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Paying heed to the US for-profit phenomenon

December 21, 2011

PBS’s Frontline documentary team has released a follow-up to its 2010 film about US for-profit conglomerates, College Inc.  

‘Educating Sergeant Pantzke’ examines the manner in which for-profit colleges have attempted to monopolise the recruitment of armed forces veterans whose tuition is paid for by the US state under the terms of the GI Bill.

The focus on aggressive and misleading recruitment chimes with that uncovered by an investigative report from the Huffington Post.  Recruiters are schooled to ‘Look for the Pain’ and convince those on the end of the hard sell that college is a route to resolving problems.

That article focused on changes at Education Management Corporation after their takeover by private equity firms: EMC also own The Art Institute who recruited Sergeant Pantzke.

In the UK, David Willetts met with representatives of the featured companies twelve times prior to the publication of the government’s white paper for higher education.  His political party is backed by very similar financial operators seeking outlets for capital and access to the UK student loans.

 Here, these companies are not going to be able to charge such high fees as they do in the US.  The government would like them to do something else: to offer cheaper alternatives to undercut the established provision.  These conglomerates have deep pockets and in the short term (and perhaps even the medium term) they could run at a loss to drive the established provision into difficulties, while their subprime degrees can be mis-sold to communities with little experience of higher education.  This would superficially resemble widening participation. 

Students at the for-profit BPP already have access to loans and grants on the same terms as those at public universities.  As of 2012/13 they will be able to borrow up to £6 000 pa to meet fees.  The creation of a single regulatory framework for higher education in England is a chance to rectify this anomaly.

 As Martin Hall, vice-chancellor at Salford, has written

The real issue, then, is not whether or not non-profit universities can become more efficient, or provide genuine choice for students.  They are doing both.  The point for debate is whether or not it is appropriate that for-profit universities convert large amounts of public cash into shareholder dividends via the mechanism of publicly subsidised student loans.

 Spot on – why should UK taxpayers provide risk free income to for-profit companies by underwriting the risk that their graduates fail to repay what they have borrowed?

It needs to be said that a large part of coalition policy across the board is about preserving corporate profits for their party backers at a time of zero growth. 


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