted attack with one purpose being redistributing wealth from high-quality public and private schools to inferior for-profit schools. It was ironic that Obama was attacked in September 2012 for his 1998 remarks about redistribution. After all, the for-profit schools are the recipients of a $30 billion dollar redistribution of wealth from taxpayers to the wealthy. It was also ironic that Mitt Romney, the man who accused the 47% of Americans who do not pay taxes of being irresponsible dependents of the state praised the for-profit schools. After all, they grow fat on public money.
This reality is concealed under deceitful rhetoric used to mislead the public and garner support for what is an attack on a bedrock of a democratic state which is an effective system of affordable and accessible public education.
Ironically, the way to counter the problems presented by the for-profit schools is to apply conservative principles to them. They need to be removed from public welfare, they need to be held responsible, and they need to be forced to compete in a free market (one in which their allies do not use the state to impede the competition). This situation exposes the lie of conservatives: they are what they profess to hate, only on larger scale.