ROI U

October 19, 2010 at 2:36 pm Leave a comment

My alma mater

In recent months, for-profit colleges have received heightened scrutiny regarding recruiting practices, tuition costs and resultant student loan burdens, and the real-world value of the certificates and degrees they issue. The Obama administration has sought restrictions of federal aid for schools whose students have to spend over 8% of their starting salary on loan payments after graduation. This measure affects career colleges offering vocational programs such as culinary arts and medical support.

For-profit proponents present a slippery slope argument that the career college regulation is part of greater designs to “rein in” the industry. Many cite unfairness in holding for-profit schools to standards not extended to other institutions. Harris Miller, president of the Association of Private Sector Colleges and Universities, says the new regulatory formula would flunk most medical schools.

Journalists and politicians are finding their story angles. ABC News conducted an undercover investigation into University of Phoenix misleading prospective students about future employment opportunities and encouraging them to take on maximum student debt. Many media accounts point out the vast cost discrepancy between for-profit schools and community colleges, an argument that  Sen. Tom Harkin echoes. Harkin has held hearings on for-profit schools and called for industry reforms.

As the saying goes, I have a dog in this fight. I hold a bachelor’s degree in Marketing from the University of Phoenix. I support for-profit schools and I’m a member of the slippery slope contingent (yes, I learned in class at UoP that “slippery slope” is a fallacious argument–unless one presents a logical chain of events and is ready to accept a “middle ground” conclusion.) For-profits will face more regulation because they draw 85% of their revenue from federal funds in the form of grants and loans. The Obama administration is demanding to see a return on investment, the ROI mantra constantly heard in the business world. It’s a justifiable claim. For-profit schools are much like defense contractors: big-time capitalists dependent on government largesse.

The concern centers on the fairness of that ROI measurement. Will for-profit schools confront tougher standards and restrictions than public and private schools? Will for-profit schools become a political punching bag, prompting more government regulation and intervention? Are parties with interests that conflict with for-profit schools driving the debate?

To this last point, there is a push for students to choose community colleges over for-profit schools with the cost factor a major rationale. (Another note: I hold an associate degree from Los Angeles Pierce College, so I’m a community college fan too.) With the Obama administration simultaneously backing increased community college enrollment and curbs on for-profit schools, it’s easy to speculate a hidden agenda. The stumbling block for the community college plan: these are public schools under tremendous budget pressure, currently reducing classes and educational opportunities.

The “ulterior motive” arguments get more compelling with Steven Eisman speaking to Congress about the need for stricter controls over for-profit education. Eisman is a portfolio manager who has been identified as a short-seller of for-profit education company stocks, making money when those stocks drop in value. Per conventional wisdom, more government oversight would mean less profit and growth, driving down stock prices.

The for-profit education industry faces considerable PR and marketing issues. In his Washington Post op-ed, Harkin describes the schools that spend close to 30% of revenue on advertising. There is an implicit tie-in to tobacco and fast-food: the image of big companies mounting big campaigns that persuade people to make poor choices. An industry criticized for having the audacity to advertise means one thing: it’s in crisis mode, which is a job for public relations. There has been a fair amount of media coverage and op-eds supporting the industry against more government control and emphasizing the shortfalls of relying more heavily on strapped community colleges. I personally liked students from for-profit schools rallying at the Capitol with shirts reading: “My education. My job. My choice.”

Unfortunately, the for-profit industry’s primary value proposition has become its biggest liability: “we are the schools for working adults who want to advance their careers.” The jobless recovery makes the inherent vocational pitch ring hollow. The go-go years for the industry may be over. University of Phoenix has announced changes to its recruiting process that may decrease enrollment, in turn necessitating higher tuition. Less service for more money. Now who says for-profits aren’t just like other schools?

Read my other post about for-profit schools: An Education Outside the Gates.

Advertisements

Entry filed under: Crisis Communications, Leadership, Marketing, Public Relations. Tags: , , , .

Serve to Lead Be Careful When You Hit “Send”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Calendar

October 2010
M T W T F S S
« Aug   Nov »
 123
45678910
11121314151617
18192021222324
25262728293031

Most Recent Posts


%d bloggers like this: