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"For-Profit Colleges Are Projected to Sharply Increase Their Share of Adult Students By Kelly Truong For-profit universities will have 42 percent of the adult-undergraduate market by 2019, nearly doubling their current share, according to a new study by the consulting company Eduventures. Last year approximately one-quarter of all adult undergraduates were enrolled at for-profit universities. The study projects that, in the next 10 years, for-profit institutions will increase their share of the adult market by 14 percentage points."

"High-Profile Trader's Harsh Critique of For-Profit Colleges Steven Eisman, the Wall Street trader who was mythologized in Michael Lewis's The Big Short as that rare person who saw the subprime mortgage crisis coming and made a killing as a result, thinks he has seen the next big explosive and exploitative financial industry -- for-profit higher education -- and he's making sure as many people as possible know it. In a speech Wednesday at the Ira Sohn Investment Research Conference, an exclusive gathering at which financial analysts who rarely share their insights publicly are encouraged to dish their "best investment ideas," Eisman started off with a broadside against Wall Street's college companies. "Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry," said Eisman, of FrontPoint Financial Services Fund. "I was wrong. The For-Profit Education Industry has proven equal to the task." Eisman's speech lays out his analysis of the sector's enormous profitability and its questionable quality, then argues that the colleges' business model is about to be radically transformed by the Obama administration's plan to hold the institutions accountable for the student-debt-to-income ratio of their graduates. "Under gainful employment, most of the companies still have high operating margins relative to other industries," Eisman said. "They are just less profitable and significantly overvalued. Downside risk could be as high as 50 percent. And let me add that I hope that gainful employment is just the beginning. Hopefully, the DOE will be looking into ways of improving accreditation and of ways to tighten rules on defaults." Stocks of the companies appeared to fall briefly in the last hour of trading Wednesday, after news of Eisman's speech made the rounds."

"Why Pay for Intro Textbooks? February 7, 2012 - 3:00am By Mitch Smith If ramen noodle sales spike at the start of every semester, here's one possible reason: textbooks can cost as much as a class itself; materials for an introductory physics course can easily top $300. Cost-conscious students can of course save money with used or online books and recoup some of their cash come buyback time. Still, it's a steep price for most 18-year-olds. But soon, introductory physics texts will have a new competitor, developed at Rice University. A free online physics book, peer-reviewed and designed to compete with major publishers' offerings, will debut next month through the non-profit publisher OpenStax College. Using Rice's Connexions platform, OpenStax will offer free course materials for five common introductory classes. The textbooks are open to classes anywhere and organizers believe the programs could save students $90 million in the next five years if the books capture 10 percent of the national market. OpenStax is funded by grants from the William and Flora Hewlett Foundation, the Bill & Melinda Gates Foundation, the 20 Million Minds Foundation and the Maxfield Foundation. Traditional publishers are quick to note that the new offerings will face competition. J. Bruce Hildebrand, executive director for higher education of the Association of American Publishers, said any textbook's use is ultimately determined by its academic value. "Free would appear to be difficult to compete with," Hildebrand said. "The issue always, however, is the quality of the materials and whether they enable students to learn, pass their course and get their degree. Nothing else really counts." In the past, open-source materials have failed to gain traction among some professors; their accuracy could be difficult to confirm because they hadn't been peer-reviewed, and supplementary materials were often nonexistent or lacking because they weren't organized for large-scale

"July 23, 2010 Education Department Takes Aim at For-Profits With Student-Debt Rule By Kelly Field After a five-week delay, the Education Department will release a rule Friday that would penalize for-profit colleges that saddle students with unmanageable amounts of debt. The proposed "gainful employment" rule, which has been anticipated by for-profit colleges and short-sellers alike, would cut off federal aid to programs whose students have the highest debt burdens and lowest loan-repayment rates, while limiting enrollment growth at hundreds of other programs. For-profit lobbyists are calling the rule "unwise and unnecessary." In a conference call with reporters, the Education Department said it was seeking to protect students and taxpayers from the high costs of student-loan defaults. "While career colleges play a vital role in training our work force to be globally competitive, some of them are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use," said Secretary of Education Arne Duncan in a written statement. Department officials estimated that 5 percent of programs would become ineligible for student aid under the rule, while 55 percent would be subject to growth restrictions and required to warn consumers and current students about the dangers of excessive borrowing."

"Flogging For-Profit Colleges November 24, 2010 WASHINGTON -- The release of yet another report highly critical of for-profit higher education by yet another advocacy group in the nation's capital barely qualifies as news these days -- except that the report and the reaction to it so clearly underscore how critics and defenders of the colleges are talking past one another. The study, released Tuesday by Education Trust, largely repackages previously published data on higher education companies -- their booming enrollments (particularly of minority and low-income students), escalating dependence on federal financial aid, relatively low graduation rates (compared to most public and independent four-year colleges), and high student debt and default levels -- to suggest that the colleges are a breeding ground for another crisis of the magnitude of the subprime mortgage loan meltdown. (The report's none-too-subtle title: "Subprime Opportunity: High Dividends, Low Baccalaureates at For-Profit Colleges.") "If the for-profit sector as a whole did its part to ensure that the students they enroll got the kind of high-quality education they thought they were paying for, these institutions would be making an important contribution to our economy, indeed to our democracy," said Kati Haycock, the group's president. "Instead, too many are taking advantage of the system by operating a business model based on systemic failure and foreclosing on the futures of vulnerable students before they have a chance to begin. That's unethical, but it's also un-American.""

"July 1, 2011 As Costs of New Rule Are Felt, Colleges Rethink Online Course Offerings in Other States By Kelly Field Bismarck State College, a two-year institution located in the capital of North Dakota, offers something few colleges do: online degrees in power-plant technology. Utilities across the country send workers to the community college for specialized training in electric power, nuclear power, and other fields. "We're pretty darn unique," said Larry C. Skogen, the college's president. "I don't think we have any competition out there." Though other colleges offer similar programs on campus, "we deliver nationwide online," he said, with students in all 50 states. That could change soon. Under federal rules that take effect on July 1, Bismarck State will have to seek approval to operate in every state where it enrolls students, or forgo those students' federal aid. With some states charging thousands of dollars per application, the college is weighing whether it can afford to remain in states where the cost of doing business outweighs the benefits, in tuition terms. Though the college hasn't made any decisions yet, "the reality is that if we run into a state where we have few students and it's expensive [to get approval], it's probably not going to be cost-effective to continue," Mr. Skogen said. Such cost-benefit calculations are being conducted on campuses across the country, as college leaders struggle to make sense of a patchwork of state rules that were written in an era when "college" was synonymous with "campus" and online learning was in its infancy. Gregory Ferenbach, a lawyer who advises colleges on regulatory compliance, said he has heard from a "couple dozen" colleges, most of them nonprofits, that are considering withdrawing from some states because of the cost or burden of obtaining approval. Their decisions could have a significant effect on college access. If enough colleges steer clear of states with expensive approval processes, or s

"Despite scandal, for-profit education offers valuable model By Steven Pearlstein Wednesday, August 11, 2010 Last week's revelations about the high prices, uneven performance and shady marketing practices of for-profit universities have now cast a dark cloud over what had been the fastest-growing segment of higher education. Giant companies that pay big bonuses and use high-pressure sales tactics to foist overpriced services on unsophisticated consumers who take on more debt than they can handle -- tell me if this doesn't sound like the educational equivalent of the subprime mortgage scandal. I have two reasons to care about this. The first is that one of the biggest for-profits, Kaplan University, is part of The Washington Post Co., to which it has provided the handsome profits that have helped to cover this newspaper's operating losses. Although we in the Post newsroom have nothing to do with Kaplan, we've all benefited from its financial success. The more important reason is that these revelations are a setback for the only serious challenge to a hidebound higher education establishment caught up in a self-destructive arms race for students, faculty, athletes, research funding and charitable gifts -- a competition that has driven up costs at twice the rate of everything else even as schools lag in meeting the educational needs of students and society. "

"Half of Money Lent to Students at For-Profits Will End Up in Default, Government Predicts December 22, 2010, 1:09 pm The U.S. Education Department expects nearly half of the money lent to students attending for-profit colleges to enter default over a 20-year period, according to an estimate published on Tuesday. More broadly, the department projects that 16 percent of the dollars lent to all college students who entered repayment in 2008 will go into default. The department will use the estimates for budgetary purposes. The estimate echoes the findings of a Chronicle analysis last summer, which found that one out of five government loans that entered repayment in 1995 had gone into default, and that the default rate reached 40 percent for loans made to students at for-profit colleges."

"Does the Messenger Matter? July 15, 2010 WASHINGTON - Sen. Tom Harkin (D-Iowa) began what many foes of for-profit higher education consider long-overdue Congressional scrutiny of the sector here late last month with a hearing questioning the business model, student value proposition and role of federal funding at for-profit colleges. But some of the loudest shouting surrounding Harkin's inquiry as chairman of the Senate Health, Education, Labor and Pensions Committee is not about any of those substantive issues. Rather, it's about Harkin's decision to include Steven Eisman -- an investor who has bet that higher education stocks will tumble in the coming months -- on the panel of witnesses at the hearing and in the senator's attempts to line up support for a stringent examination of for-profit higher education. In a statement, Harkin said he has relied on Eisman because "he is a well respected analyst with a track record of making unpopular, but correct, observations about American industries." Either directly or indirectly, Eisman and other short sellers -- people who make investments betting that a certain stock price will fall -- have been lobbying Congress and U.S. Department of Education officials for months, seeking out greater regulation while not necessarily being being transparent about their financial interests. Some are also said to be behind news stories and whistleblower lawsuits against the sector with the idea that bad publicity -- and tougher federal regulation -- will drive down higher education stock prices and help short sellers rake in profits."

"March 13, 2011 Many For-Profits Are 'Managing' Defaults to Mask Problems, Analysis Indicates 3-year default rates on student loans are 5 times as high as 2-year rates at some colleges By Goldie Blumenstyk and Alex Richards It is no surprise that student-loan default rates go up the longer they're tracked: Give borrowers more time, and more of them will default. But a Chronicle analysis has found that at hundreds of colleges, most of them for-profit, the three-year default rate is inordinately greater than the two-year rate, giving credence to concerns that certain colleges are aggressively using "default management" tools to mask problematic rates of default. Education Department data released last month show that rates at nearly all institutions rose when measured for three rather than two years, as federal law will soon require. Yet at 243 colleges, or about 8 percent of the 3,168 degree-granting institutions The Chronicle examined, the three-year rate was at least 15 percentage points higher than the two-year rate, a substantial increase. Of those, 83 percent were for-profit colleges, including 27 institutions owned by Corinthian Colleges, 25 owned by ITT Educational Services, and 17 owned by Career Education Corporation, At five of Career Education's Cordon Bleu culinary colleges, the two-year rates hovered at 5 percent or below and the three-year rates exceeded 24 percent."

March 18, 2012 A Boom Time for Education Start-Ups Despite recession investors see technology companies' 'Internet moment' By Nick DeSantis Harsh economic realities mean trouble for college leaders. But where administrators perceive an impending crisis, investors increasingly see opportunity. In recent years, venture capitalists have poured millions into education-technology start-ups, trying to cash in on a market they see as ripe for a digital makeover. And lately, those wagers have been getting bigger. Investments in education-technology companies nationwide tripled in the last decade, shooting up to $429-million in 2011 from $146-million in 2002, according to the Na­tional Venture Capital Association. The boom really took off in 2009, when venture capitalists pushed $150-million more into education-technology firms than they did in the previous year, even as the economy sank into recession. "The investing community believes that the Internet is hitting edu­cation, that education is having its Internet moment," said Jose Ferreira, founder of the interactive-learning company Knewton. Last year Mr. Ferreira's company scored a $33-million investment of its own in one of the biggest deals of the year. Enlarge Image A Boom Time for Education Start-Ups 2 Mark Abramson for The Chronicle Huge advances in computing power at colleges have created a fertile ground for companies offering technology services, like the computer-learning group Knewton (above), where staff members recently gathered for a meeting. The scramble to make bets on a tech-infused college revolution has led to so many new companies that even Mr. Ferreira can't keep track. Udacity, Udemy, and University­Now all have plans to revolutionize online learning. There's the Coursebook, a young online-learning start-up. And Coursekit, a nascent challenger to Blackboard in the market for learning-management software. And Courseload, the Indiana-based digital-textbook enterprise. And CourseRank, the cl

"January 22, 2012 States Push Even Further to Cut Spending on Colleges By Eric Kelderman For nearly four years, governors and state legislators have focused on little else in higher education but cutting budgets to deal with historic gaps in revenue. Now, with higher-education support at a 25-year low, lawmakers are considering some policy changes that have been off-limits in the past, such as consolidating campuses and eliminating governing boards. Such proposals reflect the reality that, in most states, money for higher education will be constrained for the foreseeable future. Systems in Georgia and New York have already taken the unusual step of combining campuses under a single president. Other states, such as Ohio, are talking about giving institutions more freedom from state regulations, although for college administrators there's a trade-off: They would get more flexibility but even less state money. On the agenda in many statehouses this year will be bills that would tie higher-education appropriations to the completion rates of students at public colleges. Such performance-based models, which have had a mixed record in recent decades, are again popular with lawmakers trying to squeeze the most out of every tax dollar and to reward colleges that are more efficient at producing graduates. Related Content State Support For Higher Education Falls 7.6% in 2012 Fiscal Year Calif. Governor Goes After For-Profits With Limits on Cal Grants Legislators aren't demanding that colleges be more cost-efficient just to reduce spending on higher education, says Travis J. Reindl, a higher-education researcher for the bipartisan National Governors Association. They also want to keep colleges affordable for students. "We'll still be talking about money, money, money," Mr. Reindl says of the legislative sessions ahead. "Governors are increasingly interested in how the money is being spent by higher education ... and how much of that money is going to come out of

"Venture Fund for Traditional Colleges January 17, 2012 - 3:00am By Doug Lederman The space between nonprofit and for-profit higher education gets a little more crowded today. University Ventures Fund, a $100 million investment partnership founded by a quartet of veterans of the for-profit and nonprofit education sectors, is the latest entrant in a market that aims to use private capital to expand the reach and impact of traditional colleges and universities. The fund, whose two biggest investors are the German media conglomerate Bertelsmann AG and the University of Texas Investment Management Company, is focused on stimulating "innovation from within the academy," rather than competing with it from the outside, David Figuli, a lawyer and partner in University Ventures, said in an interview Monday. The projects will include helping institutions expand the scale of their academic programs, re-engineer how they deliver instruction, and better measure student outcomes; the first two investments, also announced today, will be creating a curriculum through Brandman University aimed at improving the educational outcomes of Hispanic students, and a company that helps universities in Britain and elsewhere in Europe deliver their courses online. "Most of the attempts to bring about innovation in higher education have come from people trying to buy their way in," Figuli said, citing the many takeovers of traditional institutions by for-profit colleges over the last decade (quite a few of which he helped engineer). "Our way is to find good ideas within the existing institutions and fund those." Figuli, a former general counsel for the South Dakota and Montana university systems, said he and his partners don't buy the critiques of traditional postsecondary institutions as unimaginative or fearful of change. "I've been in higher education for 30-some years, and most of the nonprofit institutions I've worked with have been frustrated by the fact that they're capital-constra

"For-profit schools reel as rules affect enrollment By Tali Arbel and Janna Herron AP Business Writers / October 14, 2010 NEW YORK-The nation's largest for-profit college says it will take a big hit to enrollment -- and its bottom line -- as it tightens admission practices. The move comes as the government ramps up regulation of an industry which critics say preys on lower-income students and leaves them with hefty debt loads and meager job prospects. The number of lower-income students enrolled at for-profit colleges has surged in the past few years. Big advertising budgets drew those trying to bolster their resumes as a hedge against high unemployment. But critics claim the schools are not helping students find better jobs and say enrollment counselors sign up many who are unprepared for higher education. When they drop out, they are still stuck paying back their student loans. Defaults on student loans have been rising, sticking taxpayers with the bills. So the government has proposed regulations that could limit schools' access to federal financial aid if graduates' debt levels are too high or too few students repay loans. Amid intense scrutiny of the industry, Apollo Group Inc. said Wednesday it will provide new students with a free three-week trial program to see if they are ready for its University of Phoenix curriculums -- weeding out those at risk of leaving school before earning degrees. And it will no longer pay its counselors bonuses based on how many students they enroll."

"Veterans Use New GI Bill Largely at For-Profit and 2-Year Colleges Veterans Use Benefits of New GI Bill Largely at For-Profit and Community Colleges Thomas Slusser for The Chronicle For-profit colleges and community colleges were the most popular choices of students who used benefits from the Post-9/11 GI Bill this past academic year, the first in which the aid was available. The attendance patterns were largely similar to those of students who recently used aid under the previous version of the GI Bill.

"July 25, 2010 Why Do You Think They're Called For-Profit Colleges? By Kevin Carey Michael Clifford believes that education is the only path to world peace. He never went to college, but sometimes he calls himself "Doctor." Jerry Falwell is one of his heroes. Clifford has made millions of dollars from government programs but doesn't seem to see the windfall that way. Improbably, he has come to symbolize the contradictions at the heart of the growing national debate over for-profit higher education. Until recently, for-profits were mostly mom-and-pop trade schools. Twenty years ago, a series of high-profile Congressional hearings, led by Senator Sam Nunn, revealed widespread fraud in the industry, and the resulting reforms almost wiped the schools out. But they hung on and returned with a vengeance in the form of publicly traded giants like the University of Phoenix."

"The Obama administration is preparing to produce tougher regulations that could reduce the amount of federal financial aid flowing to for-profit colleges, cutting the companies' annual revenue growth by as much as a third. In response, the $29 billion industry and its supporters have enlisted top Washington lobbyists and are courting black and Hispanic legislators to fight the proposed rules, which could be released as early as this month. The companies draw students from low-income and minority communities. Federal aid to for-profit colleges has become an issue because it jumped from $4.6 billion in 2000 to $26.5 billion in 2009, according to the Education Department, prompting concern that these students are taking on too much debt. The tougher rules would require ITT Educational Services, Career Education, and Apollo Group's University of Phoenix to show that their graduates earn enough money to pay off their student loans. If for-profit colleges can't meet the standard, they could lose federal financial aid, which typically makes up three-quarters of their revenue."

"MITx: 3 Cheers and 3 Questions December 19, 2011 - 8:00pm By Joshua Kim MITx is very big news. For a great overview of MIT's plans, check out Audrey Watters' excellent writeup MITx: The Next Chapter for University Credentialing? The MIT student paper The Tech also has a great article. The MIT press release and accompanying FAQ also go into detail about MITx. 3 Cheers and 3 Questions for MITx: Cheer 1 - Leadership: All of us in higher ed should take a moment to recognize and commend MIT for the institutions continued bold leadership in higher education and the open education movement. The wonderful thing about higher ed is that when one institution innovates it grows the pie for all of us - we all benefit. Cheer 2 - Risk Taking: What I love most about MITx is MIT leaders' willingness to learn as they go. Rather than endlessly talk about the next innovation that will make it possible to offer high quality postsecondary education to large numbers of people at affordable prices, MIT is actually doing something. I have no doubt that the MITx model will change and morph over time, but the only way to figure this out is to run lots of experiments and be willing to fail, learn, and evolve. Cheer 3 - Recruiting: A program like MITx raises my opinion of MIT as a parent (my kids launch in 2015 and 2017), potential donor and even a potential employee. The market for higher ed talent is worldwide, and the best people are motivated by mission and culture. MITx is a clear stake in the ground about MIT's values. Question 1 - Platform?: From what I understand from the articles, MITx will run on a new platform that MIT is developing on its own, and that will be made open source. Is this a totally new platform? Are existing open source LMS platforms like Sakai or Moodle utilized at all? What platforms will be utilized for course videos? Again, a new platform, or an existing open source lecture capture and video management platform like OpenCast? Question 2 - Partnersh

"GOP Leader May Try to Block Rules on For-Profit Colleges The soon-to-be head of the House of Representatives education committee told Bloomberg last week that he is looking for ways to block the Obama administration from putting in place new rules aimed at requiring for-profit and other vocational programs to prove they are preparing their graduates for "gainful employment." Representative John Kline, the Minnesota Republican who will head the Committee on Education and Labor when his party takes control of the House in January, told the news service that he would favor that the government put in place an expanded set of disclosures on outcomes for nonprofit and for-profit colleges alike, and that he believed "a pretty broad spectrum" of lawmakers, from both parties, had concerns about the administration's proposed regulations."

"The For-Profit LMS Market November 1, 2010 Blackboard historically has been synonymous with learning management technology. While the company in recent years has lost some clients in that market to competitors, it still provides the learning management platform for more than half of nonprofit institutions, according to the latest data from the Campus Computing Project. But in the growing for-profit market for learning management, Blackboard is not king. That crown belongs to eCollege, the learning-management provider owned by the media conglomerate Pearson. A peon in the nonprofit world (it owns less than 2 percent market share, according to the Campus Computing Project), eCollege cornered the for-profit market early on by offering a product tailored to meet the unique needs of that type of institution, says Richard Garrett, managing director of the higher ed consulting firm Eduventures. The online learning platforms offered by eCollege and Blackboard "were evolved with different goals in mind," says Garrett. The eCollege platform "was built with top-down enterprises in mind," he says, whereas Blackboard's product was designed to "enable individual faculty to experiment with online, or to use it at an individual course level as a supplement to the classroom" - more in line with the governance structure of the traditional college, where professors have more autonomy."