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Rich People Matter More than Poor People.

It’s a simple, homespun truth, but seldom has it been brought home so powerfully as in the history of the online for-profit education sector of the United States. Rich people have enormous amounts of money invested in these schools … and why not? The schools take the wretched of the earth and make them more wretched, which after all is the destiny of the wretched. The poor we will always have with us. But along the way the hedge funds behind these schools collect billions in federal education dollars for their investors. When students default, which because a lot of them are losers they often do, investors are untouched. Only the wretched are responsible for repayment.

Expenditures at these schools are insanely low, since teaching is for shit and it’s all online so you save all that infrastructure money. Your main costs are advertising and getting the students to take the bait which, though many of them are ill-educated and gullible, is hard to do, since even if you’re real ignorant you might could see what shit the online for-profits are.

Anyway. The main point is to protect the rich people who’ve invested in this can’t-lose model, and their lobbyists have done a beautiful job of that. Check out how they did it here.

Margaret Soltan, December 10, 2011 3:51PM
Posted in: CLICK-THRU U.

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7 Responses to “Rich People Matter More than Poor People.”

  1. dave.s. Says:

    I don’t think many people wake up in the morning and think ‘What evil can I do today? bwa-ha-ha-ha-ha’ Folks who started and now work in for-profits likely focus on the successes, the young mother who went from burger-flipper to phlebotomist. In junior high school when kids are saying they want to be astronauts and cops and senators, nobody says, ‘I want to be a debt collector threatening the young mother who went from burger-flipper to burger-flipper with a ten month detour during which she flunked out of phlebotomist school’ (and ran up ten thousand dollars of debt).

    Nor do I think the young mother is worse off than Courtny Munna, the NY Times’ poster girl for student debt http://www.nytimes.com/2010/05/29/your-money/student-loans/29money.html?src=me&ref=general. The incentives here are dreadful. I think you fix them best by making student debt dischargeable in bankruptcy, and making the schools eat what they cook – when the debts go bad, at least some of the loss goes against the school. This would discourage stupid and hopeless phlebotomist (and ‘interdisciplinary degree in religious and women’s studies’).

    Times quote: ‘“Had somebody called me and said, ‘Do you have a clue where this is all headed?’, it would have been a slap in the face, but a slap in the face that I needed,” said Cathryn Munna. “When financial aid told her that they could get her $2,000 more in loans, they should have been saying ‘You are in deep doo-doo, little girl.’ ”

    That’s not a role that the university wants to take on, though. “I think that would be completely inappropriate,” said Randall Deike, the vice president of enrollment management for N.Y.U., who oversees admissions and financial aid. “Some families will do whatever it takes for their son or daughter to be not just at N.Y.U., but any first-choice college. I’m not sure that’s always the best decision, but it’s one that they really have to make themselves.”’

    Well, crap. Set it up so the schools have skin in the game, and they will stop facilitating stupid. Both profit and not-for-profit.

  2. Margaret Soltan Says:

    dave.s. Yes, but your comment sets aside the crucial question of the legitimacy of the school. There’s plenty of evidence that – for excellent reasons – employers and graduate schools don’t respect for-profit degrees. For-profits accept virtually everyone who applies (or who they drag in); they pour their money into advertising and recruitment rather than education; quite a few of the schools are rules-violators. These fact are well-known; and, with more rules coming from the government, surely there will be yet more rule-breaking.

    Yes, some students will have difficulty getting jobs when they graduate – from a legitimate or a barely legitimate school. But the legitimate school – the one that enjoys a good reputation – will tend to give its students an edge in life. It has taught them more; and it will be taken seriously by the world.

  3. david foster Says:

    “(for-profit schools) pour their money into advertising and recruitment rather than education”

    I have to note that the expensive and unprofitable sports programs run by many non-profit schools, about which you frequently write, are actually a form of advertising and recruitment.

    Substantial skin in the game for the institution should be required for federal loan programs, regardless of whether the school is for-profit or non-profit.

  4. Stephen Karlson Says:

    The shame is that universities that used to unashamedly offer upward mobility (I’m thinking about City College of New York and Wayne State in Detroit and DePaul on a good day and Northern Illinois when headquarters thinks clearly) seem to be viewing the for-profit onlines as competitors to be emulated rather than as exemplars of What We Ought Not Do.

  5. Mike S. Says:

    The Times writes about the lobbyists’ full court press but neglects other salient facts. Senator Feinstein is married to UC Regent Dick Blum, he owns substantial shares in two for-profit higher ed. ventures. He’s got nearly a billion dollars invested in something regulated by the federal gov’t with the prospect of his wife voting on relevant legislation.

    UD was mentioned here:

  6. University Diaries » “These bowls receive millions of dollars in federal and state subsidies. …They don’t donate money to their communities. They don’t do anything of substance in a charitable sense other than line the pocket Says:

    […] It’s strange to think of a world without the Bowl Championship Series. Not that it’ll happen. Stories like this one, in which its filthy corruption – even by the general standards of big-time university sports – is once again described, always conclude by saying, as this one does, “the end is near.” But the BCS sustains itself the same way other filthy American enterprises – for-profit colleges, for instance – sustain themselves, by using our tax dollars to lobby politicians. […]

  7. dave.s. Says:

    These guys talk about a lot of crap outcomes for people who went to serious schools, and quote apologist for those schools trying to pretend it away: http://www.bloomberg.com/news/2011-12-07/trapped-by-50-000-degree-in-low-paying-job-is-increasing-lament.html

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