It’s War!

Michael J. Cooneymcooney@workforce-com.com

Survival of Private Sector Colleges and Universities at Stake

Battles:•Congressional Hearings

•GAO Reports and Investigations

•NPRM – Gainful Employment

•Negative Press

•State Investigations

Plus:

•All Higher Education Outcomes in Question

•Validity of the Accreditation Process

Finally!

The value assessment, structure, methods and delivery of higher education is undergoing dramatic change.

What is college? And why should I go?

The traditional model is changing.

Students’ convenience is the future.

“The students of 2020 will demand an education onTheir terms and will be seeking a technology-based customized approach.”

The College of 2020, Chronicle Research Services

Why?$

Why?Outsized rate of growth in the for-profit sector.1990 – 2010 from less than 1% market share to

almost 12%.

Why?Students enrolled at for-profit colleges jumped from 1

million to 1.8 million between 2003-2008.

Federal aid to these schools TRIPLED from $8 billion to $24 billion.

Federal aid to not-for-profit and public schools increased 69% during the same time period

For-profits schools represent 8% of total student enrollment and

23% 23% of federal student aid in 2008

$129,775,998,123 Title IV Funds Total 2009/10

18.54% 18.54% increase from previous year

-------

Publically Traded For-Profit Education Companies

15% 15% of all Title IV Funding

64% 64% of the for-profit sectors Title IV funds

$5,380,680,600 (2009/10) EstimatedUniversity of Phoenix /14% increase

“The vast majority of the growth among Pell recipients attending for-profit colleges in the last 15 years has been among students that many traditional colleges and universities have shunned: working adults, especially from the lower socioeconomic strata.”

Thomas G. Mortensen,

Why?To BIG to regulate!

The power and validity of the “Triad” is in question.

HELP COMMITTEEHEALTH, EDUCATION, LABOR & PENSIONS

•Emerging Risk? An Overview of the Federal Investment in For-Profit Education•For-Profit Schools: The Student Recruitment Experience•The Federal Investment in For-Profit Education: Are Students Succeeding?

HELP COMMITTEEHEALTH, EDUCATION, LABOR & PENSIONS

Emerging Risk? An Overview of the Federal Investment in For-Profit EducationFor-Profit Schools: The Student Recruitment ExperienceThe Federal Investment in For-Profit Education: Are Students Succeeding?

The Battle

The Battle

Yasmine Issa , former Sanford Brown Institute student,

Yonkers, NY

The Battle

Gregory Kutz , Managing Director, Office of Forensic Audits and Special Investigations,

U.S. Government Accountability Office, Arlington, VA

CLAIMS:•Cost the taxpayer too much

•Charge too much for tuition

•Have excessively high default rates

•Have excessively low graduation rates

•Fail to prepare students for Gainful Employment

““Debt without a Diploma”Debt without a Diploma”

No Comparable Data!Data!

Post-Secondary Education Market Share

70% Public18% Private non-profit12% For-profit

Student success story vs. Student failure story

For-profits Cost Taxpayers More

$12,000 Public Universities No taxes on endowment income, property or use taxes etc.

$5,300 Private Non-profit Colleges & UniversitiesNo taxes on endowment income, property or use taxes etc.

$4,800 For-profit CollegesPay federal, state and local taxes

The Apollo Group (University of Phoenix) paid an estimated$500,000,000 in taxes in 2009.

Taxpayer Cost per student per yearTaxpayer Cost per student per year

For-profits Cost Taxpayers More

$50,000 Public Universities No taxes on endowment income, property or use taxes etc.

$18,000 Private non-profit colleges & universitiesNo taxes on endowment income, property or use taxes etc.

$17,000 For-profit CollegesPay federal, state and local taxes

Stifel Nicolaus 10/27/10

Annual Taxpayer Cost Per CompletionAnnual Taxpayer Cost Per Completion

For-profits Cost Taxpayers More with Loan Defaults Factored In

Student loan default rates track very closely with the socio-economic status and family money management practices of the borrower.

Inputs vs. ProcessInputs vs. Process

For-profits Charge Too Much for Tuition

Cost per student, per year 2009-10Cost per student, per year 2009-10

•$14,174 For-profit colleges

•$7,020 Public colleges – in state

•$18,548 Public colleges – out of state

•$26,273 Private non-profit colleges

•$50,000 Plus Elite private non-profit colleges

Public colleges increased their tuition as much as 17% across the board and many hidden fees are up more than 50% in 2010

For-profits Have the Highest Loan Defaults

Defaults are high and on the rise for all institutional types Defaults are high and on the rise for all institutional types

•The current economy and unemployment rate

•The Fed encouragement of irresponsible borrowing

•A change in borrowing habits and rationale: Student who used to borrow only for tuition are now borrowing to support a lifestyle.

•The feds will not permit the schools to limit loan values based on realistic payback

85% of college graduates must move back home

For-profits Have Low Graduation Rates

Institutional types of all types have low and declining graduation rates and the public colleges and universities are among the worst.

Robert Tucker

Remedial courses do not carry credit-weight, which is the main cause of discouragement for students who are placed in them. Students feel as though they’re working for nothing and 30 percent drop out before even beginning their college career.

Only 25% of community college students earn degrees within six yearsOnly 25% of community college students earn degrees within six years

For-profits Fail to Prepare Students for

Gainful Employment

A potentially good idea even though the current metrics are badly flawed.

In some form this is the new reality!In some form this is the new reality!Gainful Employment for All?Gainful Employment for All?

Finally:“Despite dismal student outcomes, for-profit institutions are raking in record profits.”

Senator Harkin

For-profit educations makes way to much moneyFor-profit educations makes way to much money!!

OPPORTUNITY?

You have to

BELIEVE!BELIEVE!And don’t employ anyone who doesn’tAnd don’t employ anyone who doesn’t

COLLECT DATACOLLECT DATAMeasure learning in quantitative terms.Measure learning in quantitative terms.

NEW RULES:•On-time graduation rates for students entering the program

•Placement-rate information for students who completed the program

•Median debt incurred by students who completed the program during thePreceding three years.

Change Their Change Their Frame of ReferenceFrame of Reference

They can’t understand you, until they experience you.They can’t understand you, until they experience you.

Revise your marketingRevise your marketingTake control of your advertising and messageTake control of your advertising and message

and move beyond “compliance.”and move beyond “compliance.”

IntegrityIntegrity in all aspects of your lead generation

Recover from theRecover from the Good timesGood times

The recession student market maybe the new normalThe recession student market maybe the new normal but the realities could be fatal.but the realities could be fatal.

Better not Bigger! Better not Bigger!

Enroll only those who you can graduate!Enroll only those who you can graduate!End of the open access model?End of the open access model?

Weaker consumer demand as potential students are more wary of taking on debt relative to job prospects in the current economy”

Be Exceptional Be Exceptional Build your institutional capital and instructional quality with Build your institutional capital and instructional quality with

Service Leaning.Service Leaning.

Learning by doing through the act of giving Globe University

Be Exceptional Be Exceptional Help fulfill your students dreams andHelp fulfill your students dreams and

take advantage of the recessional economy withtake advantage of the recessional economy with

Entrepreneurial Development ProgramsEntrepreneurial Development Programs

Abolish the Abolish the Job Placement OfficeJob Placement Office

Make your graduates responsible for their own successMake your graduates responsible for their own success

Wage Negotiations & Job Search SkillsWage Negotiations & Job Search Skills

Introduce:Introduce:

Career Progression PlanningCareer Progression Planning Where you are – Where you want to be.Where you are – Where you want to be.

Career, academic, & financial assessment at enrollmentCareer, academic, & financial assessment at enrollment

Then create a individual success planThen create a individual success plan

Michael J. Cooneymcooney@workforce-com.com