Low Profits will Better Allocate Academic Funding

By BRITTANY FIELDS

At for-profit schools, roughly an extra $60,000 (the average income for professors according to the Bureau of Labor Statistics) could be the difference between taking a communications class with a professor who is a recently retired employee of a TV network and taking a class with someone who has minimal experience in the field of the students’ concentration. Of course, there are many reasons why students do not get the optimal academic experience. One of the reasons is some of the money students at for-profit colleges pay goes towards the pockets of shareholders and not that well experienced professor who can teach students academics, as well as provide students with tricks of the trade.
Something about this system seems morally wrong. It is a system that has the ability to place its shareholders above its students, charging students large amounts for tuition to ensure a profit. Unlike nonprofit schools like Fordham that use subsidies to help students pay tuition, money made at for-profit schools are the additional profits of shareholders. Also, investing in academics comes in second on a for-profit school’s to do list, even though it disadvantages students.
An attempt to fix this is called a “low-profit” school. As implied, the profit is not taken out of the equation; profits are used in a different way. Rather than all of profits going to shareholders, some, if not most, goes into the academics—reversing the priorities.
Based on “Low-profit Limited Liability Companies,” a research article published in the Journal of Public Affairs and conducted by three professors from the University of Maine, people seem to be confused with the idea that low-profits seem to help both for-profit and non-profit companies. However their research also finds that with low-profit companies everyone wins in some way. The shareholders make some profit, not the highest possible, but a profit. Then some of the profit taken from shareholders are given to the students by improving educational methods.
Some advocates ask: what is to stop one school from lying about their academic performance, still giving their shareholders more of the profit? And how would business operated schools transition to a “low-profit” model?
According to The Chronicle of Higher Education, low profit must adhere to an important provision to ensure the efficiency of low-profit schools. Investors would be able to sue the “low profit” if it does not keep up with its mission. This provision would cause most low profits to abide by the purpose of the model. At the same time, because more pressure is placed on producing a strong academic performance, more students would levitate toward low-profit schools.
While this may not be the most absolute perfect model, and, of course, there are things that can be tweaked to make it more efficient, low-profit schools don’t seem to be a bad idea. With for-profits schools that treat other people’s education like something that can be placed on the back-burner for a few bucks, and with the fact that for-profit schools are not going away (despite their issues in this economy), we need to start somewhere.

Low Profits Are Still No Match for Public and Private Schools

By RACHEL SHMULEVICH

The fact that college tuition is severely inflated isn’t debatable—it’s an overwhelming fact evinced by the five figures we pay to attend school each year—but even $50,000 or more per year isn’t enough to completely cover the costs of education. There are still books, lab fees, and those annoying little charges that keep popping up all over the place. Sure, this model may be flawed, but it’s important to consider the value of the education itself—what are you getting out of it?

Just 40 years ago, a college degree guaranteed you a job. It’s not the case today, but it makes having a degree all the more important. We definitely aren’t guaranteed employment the moment we graduate; but in order to get that job at all, we are expected to earn a diploma.

A proposed alternative to the model of private colleges are the so called “low profit” institutions—which include schools such as the University of Phoenix and Kaplan and DeVry universities. On paper, these educational companies forward more of their costs to education and less to shareholders and executives. However, their mission doesn’t translate to reality. The amount of money going into both marketing and corporate profit significantly outweighs how much is spent on student instruction. It’s obvious where the focus here is: advertising—not academics.

But what about public universities as an alternative to private? Public schools are much cheaper than their private counterparts, and most have resources that match or even exceed prestigious private universities. Many of them are considered among some of the best schools in the nation—UC Berkeley, University of Virginia and College of William and Mary—just to name a few. Even for-profits cannot match the generally low tuition of publics. And they definitely don’t match the average amount of money allocated for each individual student’s instruction.

Gregory Ruzis, senior manager of Fulcrum Analytics, stated that when hiring, where the degree comes from isn’t important for him in evaluating whether or not the candidate can do the job. However, he notes that candidates from public and private universities, as opposed to those from for profits, tend to have a more complete education.

An education in a for-profit institution isn’t useless—but if you’re looking for a good alternative to a private college, this isn’t it. These educational companies are in fact a “watered-down” version of private colleges and universities and nothing more. They offer no meaningful difference from private institutions in the amount spent on students versus how much is diverted to shareholders. Moreover, their education, while convenient and trimmed of all the “nonsense,” is limiting. If you’re really looking for change, look no further than the publics.