Comments on: For-profits vs not-for-profits A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: traduceri daneza romana Mon, 29 Sep 2014 14:06:28 +0000 This can be a really good read for me personally, Have to acknowledge that you’ll be among the best blog writers We previously observed. Thanks regarding putting up this informative article.

By: StudentLoanDebt Fri, 16 Mar 2012 22:52:07 +0000 Do you feel ripped off by your for-profit school? Has your experience left you near bankruptcy? Do you have huge student loans to pay off after going to a for-profit school?

I’m a grad student doing a project on the best way we can legislate changes in (1) accreditation, (2) disclosures to students, and (3) accountability/oversight of these schools. Please get in touch and share your stories. We may even ask you to testify in front of state legislatures. Mostly, we’re just collecting stories for a “story book” that we can hand to California State Senators or Assemblypeople.

Get in touch!

By: rb6 Wed, 18 Jan 2012 16:27:25 +0000 I don’t think you can restate Cornichon’s comment enough: the for-profit educational industry exists ONLY because of the existence of federally subsidized student loans. The scandal is that even when the student defaults, there is no penalty to the institution, which makes its money all at the front-end, sometimes even when the student quickly disenrolls.

Yes, educational loans also go to not-for-profit institutions, but the percentage of loan to other assistance is much smaller — 90% of the revenue received by for-profits comes from federally guaranteed loans. Calling what for-profit universities do part of a free market approach to education is simply perverse.

By: Cornichon Wed, 18 Jan 2012 05:26:41 +0000 If only it were that simple.

For-profit colleges exist ONLY because of guaranteed student loans, a subsidy that makes risky loans available to non-credit-worthy teens, provided courtesy of the Bush administration.

Is it any wonder that the majority owner of the largest network of private colleges, Art Institutes, is owned by Goldman Sachs? (Okay, technically, it’s the largest shareholder in AI’s parent company, Educational Management Corp.)

So when will Goldman Sachs endow a chair in economics at Harvard, do you suppose?

By: OneOfTheSheep Wed, 18 Jan 2012 01:43:32 +0000 @revelo,

My compliments on a well thought out post. Hope you have the time and inclination to become an ongoing commenter.

By: OneOfTheSheep Wed, 18 Jan 2012 01:37:12 +0000 @colinr,

Given the choice of the same non-organic milk for $2/gal. at a store where the “use by” date is a week away and another store where the “use by” date is a two weeks out for $3/gal., I’ll gladly accept that I need to finish my milk within 7 days for a 33% saving. Procrastination is a luxury few will pay for once they “understand”.

Also, I have found Walmart to be responsible. When their milk department is out of their Great Value Lactose Free Fat Free too frequently, they have been willing to substitute the same thing “organic” (which normally costs around 10% more) for the non-organic price. Not everyone has the “Whole Foods” mentality or financial priorities.

By: timder Wed, 18 Jan 2012 01:15:58 +0000 Like the mortgage/housing industry a few years ago, the higher education industry (both for-profit and non-profit) is encouraging students to take on massive amounts of debt that may never be paid back. For-profit universities are some of the biggest offenders… but this is rent-seeking behavior associated with bad government policy. Government subsidies are (primarily) enriching producers, rather than lowering the effective cost for consumers.

In the absence of distorting public policies, I see no reason to think that for-profit universities can’t provide a valuable service to students.

You claim that their profit incentives are *by definition* misaligned with those of students. Then how does Apple (or GE or Trader Joe’s) produce goods that people like? Presumably their profit motive is just as strong as a for-profit ed provider.

By: colinr Tue, 17 Jan 2012 20:43:21 +0000 I would disgree with Walmart & the Park Slope Food Coop. You can’t buy the same groceries at the two. Try buying an organic head of lettuce at Walmart that is so fresh you can let it sit for 2 weeks before you finally get around to eating it. And still be able to eat it.

By: MarkSlavonia Tue, 17 Jan 2012 16:35:53 +0000 Mr. Salmon – Your post asks about places where for-profits compete with not-for-profits. One fascinating case to examine is the world of sport.

In European football (soccer), top teams from each nation’s league compete annually in the UEFA Champions League. Some of the top national leagues, such as England’s Premier League or Italy’s Serie A, have teams that are investor-owned. Others, most notably Spain, are comprised of teams that are mutualized not-for-profits, somewhat similar to the Green Bay Packers in the NFL.

Both models seem able to support top-quality teams; the last six Champions League titles have been split 50/50 between mutualized teams (Barcelona, 3 times) and investor-owned teams (A.C. Milan, Inter Milan, and Manchester United).

But the for-profit model may be performing better in creating a commercially-dominant league, as the English Premier League is solidifying its place as the most-watched league in the world, while many other top nations’ domestic leagues are dominated by a few top teams and draw less international interest. Of course, creating a commercially-dominant league is much more consistent with the goals of a for-profit structure, so perhaps this is no surprise.

Sports ownership structures may be interesting to examine but, due to the unique characteristics of this business, may not hold many lessons applicable to other businesses.

Mark Slavonia

By: Jonbbckstein Tue, 17 Jan 2012 15:35:04 +0000 Jon Stein, founder of Betterment.

I agree with the comment about incentives/subsidies to education via loans, that we have perhaps inflated the price of education via cheap credit (that can’t be washed away in bankruptcy).

And we’ve inflated the cost of healthcare via the tax subsidy for health insurance.

I would advocate for less promotion of private education and healthcare via these government subsidies – and rather see investment into low cost public alternatives to private versions.

Same could be said for investing. Rather than encourage everyone via tax breaks to invest in IRAs, why not provide a low-cost government option to everyone? It may not be the best option for everyone – but could lead competition in the right direction.