The majority of for-profit colleges are small, but the largest and most notable bear familiar names: the University of Phoenix and ITT Technical Institute, to name two. Historically, for-profit colleges have been local, family-owned operations controlled privately, oftentimes by single proprietors. But in the 1990s, a new age of for-profit college expansion began: The Wall Street era. It is “marked by the new visibility of publicly owned corporate providers” and “defined by Wall Street institutions.” For-profit colleges do not simply participate in revenue-generating activities, as do all institutions of higher education. Instead, for-profit colleges are also defined by their profit-seeking imperative.
Randy Martin, an author and sociologist, has called America’s current socioeconomic culture one where daily life has been financialized. Rather than exchanging money for goods, increasingly consumers use credit and debt to construct their social lives and its accoutrements. At the macro level, markets have financialized mortgages (see: the 2009 housing crisis) and education spending (see: student loans). When talking about for-profit colleges, financialization refers to the period of time when for-profit credentialing organizations were transformed into what investors blithely call “favorable markets.” These markets are favorable to investors because the conditions that produced them are significant and predictable. I call this blithe because the conditions in question are systemic inequalities in access to good jobs and a social safety net as good jobs become fewer. To capitalize on these conditions, the for-profit college organizations relied on growth and acquisition strategies consistent with shareholder-business organizations. Those favorable markets are not naturally occurring phenomenon; they come from somewhere. And they are profitable for reasons that suggest the success of for-profit colleges in their current form is a barometer of deep, far-reaching inequalities.
Despite the claims that for-profit colleges serve an unmet need, are more nimble than stodgy traditional colleges, and increase access to poor and minority students, for-profit colleges—as I explain in my book, Lower Ed—target and thrive off of inequality. That inequality is just shrouded in euphemisms that don’t challenge the conventional wisdom of the educational gospel. It’s there, even in the rosiest interpretations of the rise of for-profit higher education, or “lower ed,” at the turn of the 21st century.
When economists say that these agile, responsive institutions are better suited to career training, they’re talking about inequality. In the knowledge economy, technological advancements make human labor more efficient. More work can be produced with fewer workers. A consequence of that efficiency has been greater economic insecurity. The more insecure people feel, the more they are willing to spend money for an insurance policy against low wages, unemployment, and downward mobility. Those least likely to have an insurance policy that our labor market values are people for whom higher education has always been a long shot: poor people, single parents, the socially isolated, African Americans, the working class.
When education researchers talk about the unmet consumer demand that for-profit colleges serve, they’re talking about inequality. Who is mostly likely to go to good schools with college-prep classes, have medical care and stable housing, focus on standardized tests, and have the money to participate in extracurricular activities? And who does not have those social resources that many traditional colleges assume their likely student will have? Again, the answer can be summed up by race, class, and gender.
When investors and politicians say that for-profit colleges offer a flexible solution to retrain the country’s workforce, they are talking about inequality. Whose training in the jobs of the 20th century is now obsolete in the 21st century? Who needs a flexible solution? Women who carry the burden of primary childcare, men working more than one job, older adults caring for both their parents and their own children—a group for whom time isn’t just money, but also the absence of money.
Flexible solutions, on-demand education, open-access career retraining, reskilling, and upskilling—these are terms that talk about inequality without taking inequality seriously. When these words and conceptualizations of for-profit higher education are used, strange conclusions follow. People with “low cognitive abilities” are blamed for enrolling in “low-quality” for-profit colleges.
The argument goes that more for-profit colleges are a democratic good despite the fact that the most vulnerable students pay a high price for attending them. It’s said that consumers drive products, as if students are consuming degrees rather than the promise of a good job. In effect, people are blamed for doing precisely what the education gospel demands that they do.
From my experience on the ground working in for-profit colleges, and later when studying them, I realized there is a more satisfying—if damning—explanation for the rise of for-profit colleges in the Wall Street era of lower ed. Inequalities in how people work, exacerbated by social policies and legitimized by individualist notions of education as a consumer good, conspired to create the demand for a credential that would insure workers against bad jobs. And everyone from politicians to employers to researchers and those in traditional higher education benefitted when for-profit colleges became the solution to that demand. For-profit credentials became a political solution for “re-training” America’s workforce.
It may not be explicit, but when politicians extol the virtues of short-term occupational training, they are promoting for-profit colleges’ speciality. Employers were able to shift job training from on-the-job certifications to tuition-assistance programs where employees complete degrees around their work schedules. In Charlotte, North Carolina, that looked like a large banking call center offering Strayer University classes on-site, paid for with tuition-assistance dollars that had to be repaid if the worker separated from the company before two years of work, ostensibly paying the company back. For researchers, for-profit colleges are an oddity of the higher-education ecosystem that provides data to answer research questions. And traditional higher education benefitted, to some degree, when the most vulnerable and expensive students to enroll and teach pursued education at for-profit colleges instead of taxing the limited resources of public and private not-for-profit colleges.
The assumed public good of for-profit colleges as a solution to bad social conditions is that students get the training they need, on-demand. But the best-case scenario isn’t that great. Even the students who succeeded at for-profit colleges paid a price that’s not usually associated with the education gospel. Many took on significant debt. Those who took on less thanks to employer tuition plans or veteran’s benefits are still part of a system that will likely ask them to get more credentials in the future. They will re-enter the higher-education pipeline with a for-profit degree—a credential that makes it hard to move back into traditional higher education, which may be more prestigious, less expensive, or better suited for the student.
And those are the success stories. The more likely story is the student who finishes with high debt or more debt than their salary can absorb—say, a nursing assistant. Or the student who doesn’t finish, perhaps the most vulnerable of all students. She has debt, no degree, and all the burdens that made her likely to attend a for-profit college in the first place. For these students, the problem of inequalities in access and outcomes is clearly a consequence of lower ed’s expansion.
But there’s a larger story of inequality with vast social implications. It’s the story about whether it is affordable to keep subsidizing lower ed at its current scale as anti-poverty programs and social welfare safety nets continue to shrink or become harder to access. It’s the story of society’s willingness to make a high-cost, high-risk, debt-driven system of higher education absorb the demand among workers who—as almost every expert predicts—will increasingly have to go back to college many times to stay employable.
That’s the challenge for all of higher education, but only in lower ed is the challenge singular, especially expensive, and perversely profitable. It's the story of lower ed—subsidized by taxpayers—retraining workers at the individual's expense. It's the story of people living longer and wages stagnating, of spending more time in the workforce as childcare and healthcare costs continue to rise, and the social safety net frays. The troubling rise of for-profit colleges, despite their boom-and-bust investment cycles, is a symptom of larger issues wrought by changes in how people work and the unwillingness to legislate in order to protect the social contract.
This article has been excerpted from Tressie McMillan Cottom's book, Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy.