Since the election of Donald Trump, the fortunes of the for-profit higher education sector seem to have risen dramatically.
The stock price of publicly traded education companies is up across the board, with increases typically ranging from 25% to over 100% since November 9th. Behind-the-scenes private equity activity is coming out of hibernation, and, what had been almost daily attacks on private sector higher education from the Education Department and mainstream media, have gone virtually radio silent. The difference between November 7th and November 9th is profound.
But is there really a “new day” for the for-profit sector of higher education or is what we’re seeing mostly post-election hype that will not sustain itself?
For the fierce, ideological critics of for-profit higher education, the election of Donald Trump is nearly apocalyptic (and not just relative to private sector higher education). However, other than generic statements about his desire to decrease existing federal regulation of all kinds and to limit future regulation, we really don’t know what a Trump Education Department, under Betsy DeVos as secretary, will mean for either K-12 or higher education. Ms. DeVos’ claim to fame in the education world is as an enthusiastic proponent of vouchers and charter schools, and as someone who seems to look favorably on for-profit operators in the K-12 context. No one knows what her views on higher education are, although one could surmise that the department would almost certainly be less ideologically opposed to private enterprise under her than has been the case with Arnie Duncan and John King.
As for Trump himself, other than limited commentary on student debt and generally disdainful language about the Education Department itself, he has not provided any meaningful hints on what his presidency would mean for higher education policy. We also can’t take much from his disastrous foray with Trump University, which was never a “university” in any sense of the word.
As someone who, despite being a product of the traditional higher education world (both as a student and professionally), has active connections to and experience in the private sector of higher education, I get the sense that current expectations in the sector are a little “frothy” and potentially misplaced. Why is that?
First of all, the long-term sustainability of the industry has nothing to do with who is president. The election of Trump may very well alter the short-term behavior of the federal government in ways that are more favorable—or at least less punitive—than had Secretary Clinton won the election and maintained the status quo. However, the long-term future of for-profit enterprise as a viable “sector” of higher education will require certain structural commitments that must exist outside of transcendent and temporal political realities. In effect, the industry seems to have been given a tremendous, unexpected gift, but if for-profit operators harbor a collective belief that Trump’s electoral victory has guaranteed their future, that would be a naïve and dangerous assumption. So, what does have to be true to ensure the sector’s future?
First, for-profit educational institutions should be committed to some areas of greater accountability and results than their not-for-profit brethren–that does not necessarily mean separate regulations–but is may mean greater performance. Double standards are a fact of life and that is no different in higher education. It is also reasonable. If owners of for-profit educational institutions enjoy financial benefits largely via public funding, one can argue they have greater accountability for outcomes than institutions in which no individuals personally own, or benefit from, equity in the business. It is certainly acceptable to do well by doing good, but setting a higher standard would further legitimize the business model. It is certainly acceptable to do well by doing good, but setting a higher standard would further legitimize the business model while protecting for-profit providers from attacks and future regulation based on tax status.
Second, the for-profit “sector,” such as it is, must be prepared to accept certain cultural changes. Even if we assume that making a profit delivering education is legitimate as a matter of principle (and we seem to have come to that conclusion as a society in many other industries), there is almost certainly a “social contract” unique to educational enterprise that binds providers to pursue student and taxpayer outcomes at least as enthusiastically as they pursue shareholder outcomes. Operationally, that may mean spending at least as much on career services as marketing and admissions—and it may mean accepting lower net margins. It almost certainly means valuing student retention as highly or more highly than new enrollments as well as aligning student debt with the value of the education, with or without gainful employment regulations. It may mean shifting from the historical focus on aggressive growth to a focus on sustainability. And it likely means a shift from academics on the periphery to academics as a core competency. Although proprietary institutions typically retain and graduate higher percentages of students than other sectors of higher education in certificate and two-year programs, academic operations have not typically been the “center of attention” in the way that admissions has been. Making that cultural change would be in the enduring interest of the industry.
In short, the long-term viability of private sector higher education lies in the industry’s ability to deliver a sustained, compelling value proposition to students, employers, and tax payers, while operating with “bullet proof” compliance and unquestioned stewardship of public funds. Thinking otherwise puts the private sector of higher education at risk regardless of who is president.
Opportunities
One of the great potential ironies of the Trump election could be that private sector education comes “out of the shadows” to take a leadership position in the reformation of higher education, particularly as it relates to accountability. While traditional, mostly regionally accredited institutions have never had any formal accountability for even the most basic student outcomes such as retention, graduation and employment, for-profit institutions have operated under a rubric of accountability for outcomes for half a century, through accreditation and state and federal oversight. In fact, much of the regulatory regime to which private sector education is accountable literally only applies to those institutions due to their tax status. As a result of this reality, if the private sector is smart, it will move away from its historical view of intellectual assets and operational strategies as “proprietary,” and assertively join the rest of the higher education world, not only as an equal partner, but as the sector that knows accountability better than any other. This could be the difference between surviving and thriving over the long-term.
The sector’s future is obviously much more bright in a leadership role, collaborating with other sectors, congress, regulators, and accreditors (likely via HEA reauthorization) to help construct an accountability regime based on agreed upon outcomes that apply broadly across higher education than it is by taking a short view of the Trump election, which, at best, is a temporary reprieve. Even if a Trump presidency does lessen the regulatory burden on for-profit educational providers, and it likely will if only in the sense that the department will be less ideological, his election will not erase many years of “policy by regulation” nor will it erase the inherent biases that seem to exist in the Department. Moreover, the “4th Branch of government” (administrative departments) is monolithic and not likely to be undone by any one president, in four or even eight years.
The extent to which the for-profit sector of higher education effectively leverages the “gift” of a Trump presidency with a disciplined commitment to creating the compelling, un-debatable value proposition discussed earlier, has implications way beyond the sector itself. As recent research shows, both the U.S. economy and society are profoundly dependent upon private sector career colleges and universities. Since there is no viable alternative to the sector, it is imperative that the for-profit industry rise to the occasion and ensure the long-term viability of private sector higher education—for students, sector employees, employers, and society at large.