The Forum | Trusteeship

Guest Blog: The Good, the Bad, and the For-Profit Institution

August 24, 2015

On Tuesday, April 27, 2015, the for-profit Corinthian Colleges, Inc. (CCi) filed for bankruptcy. CCi built its business around non-traditional students entering higher education with the help of federal student loans. Critics claim that this business model is questionable, and the Corinthian debacle has shed light on problems that have occurred in the operations of for-profit colleges. While Corinthian had bad financial practices at its core, many for-profit institutions operate with great success.

Most of the benefits of for-profit schools spring from the fact that they are indeed for profit. For-profit schools are generally more efficient, and this efficiency does not end at day-to-day operations. For-profit colleges respond better to market signals concerning programming. For-profit schools are agile: they can add new programs when demand increases, and they can terminate old programs once they become obsolete. A nonprofit school takes longer to make these decisions and must take into account the interests and sensitivities of faculty and staff when deciding whether to cut or keep classes. In contrast, responding to market forces, for-profit schools have the capacity and imperative to compete against one another. An important focus of for-profit schools is maintaining relationships with potential employers and maximizing effective instruction. Competition between colleges can improve the experience of their students. As consumers, students want an education from the institution that efficiently uses instructional time and has a close relationship to the industries in which they aspire to work. For-profit schools that want to attract and retain students have an imperative to meet this demand accordingly.

For-profit schools have expanded possibilities for higher education among individuals who otherwise might not have the opportunity. Additionally, for-profit schools often serve students who do not start higher education immediately after high school or are routinely turned away from nonprofit institutions.

As the current discussion surrounding for-profit schools and the reauthorization of the Higher Education Act continues, it is important to be mindful of both the weaknesses and benefits of for-profit education. While it is clear that that some for-profit schools have aspects that deserve scrutiny, and, at times, intervention, the same is true for plenty of nonprofit schools. ACTA has consistently called for a level-playing field between the two sectors. National for-profit education corporations are still relatively new to higher education. It takes time and patience to work out flaws in the system and to fully realize the potential educational and societal benefits provided by for-profit colleges and universities.

Every summer, ACTA is privileged to have several interns conduct research for the What Will They Learn?™ project. This is the second in a series of guest blogs written by our interns, who chose topics relevant to higher education. Skip is a junior at the College of William and Mary. He is a public policy major, a member of the Kappa Alpha Order, and a founding member of Young Americans for Liberty. 


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