The latest scrutiny in the for-profit education space comes from one of the regional accreditation bodies and their attention directed toward ”accreditation shopping.”
With the ongoing pressure from the Department of Education, coupled with a recent disclosure by noted investor, Steve Eisman, that he is shorting private education stocks and that for-profit education is the new sub-prime, the sector as a whole has taken a serious hit. For example, Apollo is trading at a 52 week low and other stocks are trading well below their moving averages.
This volitility will continue for the foreseeable future and a deep plunge for some education companies is a distinct possibility. This uncertainty will continue until the industry, and specifically some of the “bad apples” within the space, come to grips with aggressive recruiting tactics, sub-par academic protocol, and burdensome debt load of their students.
04 Jun
A New Paradigm
There is no argument that earning a degree increases what a person will earn over his or her lifetime. However, with increased scrutiny from the Department of Education and regulatory bodies on whether or not a specific degree from a specific institution provides the opportunity for the recipient of that degree to be “gainfully” employed, we have to ask ourselves if the paradigm is skewed. Is education slowly falling into the trap of promoting consumption rather than measuring if that education prepared a person to “do well?” What would it do to our existing paradigms and assessments if we based our model on this — “neither self nor wealth can be measured in terms of what you consume or own.”
This is an interesting PBS investigation of for-profit education -
Remember — two sides to every story!
Is the Obama vverhaul of student financing a bad thing? Absolutely not! Although I stand opposed to the recent health care legislation and the government intervention necessary to implement it, the overhaul of higher education finance is a good thing. Now don’t ask me how higher education financing slipped into a health care bill, but at its face value good things could come of it. Its benefits include:
1. Students will borrow directly from the federal government and bypass the middlemen (banks) who have made sizable amounts of money from fees associated with the previous form of lending.
2. Pell Grant funding should increase helping more of those who are in financial need earn an education.
3. Loan repayments for graduates will be capped at 10% of a graduate’s salary rather than the 15% that it is today.
Will we see the intended $68 million in savings? The jury will be out on that one for a while, but these recent changes are a step in the right direction.