8 ms·

This is incremental progress, it's just one school. But a crazy step in the right direction. For-Profit institutions are a plague on our nation (high-cost low

by swalsh 10y ago

This is incremental progress, it's just one school. But a crazy step in the right direction. For-Profit institutions are a plague on our nation (high-cost low-value educations) allowed to rise up out of the failings of our strained public institutions (not enough capacity to meet demand). What really blows my mind is that this seems to come after the justice department discontinues for profit federal prisons. It's like all that "change" we were hoping for with Obama seems to be coming at once.

S_Daedalus 10y ago
Is that really shocking? That's the kind of thing that happens when a president is leaving, and doesn't have to worry about another term, or in this case, campaigning for anyone.
Unbeliever69 10y ago
When the discontinuation of federal prison article came up on hacker news I commented, "Now if we could only outlaw for-profit schools!"
- deleted 10y ago
  [deleted]
- dangero 10y ago
  What's wrong with someone educating people and making a profit while doing it?
  - ulkram 10y ago
    Exactly, there are a lot of good private universities.
    - ng12 10y ago
      In the USA, private does not mean for-profit. The good private universities are still non-profit. There's nothing wrong with for-profit schools in theory. It's a socio-economic problem. There's already so much money flowing through the US university system that the vast majority of for-profit schools are predatory institutions targeting lower-class, under-educated people. Their primary business model is to convince students to take out loans to pay for a white-collar education that won't make them any more employable.
      - cpr 10y ago
        The "good private universities" may be "non-profit" in some strict sense, but in the case of the big Ivies (e.g., Harvard, my alma mater), they could be described as a hedge fund with, oh, yes, by the way, a school attached, or, alternatively, as a huge Federally-funded research institution. The educational part seems to be a facade for the big money/big institution part. (Bitter much? Sure. ;-)
        vonmoltke 10y ago
        What good is a "hedge fund" you can't take the money out of? The Ivies have massive endowments, but that money can only be spent on the school.
        sldivzklhc 10y ago
        I went to a school like that. They provided grant-only aid to cover tuition and living expenses for students from most of the US income distribution. I think you will have a harder time finding sob stories about my classmates (at least since the no-loan policies were enacted).
      - mywittyname 10y ago
        > There's nothing wrong with for-profit schools in theory. Absolutely. The problem is our university system as it stands is now really structured for profitability. The system was originally designed to cater to wealthy students and when public universities came to be, they kept the same model, and used tax subsidies to maintain it. An effective for-profit education system would look nothing like our current university system. But a higher education system that doesn't match our current system isn't useful for students because the majority of them are looking for degrees, not necessarily an education. Theoretically there's nothing wrong with for-profit schools, but the current educational climate prevent them from working. For now, for-profit education really only has a place in domains that can be taught adequately in less than a year and where the student's outcome can be readily assessed.
      - crazy1van 10y ago
        > Their primary business model is to convince students to take out loans to pay for a white-collar education that won't make them any more employable. I think this applies to far more schools than just private for-profits like ITT. There are many recent graduates from non-profit public schools that have mountains of debt and very little job prospects.
    - deleted 10y ago
      [deleted]
  - swalsh 10y ago
    The issue is that the profit comes before the education. These institutions prey on low-income people who for whatever reason couldn't get into public institutions. When the students graduate they have huge debts, typically larger than those that went to public institutions, but worse their degrees are often worthless. The accreditation for these institutions often come from companies owned by the same corporation. The accreditation means nothing so your credits can't transfer. Do a google search, you'll find article after article about students who went to these schools trying to get a better life and just made their lives worse. They went from poor, to hopelessly poor. Whereas before they were poor with bad job prospects they're now poor with bad job prospects and HUGE debts. They often just stop paying them. It's one of the biggest contributors to our student debt problem.
    - SilasX 10y ago
      >The issue is that the profit comes before the education. ... That sounds like a fully-general argument against provision of any good by a for-profit business: "The issue with private farms is that the profit comes before the food." "The issue with private semiconductors is the profit comes before the computational efficiency." True, profits do bring the potential for fraud, abuse, etc., but obviously there are at least some situations where that can all be contained. What's special about education per se? You cite abuses, but are those artifacts of the for-profit part, or the "students generally don't have good information about what a given school will do for their career"? I mean, there are lots of cases of students at "non-profit" public universities who are drowning in debt from a worthless degree.
      - commandar 10y ago
        >What's special about education per se? In the US? The fact that it gets paid for with loans that aren't dischargeable in bankruptcy.
        SilasX 10y ago
        I meant, what's special in terms of profits skewing incentives.
  - kosievdmerwe 10y ago
    The problem with for-profit prisons is the misalignment between what's good for profit and what's good for prisoners. Where the prisoners can't "vote with their wallets" to counter-balance this misalignment. I don't see a similar issue with for-profit schools. In order to attract students they need to to provide good education and foster a good reputation.
    - emn13 10y ago
      Hmm, is that really true though? If so, ideally, people would choose an institute that teaches them as well as possible for as little as possible money. But that's not at all what people do: they prefer prestigious schools that (hopefully) lead to good job prospects. Prestige is a funny thing - the fact that a school is hard to get into and expensive may well raise prestige, regardless of educational outcomes. Don't forget, it's very hard for students and (future) employers/investors/business partners to tell how good an education is. It's quite difficult even for the institutes themselves and any oversight that may exist. That means incentives aren't as simple as you suggest. Sure, at some very, very long term horizon, better education helps an institute. But that may well be multiple generations away; much too far away to work well in an open market. Especially since there is so much other noise that can be optimized instead. By constrast, the state's interest in decent education is much more straighforward (not that the politicians making the choices have their incentives straight, but that's another story). In particular, whereas it's clearly in the for-profit institutes interest to milk students no matter how and no matter how unfairly. This is a normal risk in any organisation - but the point is that for-profit organisations aren't magic optimization bullets. These downsides don't need to be a problem, but they do need to be dealt with, and there needs to be some upside to the deal too. What's the upside here? I think you're clearly right for short-enough courses with clearly demonstrable and measurable outcomes. And I bet you're right in the abstract too, in the sense that "it should be possible to align incentives such that..." - but I'm not sure it holds given the current way education is structured. Real-world evidence certainly doesn't seem to suggest profit-motive works very well here.
      - michaelchisari 10y ago
        Not to mention that for-profit schools appeal to (some would say prey upon) students from blue collar or lower class families for whom ANY degree seems worth whatever you might pay for it. If you're from generations of laborers who have never gone to college, then taking out a predatory loan to go to a predatory school that gives you a somewhat useless degree seems like a good idea at first glance.
  - deleted 10y ago
    [deleted]
  - nyargh 10y ago
    Nothing, if they also accept the downside risk of financing a crap education. The default rates for many private universities are astounding - and the taxpayer helps backstop them from losses via federal student loans.
nradov 10y ago
In principle there's nothing wrong with for-profit schools which train people on specific job skills or certification programs. There are some valuable skills that non-profit community colleges can't practically teach. But still the federal government should only support financial aid for such schools if they demonstrate a high rate of job placement for students who complete the program.
- swalsh 10y ago
  You're right, there are many examples of great for-profit institutions. The problem is there's little differentiating them from "predator" schools. One issue is information asymmetry.
  - nickff 10y ago
    There is informational asymmetry in every transaction (as well as in non-profit schools); this is a red herring (unless you can show that it is causing a specific, large, unsolved problem). The current administration has repeatedly demonstrated hostility towards for-profit schools, and has chosen to use discretionary enforcement of rules against them rather than enforcing standards universally, because they know that the standards would hit many non-profit schools as well. I am not sure about the specifics of this case, but the Department of Education has been looking at for-profit schools much harder than non-profits.
    - ajkjk 10y ago
      The existence of information asymmetry isn't per se the problem, no, of course not. But it's not a red herring to mention if we can look at the world and see the information asymmetry doing active harm, which I think most commenters here would agree with. The opinion that large numbers of for-profit schools are convincing people to give them money and then providing almost nothing useful in return is so widespread now that I'd assume it to be everyone's default unless they specifically mention otherwise.
      - nickff 10y ago
dragonwriter 10y ago
> What really blows my mind is that this seems to come after the justice department discontinues for profit federal prisons. The Administration has been heightening scrutiny of colleges receiving federal aid money, particularly for-profit institutions, for some time. The ITT action echoes the prior action against Corinthian.
Shivetya 10y ago
I see little difference between large state schools and for profits. Plus there are plenty of "NON-PROFITS" which are soaking up the aid as well; its just a convenient classification; worse they are so to protect their endowments from taxation and such. So why excuse schools like them when non-profit can exploit the tax payer more than for-profits? Old article http://nymag.com/daily/intelligencer/2014/09/take-away-harvards-nonprofit-status.html http://nymag.com/daily/intelligencer/2014/09/take-away-harva...
naravara 10y ago
The announcements are all coming at once, but decisions like these take a long long LONG time to percolate through the federal bureaucracy. Not quite 8 years, but I would expect they've had contingencies for going down this road kicking around for at least a year or so. I don't think they're just impulsively scrambling to fulfill all their whims, they're just striking now while they have the political capital and the opposition is too distracted and demoralized to make a fuss.
schmidty 10y ago
> For-Profit institutions are a plague on our nation I dont understand. ANY for profit? Like Apple or Ford? Or just educational institutions? If just educational institutions, what is special about that sector that makes them a plague?
- 20yrs_no_equity 10y ago
  Plus anyone who thinks that "Public" schools are not for profit hasn't looked too closely. My "Public" University was basically a football program which had classes to try and justify its existence. Think Stanford isn't for profit? Harvard? University of California? The only difference is who is making the profit an what their incentives are. ITT doesn't make money if its students don't get jobs. Does UC Santa Cruz really care more?
  - boneheadmed 10y ago
    I just love how all the leftists on HN have the down vote power and simply down vote and gray out anything they disagree with. Commies never change in any society. Since their arguments are weak it's easier to just make your opinion (or your very self in the USSR, Cuba, NK, etc.) disappear. Love it. Please make me dissapear too ;)
    - munchbunny 10y ago
      I can't tell how serious you are, but I'll assume you are. There parent poster didn't get voted down because people disagree with him/her. The parent poster got voted down because he/she clearly didn't understand the problem the article was talking about. Nothing to do with leftism.
    - sctb 10y ago
      This comment violates the HN guidelines, and we ban accounts that do so repeatedly. Please stop. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- munchbunny 10y ago

by swalsh 10y ago

S_Daedalus 10y ago

Is that really shocking? That's the kind of thing that happens when a president is leaving, and doesn't have to worry about another term, or in this case, campaigning for anyone.

Unbeliever69 10y ago

When the discontinuation of federal prison article came up on hacker news I commented, "Now if we could only outlaw for-profit schools!"

deleted 10y ago
[deleted]
dangero 10y ago
What's wrong with someone educating people and making a profit while doing it?
- ulkram 10y ago
  Exactly, there are a lot of good private universities.
  - ng12 10y ago
    In the USA, private does not mean for-profit. The good private universities are still non-profit. There's nothing wrong with for-profit schools in theory. It's a socio-economic problem. There's already so much money flowing through the US university system that the vast majority of for-profit schools are predatory institutions targeting lower-class, under-educated people. Their primary business model is to convince students to take out loans to pay for a white-collar education that won't make them any more employable.
    - cpr 10y ago
      The "good private universities" may be "non-profit" in some strict sense, but in the case of the big Ivies (e.g., Harvard, my alma mater), they could be described as a hedge fund with, oh, yes, by the way, a school attached, or, alternatively, as a huge Federally-funded research institution. The educational part seems to be a facade for the big money/big institution part. (Bitter much? Sure. ;-)
      - vonmoltke 10y ago
        What good is a "hedge fund" you can't take the money out of? The Ivies have massive endowments, but that money can only be spent on the school.
      - sldivzklhc 10y ago
        I went to a school like that. They provided grant-only aid to cover tuition and living expenses for students from most of the US income distribution. I think you will have a harder time finding sob stories about my classmates (at least since the no-loan policies were enacted).
    - mywittyname 10y ago
      > There's nothing wrong with for-profit schools in theory. Absolutely. The problem is our university system as it stands is now really structured for profitability. The system was originally designed to cater to wealthy students and when public universities came to be, they kept the same model, and used tax subsidies to maintain it. An effective for-profit education system would look nothing like our current university system. But a higher education system that doesn't match our current system isn't useful for students because the majority of them are looking for degrees, not necessarily an education. Theoretically there's nothing wrong with for-profit schools, but the current educational climate prevent them from working. For now, for-profit education really only has a place in domains that can be taught adequately in less than a year and where the student's outcome can be readily assessed.
    - crazy1van 10y ago
      > Their primary business model is to convince students to take out loans to pay for a white-collar education that won't make them any more employable. I think this applies to far more schools than just private for-profits like ITT. There are many recent graduates from non-profit public schools that have mountains of debt and very little job prospects.
  - deleted 10y ago
    [deleted]
- swalsh 10y ago
  The issue is that the profit comes before the education. These institutions prey on low-income people who for whatever reason couldn't get into public institutions. When the students graduate they have huge debts, typically larger than those that went to public institutions, but worse their degrees are often worthless. The accreditation for these institutions often come from companies owned by the same corporation. The accreditation means nothing so your credits can't transfer. Do a google search, you'll find article after article about students who went to these schools trying to get a better life and just made their lives worse. They went from poor, to hopelessly poor. Whereas before they were poor with bad job prospects they're now poor with bad job prospects and HUGE debts. They often just stop paying them. It's one of the biggest contributors to our student debt problem.
  - SilasX 10y ago
    >The issue is that the profit comes before the education. ... That sounds like a fully-general argument against provision of any good by a for-profit business: "The issue with private farms is that the profit comes before the food." "The issue with private semiconductors is the profit comes before the computational efficiency." True, profits do bring the potential for fraud, abuse, etc., but obviously there are at least some situations where that can all be contained. What's special about education per se? You cite abuses, but are those artifacts of the for-profit part, or the "students generally don't have good information about what a given school will do for their career"? I mean, there are lots of cases of students at "non-profit" public universities who are drowning in debt from a worthless degree.
    - commandar 10y ago
      >What's special about education per se? In the US? The fact that it gets paid for with loans that aren't dischargeable in bankruptcy.
      - SilasX 10y ago
        I meant, what's special in terms of profits skewing incentives.
- kosievdmerwe 10y ago
  The problem with for-profit prisons is the misalignment between what's good for profit and what's good for prisoners. Where the prisoners can't "vote with their wallets" to counter-balance this misalignment. I don't see a similar issue with for-profit schools. In order to attract students they need to to provide good education and foster a good reputation.
  - emn13 10y ago
    Hmm, is that really true though? If so, ideally, people would choose an institute that teaches them as well as possible for as little as possible money. But that's not at all what people do: they prefer prestigious schools that (hopefully) lead to good job prospects. Prestige is a funny thing - the fact that a school is hard to get into and expensive may well raise prestige, regardless of educational outcomes. Don't forget, it's very hard for students and (future) employers/investors/business partners to tell how good an education is. It's quite difficult even for the institutes themselves and any oversight that may exist. That means incentives aren't as simple as you suggest. Sure, at some very, very long term horizon, better education helps an institute. But that may well be multiple generations away; much too far away to work well in an open market. Especially since there is so much other noise that can be optimized instead. By constrast, the state's interest in decent education is much more straighforward (not that the politicians making the choices have their incentives straight, but that's another story). In particular, whereas it's clearly in the for-profit institutes interest to milk students no matter how and no matter how unfairly. This is a normal risk in any organisation - but the point is that for-profit organisations aren't magic optimization bullets. These downsides don't need to be a problem, but they do need to be dealt with, and there needs to be some upside to the deal too. What's the upside here? I think you're clearly right for short-enough courses with clearly demonstrable and measurable outcomes. And I bet you're right in the abstract too, in the sense that "it should be possible to align incentives such that..." - but I'm not sure it holds given the current way education is structured. Real-world evidence certainly doesn't seem to suggest profit-motive works very well here.
    - michaelchisari 10y ago
      Not to mention that for-profit schools appeal to (some would say prey upon) students from blue collar or lower class families for whom ANY degree seems worth whatever you might pay for it. If you're from generations of laborers who have never gone to college, then taking out a predatory loan to go to a predatory school that gives you a somewhat useless degree seems like a good idea at first glance.
- deleted 10y ago
  [deleted]
- nyargh 10y ago
  Nothing, if they also accept the downside risk of financing a crap education. The default rates for many private universities are astounding - and the taxpayer helps backstop them from losses via federal student loans.

nradov 10y ago

In principle there's nothing wrong with for-profit schools which train people on specific job skills or certification programs. There are some valuable skills that non-profit community colleges can't practically teach. But still the federal government should only support financial aid for such schools if they demonstrate a high rate of job placement for students who complete the program.

swalsh 10y ago
You're right, there are many examples of great for-profit institutions. The problem is there's little differentiating them from "predator" schools. One issue is information asymmetry.
- nickff 10y ago
  There is informational asymmetry in every transaction (as well as in non-profit schools); this is a red herring (unless you can show that it is causing a specific, large, unsolved problem). The current administration has repeatedly demonstrated hostility towards for-profit schools, and has chosen to use discretionary enforcement of rules against them rather than enforcing standards universally, because they know that the standards would hit many non-profit schools as well. I am not sure about the specifics of this case, but the Department of Education has been looking at for-profit schools much harder than non-profits.
  - ajkjk 10y ago
    The existence of information asymmetry isn't per se the problem, no, of course not. But it's not a red herring to mention if we can look at the world and see the information asymmetry doing active harm, which I think most commenters here would agree with. The opinion that large numbers of for-profit schools are convincing people to give them money and then providing almost nothing useful in return is so widespread now that I'd assume it to be everyone's default unless they specifically mention otherwise.
    - nickff 10y ago

dragonwriter 10y ago

> What really blows my mind is that this seems to come after the justice department discontinues for profit federal prisons. The Administration has been heightening scrutiny of colleges receiving federal aid money, particularly for-profit institutions, for some time. The ITT action echoes the prior action against Corinthian.

Shivetya 10y ago

I see little difference between large state schools and for profits. Plus there are plenty of "NON-PROFITS" which are soaking up the aid as well; its just a convenient classification; worse they are so to protect their endowments from taxation and such. So why excuse schools like them when non-profit can exploit the tax payer more than for-profits? Old article http://nymag.com/daily/intelligencer/2014/09/take-away-harvards-nonprofit-status.html http://nymag.com/daily/intelligencer/2014/09/take-away-harva...

naravara 10y ago

The announcements are all coming at once, but decisions like these take a long long LONG time to percolate through the federal bureaucracy. Not quite 8 years, but I would expect they've had contingencies for going down this road kicking around for at least a year or so. I don't think they're just impulsively scrambling to fulfill all their whims, they're just striking now while they have the political capital and the opposition is too distracted and demoralized to make a fuss.

schmidty 10y ago

> For-Profit institutions are a plague on our nation I dont understand. ANY for profit? Like Apple or Ford? Or just educational institutions? If just educational institutions, what is special about that sector that makes them a plague?

20yrs_no_equity 10y ago
Plus anyone who thinks that "Public" schools are not for profit hasn't looked too closely. My "Public" University was basically a football program which had classes to try and justify its existence. Think Stanford isn't for profit? Harvard? University of California? The only difference is who is making the profit an what their incentives are. ITT doesn't make money if its students don't get jobs. Does UC Santa Cruz really care more?
- boneheadmed 10y ago
  I just love how all the leftists on HN have the down vote power and simply down vote and gray out anything they disagree with. Commies never change in any society. Since their arguments are weak it's easier to just make your opinion (or your very self in the USSR, Cuba, NK, etc.) disappear. Love it. Please make me dissapear too ;)
  - munchbunny 10y ago
    I can't tell how serious you are, but I'll assume you are. There parent poster didn't get voted down because people disagree with him/her. The parent poster got voted down because he/she clearly didn't understand the problem the article was talking about. Nothing to do with leftism.
  - sctb 10y ago
    This comment violates the HN guidelines, and we ban accounts that do so repeatedly. Please stop. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
munchbunny 10y ago