By Reihan Salam
September 19, 2011
There are a few small things I’d change about Joe Nocera’s piece on for-profit higher education.
(1) I wish he had talked to Rick Hess and Kevin Carey, both of whom have done excellent work on this subject, and Vance Fried, who has written on the “profits” in nonprofit education. Education Sector’s borrowing to credential ratio would have been an excellent framing device.
(2) On his prescriptions, which you’ll find below, I’d add a few points:
Robert Silberman, the chairman and chief executive of Strayer Education, widely regarded as one of the better for-profit companies, suggests replacing the plethora of regulations with two simple changes. First, he says, the government should force the for-profits to share in the losses when a student defaults. And second, the government should set up a national eligibility test to screen out students who lack the skills to attend college. Would there still be defaults? Of course. But plenty of students at nonprofit universities default, too. Silberman’s solution would help ensure that both the government and for-profit companies are taking smarter risks on the students they enroll and educate.
There is nothing inherently wrong with the idea of for-profit education. The for-profits have flaws, but so do nonprofits, with their bloated infrastructure, sky-high tuition, out-of-control athletic programs and resistance to change. In a country where education matters so much, we need them both.
(a) Why only force the for-profits to share in the losses when a student defaults? The borrowing to credential numbers tell us that the nonprofits are generally much better on this front. But I see no reason to limit the provision to for-profits, as it would serve as a useful disciplining mechanism for all institutions that accept federal student loans.
(b) Must we have a national eligibility test if colleges have “skin in the game” per Silberman’s first suggestion? The answer might be yes, but we should be clear on what we’re saying here: some students will be barred from attending college on the grounds that they don’t clear some bar pegged to aptitude. That will make many people very uncomfortable, and I’m not sure that Silberman and Nocera have thought through the implications