Phi Beta Cons

Not So Profitable

Andrew Ferguson has written an article defending for-profit colleges. He is informative and makes some good points, but some of his arguments do not convince. For example, almost everything he suggests that the for-profits especially provide — flexible hours, online learning, weekend classes, whatever — is already available through the not-for-profits. 

Moreover, Ferguson suggests that since both not-for-profit and for-profit colleges are frauds, what’s the difference? This is a cynical argument. True, not-for-profit colleges are already enrolling unprepared students and giving them degrees that often turn out to be less than valuable if not worthless; but for-profits go even lower in the potential student pool, and this is reflected in the higher default rate on their students’ federally funded loans. It’s very much like the subprime mortgage loans that led to financial chaos, and it is a difference that should matter to the taxpayer. It is projected that the for-profits will use $500,000,000 in the next ten years. Also default is very bad for students’ future prospects. If there are still some barriers at the not-for-profits keeping some doubly unprepared students out of college, that is actually beneficial in the long run. Finding ways to lower even those already incredibly low barriers is not helpful in the long run. 

Again comparing the two, Ferguson says that they both use easy government money to insulate themselves from market pressure, and he concludes that the only real difference is that the for-profits make a profit. They do not actually make a profit in the sense of making money. They transfer money from the taxpayer through the student to the investor.

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