Rolfe Winkler
Option ARMageddon
Frontline exposes for-profit education
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In this great episode of Frontline, there’s a telling quote from Rep. George Miller, in which he compares for-profit educators to purveyors of liar loans. Too true. Both amount to finding a warm body willing to borrow money to pay for an inflated asset.
Of course, the education offered by for-profit schools is hardly an asset.
One telling stat is that default rates on loans to for-profit students (the vast majority taxpayer-funded) are manipulated. Officially the default rate is about 10%. In reality, it could be closer to 50% according to Frontline’s source.
Another interesting stat: Though for-profit colleges represent about 10% of college students, they generate 44% of student loan defaults. The report doesn’t explain if that’s using the official or unofficial default rate.
“Degrees” from for-profit schools can’t be said to have value when so many students end up in debt slavery. And slavery is the right word. Student loans can’t are very difficult to escape, even in bankruptcy. Meanwhile students are stuck with a piece of paper that often promises no incremental income over what’s achievable with a high-school diploma.
Don’t expect much to change at the federal level. As the Frontline report makes clear, politicians need the for-profit education industry to help more Americans attain a “college degree.” Unfortunately, it’s the appearance of education that matters, not the reality. And taxpayers are funding this effort to keep up appearances through subprime loans — how can loans that default at a rate of 10% (50%?) not be called subprime?
One is reminded how the need to grow “homeownership” drove politicians to encourage subprime mortgage lending. Of course the reality was these people often put no equity into the house. That is, they never actually owned anything. Again, it was the appearance that mattered, not reality.
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If I remember my reading of Milton Friedman’s Freedom to Choose, he made a case for not having professional certifications because their primary function was to artificially limit the practitioners in any field and protect those already in it.
In the case of the generic degree from a college, especially a for-profit school of one kind or another, there are no professional members to shelter from open competition and nothing is certified other than that one has spent a whole lot of money. It’s the perfect scam because it depends upon the broad correlation that hoodwinks the nation into the equation of more education = more income.
The only way out of this gift to the education industry is 1) to do the research that factors out everything BUT the knowledge gain from “education” that was paid for in determining income, and 2) breaking the sweet deal for educators from companies requiring degrees that have no relationship to the job for which the degree is required.
Another side to this issue is the fact that many schools only teach in collusion with the dominant industry in the area. So what these schools provide is not so much an education as training. An education is supposed to help a person become a critical, well rounded thinker. Educated people are supposed to be able to make distinctions beyond what is needed simply to “do your job”.
People educated in the arts and humanities are capable of understanding human issues particularly where they regard governmental policy and societal issues. A citizenry that is properly educated will not fall for arguments that appeal to nationalism or raw emotion. An educated citizenry can evaluate societal conditions and hold policy makers accountable for their failure to correct problems that fall within their charge.
For-profit schools do the bidding of two masters. The corporate leaders that want good “worker bees”, are only too happy to fund schools that will train people without giving them any more food for thought. And policy makers who want to continue bilking the public, are only too happy to denounce the arts and humanities as being wasteful of tax payer dollars. They then promote the more “useful” subjects like math and science which allow people to “get jobs”, while still not being aware enough to know they’re being cheated. In this way the citizenry can be manipulated by using the fear of uncertainty, national pride, or any other idea that stirs the emotions.
In truth we don’t REALLY have an educational system. We have training institutes.
Great comments, don’t forget the big schools get tax breaks….cause…you know, they need the help. Its written into the state constiution of Illinois that Northwestern University will never pay taxes. I know, I know they give back to the community, whatever, its a $5 Billion dollar corporation. Pathetic. As the stock market is poised for a major re-pricing at this stage, lets hope it spills over to college and get tuition under control.
I find it interesting that they claim defaulting student loans obtained through these universities could be the next “housing crisis.” Nevertheless, the instructors they hire are hired as “independent contractors” who are anything but independent. They must undergo training on their own time. They must use the teaching tools (books, technology, course shell etc.) supplied to them by the for profits. They must adhere to the prescribed teaching styles. They are regularly scheduled to work courses semesters in advance. In some cases, they aren’t given contracts for the semesters in which they are teaching sooner than 4 weeks into the semester. Independent contractors working as professors for these schools ARE EMPLOYEES by the IRS’s own criteria, and yet they won’t do what they did to Microsoft and make them pay accordingly. Hmmm…I wonder if not having to pay benefits such as social security, workers compensation, or unemployment improves profits? Isn’t it ironic that the vast majority of the people who supply the services they offer aren’t their employees? I think there is no greater sign indicating they are NOT in the business of education; rather, they are in the business of obtaining loans.