It’s War!

1. It’s War! Survival of Private Sector Colleges and Universities at Stake Michael J. Cooney mcooney@workforce-com.com

2. Battles: • Congressional Hearings • GAO Reports and Investigations • NPRM – Gainful Employment • Negative Press • State Investigations • Plus: • All Higher Education Outcomes in Question • Validity of the Accreditation Process

3. Finally! The value assessment, structure, methods and delivery of higher education is undergoing dramatic change. What is college? And why should I go? The traditional model is changing. Students’ convenience is the future. “The students of 2020 will demand an education on Their terms and will be seeking a technology-based customized approach.” The College of 2020, Chronicle Research Services

4. Why? $

5. Why? Outsized rate of growth in the for-profit sector. 1990 – 2010 from less than 1% market share to almost 12%.

6. Why? Students enrolled at for-profit colleges jumped from 1 million to 1.8 million between 2003-2008. Federal aid to these schools TRIPLED from $8 billion to $24 billion. Federal aid to not-for-profit and public schools increased 69% during the same time period For-profits schools represent 8% of total student enrollment and 23% of federal student aid in 2008

7. $129,775,998,123 Title IV Funds Total 2009/10 18.54% increase from previous year ------- Publically Traded For-Profit Education Companies 15% of all Title IV Funding 64% of the for-profit sectors Title IV funds $5,380,680,600 (2009/10) Estimated University of Phoenix /14% increase

8. “The vast majority of the growth among Pell recipients attending for-profit colleges in the last 15 years has been among students that many traditional colleges and universities have shunned: working adults, especially from the lower socioeconomic strata.” Thomas G. Mortensen,

9. Why? To BIG to regulate! The power and validity of the “Triad” is in question.

10. HELP COMMITTEE • HEALTH, EDUCATION, LABOR & PENSIONS • Emerging Risk? An Overview of the Federal Investment in For-Profit Education • For-Profit Schools: The Student Recruitment Experience • The Federal Investment in For-Profit Education: Are Students Succeeding?

11. HELP COMMITTEE HEALTH, EDUCATION, LABOR & PENSIONS Emerging Risk? An Overview of the Federal Investment in For-Profit Education For-Profit Schools: The Student Recruitment Experience The Federal Investment in For-Profit Education: Are Students Succeeding?

12. The Battle • The Role of Accreditation • Quality Assurance – Gate Keeper - Quality Improvement • Focus on Inputs and process • Promotes status quo • Establishes barriers to entry • “Accreditation today is the biggest barrier to innovation • and change in higher education” Charles Miller • “The secrecy of peer review has actually become counterproductive • in terms of credibility with the public” Steven Crow

13. The Battle Yasmine Issa , former Sanford Brown Institute student, Yonkers, NY

14. The Battle Gregory Kutz , Managing Director, Office of Forensic Audits and Special Investigations, U.S. Government Accountability Office, Arlington, VA

15. CLAIMS: • Cost the taxpayer too much • Charge too much for tuition • Have excessively high default rates • Have excessively low graduation rates • Fail to prepare students for Gainful Employment • “Debt without a Diploma”

16. No Comparable Data! Post-Secondary Education Market Share 70% Public 18% Private non-profit 12% For-profit Student success story vs. Student failure story

17. For-profits Cost Taxpayers More Taxpayer Cost per student per year $12,000 Public Universities No taxes on endowment income, property or use taxes etc. $5,300 Private Non-profit Colleges & Universities No taxes on endowment income, property or use taxes etc. $4,800 For-profit Colleges Pay federal, state and local taxes The Apollo Group (University of Phoenix) paid an estimated $500,000,000 in taxes in 2009.

18. For-profits Cost Taxpayers More Annual Taxpayer Cost Per Completion $50,000 Public Universities No taxes on endowment income, property or use taxes etc. $18,000 Private non-profit colleges & universities No taxes on endowment income, property or use taxes etc. $17,000 For-profit Colleges Pay federal, state and local taxes Stifel Nicolaus 10/27/10

19. For-profits Cost Taxpayers More with Loan Defaults Factored In Student loan default rates track very closely with the socio-economic status and family money management practices of the borrower. Inputs vs. Process

20. For-profits Charge Too Much for Tuition • Cost per student, per year 2009-10 • $14,174 For-profit colleges • $7,020 Public colleges – in state • $18,548 Public colleges – out of state • $26,273 Private non-profit colleges • $50,000 Plus Elite private non-profit colleges Public colleges increased their tuition as much as 17% across the board and many hidden fees are up more than 50% in 2010

21. For-profits Have the Highest Loan Defaults • Defaults are high and on the rise for all institutional types • The current economy and unemployment rate • The Fed encouragement of irresponsible borrowing • A change in borrowing habits and rationale: Student who used to borrow only for tuition are now borrowing to support a lifestyle. • The feds will not permit the schools to limit loan values based on realistic payback 85% of college graduates must move back home

22. For-profits Have Low Graduation Rates Institutional types of all types have low and declining graduation rates and the public colleges and universities are among the worst. Robert Tucker Only 25% of community college students earn degrees within six years Remedial courses do not carry credit-weight, which is the main cause of discouragement for students who are placed in them. Students feel as though they’re working for nothing and 30 percent drop out before even beginning their college career.

23. For-profits Fail to Prepare Students for Gainful Employment A potentially good idea even though the current metrics are badly flawed. In some form this is the new reality! Gainful Employment for All?

24. Finally: “Despite dismal student outcomes, for-profit institutions are raking in record profits.” Senator Harkin For-profit educations makes way to much money!

25. OPPORTUNITY?

26. You have to BELIEVE! And don’t employ anyone who doesn’t

27. COLLECT DATA Measure learning in quantitative terms. • NEW RULES: • On-time graduation rates for students entering the program • Placement-rate information for students who completed the program • Median debt incurred by students who completed the program during the • Preceding three years.

28. Change Their Frame of Reference They can’t understand you, until they experience you.

29. Revise your marketing Take control of your advertising and message and move beyond “compliance.” Integrity in all aspects of your lead generation

30. Recover from the Good times The recession student market maybe the new normal but the realities could be fatal. Better not Bigger! Enroll only those who you can graduate! End of the open access model? Weaker consumer demand as potential students are more wary of taking on debt relative to job prospects in the current economy”

31. Be Exceptional Build your institutional capital and instructional quality with Service Leaning. Learning by doing through the act of giving Globe University

32. Be Exceptional Help fulfill your students dreams and take advantage of the recessional economy with Entrepreneurial Development Programs

33. Abolish the Job Placement Office Make your graduates responsible for their own success Wage Negotiations & Job Search Skills

34. Introduce: Career Progression Planning Where you are – Where you want to be. Career, academic, & financial assessment at enrollment Then create a individual success plan

35. There is power in community • Accept each other credits • Make referrals • Promote higher education of all kinds

36. Michael J. Cooney mcooney@workforce-com.com