Michael Hiltzik: The university, for-profit and not-for-profit
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The only segment of higher education that seems to be thriving these days is the for-profit university, which offers to train students for ‘gainful employment’ at a price that’s below that of traditional four-year institutions but much higher than the public academy.
The questions swirling around the for-profit sector include whether they entice students into unsuitable programs, overload them with debt (mostly provided by federal programs), and can truly deliver on the promise of gainful employment.
As my Wednesday column reports, it’s not unusual to hear Richard C. Blum sounding off on similar issues of higher education governance and strategy, at least as they apply to the University of California, of which he is a regent. He’s not so vociferous when it comes to the for-profit sector, even though his investment firm is the largest shareholder in two leading companies in the industry.
There are indications that the Obama administration is considering tightening up the rules for proprietary colleges, many of which would not exist were it not for their students’ access to federal grants and loans. Among other things, the Administration is considering actually defining ‘gainful employment,’ a term that has been ambiguous for far too long.
A letter from numerous higher education advocacy groups to Education Secretary Arne Duncan in support of the federal initiatives is here. An update on proposed regulations is here.
The column begins below.
Conflicts of interest almost always involve money, but sometimes they raise more questions about the subjects’ perspective than about their wallets. Consider the large investments University of California Regent Richard C. Blum has made in two for-profit higher education companies, Career Education Corp. and ITT Educational Services Inc. Blum’s San Francisco investment firm is the largest shareholder in both firms, owning nearly 20% of Career Education and more than 10% of ITT Educational. The firm’s combined holdings in these two stocks is valued at about $700 million, based on their recent market prices. That sounds like a lot of money, but I think we can concede as a matter of courtesy that Blum, who is a billionaire and the chairman of the real estate firm CB Richard Ellis, probably wouldn’t take any action as a regent merely to juice the value of those holdings. But what do these investments say about Blum’s vision for higher education?
Read the whole column.
-- Michael Hiltzik
