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Private for-profit institutions have been the fastest growing part of the U.S. higher education sector. For-profit enrollment increased from 0.2 percent to 9.1 percent of total enrollment in degree-granting schools from 1970 to 2009, and for-profit institutions account for the majority of enrollments in non-degree granting postsecondary schools. We describe the schools, students, and programs in the for-profit higher education sector, its phenomenal recent growth, and its relationship to the federal and state governments. Using the 2004 to 2009 Beginning Postsecondary Students (BPS) longitudinal survey we assess outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions. We find that relative to these other institutions, for-profits educate a larger fraction of minority, disadvantaged, and older students, and they have greater success at retaining students in their first year and getting them to complete short programs at the certificate and associate degree levels. But we also find that for-profit students end up with higher unemployment and "idleness" rates and lower earnings six years after entering programs than do comparable students from other schools, and that they have far greater student debt burdens and default rates on their student loans.

Like subprime mortgages, for-profit colleges are a scam driven by payment of commissions to sales staff known as recruiters. The payment of commissions to high-pressure salespeople is so central to the scam that the umbrella trade group for for-profits, the Association of Private Sector Colleges and Universities (APSCU), has sued the federal government to overturn its ban on incentive pay. It cannot be stated strongly enough: for-profit colleges could not engage in the ongoing exploitation of students and theft of federal money without the direct cooperation and assistance of the federal government in what can only be termed an immoral economy. The same forces that demonize everything government does or attempts to do are busy feeding from the government trough. The hypocrisy is untenable, the federal subsidies unfathomable and the lack of criminal prosecution unconscionable. For-profit colleges are a kickback scheme where politicians enact favorable legislation and regulations that allow for-profit colleges to maintain access to student loans and grant money. The for-profit colleges then "give" a small cut of the federal money back to the politicians to enact favorable legislation.

While past annual Profiles reports have focused on either for-profit EMOs or nonprofit EMOs, this is the first annual Profiles report to cover both categories in a single report which allows for easier comparisons. The 2010-2011 school year marked another year of relatively slow growth in the for-profit education management industry and another year of steady growth in the nonprofit EMO industry. We believe our key finding from the past three years, that the for-profit school management sector has leveled off and that many for-profit companies are expanding into supplemental services, continued in the 2010-2011 school year. The nonprofit management sector's growth remains steady, both in terms of new nonprofit EMOs and new managed schools. While the number of new schools under for-profit EMO management has slowed, enrollments in all managed schools continue to grow at a rapid pace.

The 2009-2010 school year marked another year of relatively slow growth in the for-profit education management industry. The greatest increase in profiled companies occurred in the category of small EMOs (i.e., EMOs that manage three or fewer schools). We believe our key finding from the 2007-2008 and 2008-2009 report, i.e., that the growth of the EMO sector is slowing, still holds true for the 2009-2010 academic year overall. While the number of new schools under for-profit EMO management has slowed, the enrollments in these schools continue to grow at a more rapid pace. This Profiles report shows that generally large for-profit EMOs are managing fewer schools, and that small and medium for-profit EMOs are growing. While past annual Profiles reports have focused on descriptive data related to the number of EMOs and schools under EMO management, this year's report adds new variables on school performance as measured by federal or state rating systems. 

Republic Report has more information about Mitt Romney's ties to the controversial for-profit education industry, including poor performer Vatterott Colleges. The New York Times reported in January  that Romney praised for-profit colleges, in particular overpriced Full Sail University without telling voters that his campaign and Super PAC had received nearly $100,000 from Full Sail CEO Bill Heavener and from C. Kevin Landry, chairman of TA Associates, the private equity firm that owns Full Sail. But TA has other connections to Romney and the for-profit college industry.

For-profit colleges and universities have a well-deserved reputation for deceptive recruiting, low-quality programs, and sky-high prices. Now you can add union suppression to that reputation. A branch of the for-profit college mega-provider Kaplan University has noticed that some of its teaching staff are considering a union, and the management is not pleased. Recently, administrative staff at a branch of Kaplan International Centers (KIC) in New York City issued a memo to teachers to explain "the risk" of showing an interest in "union organizing." And the contents of the memo are revealing of the smears and innuendo that for-profit education institutions and other employers use to squelch union organizing activities and to make employees uneasy of asserting their rights to collective action.

For-profit colleges are the ultimate special interest. Many receive around 90 percent of their revenue from federal financial aid, more than $30 billion a year, and many charge students sky-high prices. In recent years, it has been fully documented that a large number of these schools have high dropouts rates and dismal job placement, and many have been caught engaging in highly coercive and deceptive recruiting practices. Yet when the bad actions of these predatory schools got publicly exposed, the schools simply used the enormous resources they've amassed to hire expensive lobbyists and consultants, and to make campaign contributions to politicians, in order to avoid accountability and keep taxpayer dollars pouring into their coffers. Are you surprised to learn that these subprime schools joined the now-discredited ALEC, the secretive group that connects corporate special interests with campaign contribution-hungry state legislators in order to dominate lawmaking at the state level? No, you probably aren't surprised. Much of the action on for-profit colleges takes place at the federal level, where the money comes from, but states are increasingly taking an interest in protecting their residents from predatory practices - through accreditation of schools, investigations of fraud, and other oversight. So for-profit colleges have come to ALEC to seek influence at the state level.

Teach for America loves to expand its reach, and so it has again, this time partnering with the controversial Imagine schools, the nation's largest for-profit charter school network. That's an interesting pairing. Imagine is based in Arlington, Virginia, with some 75 schools in more than a dozen states, including Maryland, and the District of Columbia. The for-profit charter operator has been investigated in some states for the way it exercises control over the schools it manages, essentially ignoring the boards of trustees that are supposed to really run the schools. It has also come under scrutiny for its complicated real estate deals that generate millions of public dollars for Imagine.

At a time when public schools are seeing deep cuts in funding, there's a growing market for companies running online elementary, middle and high schools. The largest for-profit company overseeing these programs in Colorado is Virginia-based company K12 Inc. While public schools are struggling to survive, K12 Inc.-with the support of state tax dollars-is reporting double digit profits. Meantime, it's not measuring up to state academic standards.

This post is about a for-profit charter management organization, Imagine Schools, and real estate/facilities. I'm using the dataset ImagineSchools posted here. Imagine is one of the largest charter operators in the country. The company currently operates 70-something schools. A common challenge for charter schools is access to facilities. Some districts give charters access to entire schools, some allow district schools and charter schools to operate out of the same building ("co-location"), and some charters secure facilities through non-profit or for-profit organization in the private sector. To the best of my knowledge, Imagine does not have any schools in district facilities. Instead, Imagine either owns the schools through the company's real estate arm, SchoolHouse Finance, LLC, or partners with one of two real estate investment trusts ("REITs"), Entertainment Properties Trust and Inland Public Properties Development. As of right now, EPT owns 27 facilities used by Imagine and IPPD owns seven facilities used by Imagine. To gather financial information I collected data from IRS 990 forms for the years 2008 through 20101. I pulled the following information

In some cases, charter schools are managed by for-profit entities (referred to in this article as "management companies"). The management agreements documenting these relationships range from agreements to provide general administrative support to agreements to provide virtually every service to be offered by the charter school, including curriculum, payroll, compliance reporting, providing teachers and staff through employee leasing, and the purchase and leasing of facilities. Many charter schools are intended to be operated as 501(c)(3) public charities. Historically, the Internal Revenue Service ("IRS") has carefully reviewed other types of charitable organizations operated by management companies to determine whether they qualify as a tax-exempt charities because they are, in fact, operating for the private benefit of the for-profit management company. However, the IRS has not brought a similar focus on this issue to charter schools generally - until now. The IRS is poised to increase its scrutiny of charter school/management company relationships and is now subjecting charter schools to more stringent standards defining such relationships.

"When our schools are run for profit, there are disastrous consequences for both students and teachers. Teachers are "managed" through the "outcomes" they produce, meaning their students' test scores. This makes teachers focus not on their students strengths, not on their students' needs or interests, but rather on their deficits, on the skills and concepts the students must master to pass the next test. Students who are, for whatever reasons unable to produce test score gains (perhaps they might be uninterested, alienated, traumatized, hungry, special education, new to the English language, or a hundred other reasons) become a liability for the teacher and the school. Under the pressure to produce "profits" is the form of higher test scores, schools begin to systematically reject students like these, as we are already seeing among some charter schools. Schools care less about nurturing students or teachers. The environment becomes less humane. Turnover increases among teachers, and attrition rises for students. Residual public schools become a dumping ground for students too difficult to educate."

"According to The New York Times, the New York State Attorney General has exposed the supposedly non-profit Pearson Foundation for what it really is, a partner with the for-profit wing of the global Pearson publishing mega-giant. The Pearson Foundation agreed to pay a penalty of over seven million dollars to New York State that will be used to prepare teachers to work in high needs communities. According to New York State law, foundations are prohibited by law from using charitable funds to promote and develop for-profit activities."

I'm frequently frustrated by our inability to talk sensibly about the role of for-profits in schooling. Most discussion amounts to reflexive demonization, occasionally interspersed with hired-gun salesmanship or protestations of good intentions. Nearly absent is thinking about the role for-profits can play in promoting quality and cost-effectiveness at scale, or what it'll take to make that happen.

"In response to my post, "What Happens when Profits Drive Reform?" Tom Segal has written a full-throated defense of the profit-seeking enterprises in the education sector. I think he overstates their value, and brushes aside legitimate concerns about the dangers our public schools face."

He is earning his teaching certificate through an online, for-profit alternative certification program, a nontraditional route to teaching that is becoming more common in Texas. Such programs, which can offer certification in three months to two years, are booming despite little more than anecdotal evidence of their success.

Akron businessman David Brennan told employees of White Hat Management last month that his family can no longer afford to subsidize the company he founded in 1998 and owns. White Hat is one of the country's largest for-profit charter school operators.

Today, hundreds of state legislators from across the nation will head out to an "island" resort on the coast of Florida to a unique "education academy" sponsored by the American Legislative Exchange Council (ALEC). There will be no students or teachers. Instead, legislators, representatives from right-wing think tanks and for-profit education corporations will meet behind closed doors to channel their inner Milton Friedman and promote the radical transformation of the American education system into a private, for-profit enterprise.

"If the mission of the education system is to serve the economy, and that means maximizing profits, then those profits will be highest if we have an overabundance of college graduates to do the technical work that must be done to keep the machinery of production running. And we have low wage service sector that is unable to raise its wages because they are unorganized and have no political clout. Those who are unemployed are informed over and over again by the school system that they are inadequate because they cannot pass the tests, and therefore to perceive their status as being the result of their own failure to make themselves useful to employers. They are unemployed not because manufacturing has been outsourced to cheap labor overseas, but because they were not "career ready," as proven by their failure to pass the new, much more "rigorous" Common Core aligned tests. Education reform becomes an exercise in rationalizing the shift of half the nation's workers into "surplus" status. It creates a new meritocracy, based on a false paradigm that defines the ability to do well on tests as merit."

Last week, Governor Chris Christie unveiled legislation that would allow private, for-profit companies to take over failing public schools.  Christie has also pushed for more charter schools and a New Jersey voucher system.