Red Balloon Resources

"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."

"The Internal Revenue Service's 79-page report on colleges' tax compliance was a thorough reminder of just how big and complex higher education has become. That complexity affirms the concerns of some higher-education experts that many large research universities are placing too much priority on activities that raise the profile and prestige of their institutions but do little to improve undergraduate education. Such activities include contracts for private research and public-private partnerships to market new patents. "In some of these places, undergraduate education has never been a top priority," says Jane V. Wellman, executive director of the Delta Project on Postsecondary Education Costs, Productivity, and Accountability. The issue is whether the increasing amount of support coming from sources outside state tax dollars "is causing these institutions ... to move away from their public mission. The answer in too many cases is, unfortunately, yes.""

"Another College Is Sold to a For-Profit May 24, 2010 Lambuth University, a Methodist institution in Tennessee, announced Friday that it has agreed to be sold to private investors, but declined to name the group that is taking over the institution. A week ago, the university said that if it failed to reach a deal by Friday, there was a danger of closure and of failing to meet payroll. Assuming the deal goes through, Lambuth will be the latest example of a financially struggling private college agreeing to be bought out by a for-profit group. Just two months ago, a new for-profit company bought Dana College, a Lutheran liberal arts institution in Nebraska. Share This Story * Bookmark and Share * E-mail * Print Related Stories * Union Push in For-Profit Higher Ed May 24, 2010 * Comparing Higher Ed to Wall Street April 29, 2010 * Pushback on Gainful Employment April 22, 2010 * Going Ahead With Gainful Employment April 21, 2010 * Unnatural Acts April 8, 2010 FREE Daily News Alerts Advertisement The statement announcing the sale said that "President Bill Seymour told the board that this was the best proposal Lambuth has received throughout its year-long process of searching for a suitable partner." The statement also said that the university should be able to submit documents about the shift to its accreditor, the Southern Association of Schools and Colleges, in time for a June review of the change in ownership. Transfer of accreditation from a regional accreditor such as SACS is typically a key enticement for for-profit entities considering the purchase of a private nonprofit college. While changes in ownership subject colleges to an additional accreditation review, such a shift is generally considered far easier than starting from scratch to earn initial accreditation. Some critics charge that these accreditation shifts are a serious loophole in oversight of higher education and that a purchase of a

"Easing their way into awarding four-year degrees, some community colleges around the country have begun offering applied baccalaureate degrees with a technical, workforce-ready focus. Two-year colleges in Wisconsin, however, are lobbying the state system to let them offer a different kind of applied baccalaureate - one with a liberal arts focus and aimed at rural, place-bound adults. In June, the University of Wisconsin Colleges, the state's 13 associate-degree awarding institutions, plan to present a comprehensive proposal to the University of Wisconsin System Board of Regents to introduce the bachelor of applied arts and sciences (B.A.A.S.) degree. If the proposal is approved by the board, the new degree program would be offered on a pilot basis, starting in the fall of 2011, at six of the system's two-year colleges in cooperation with six of the system's comprehensive universities. "

"We hear a lot of talk about the importance of educational achievement and the knee-buckling costs of college. What if you could get kids to complete two years of college by the time they finish high school? * Read All Comments (44) » That is happening in New York City"

"ST. PAUL, MINN. -- Pockets of experimentation and potential change are cropping up all over the place in higher education. Here, it's the OpenCourseWare movement. There, colleges are adopting "just in time" remediation. And over here, some states are changing funding formulas to reward institutions for graduating students rather than merely enrolling them. But what do the individual innovations amount to? Do they point the way to the sort of transformative change that, given the likelihood of constrained budgets going forward, is probably necessary if higher education is to not only sustain the current level of postsecondary attainment in the country, but increase it in the way many policy experts believe is needed? Share This Story * Bookmark and Share * E-mail * Print Related Stories * Community Colleges' Unfunded Mandate May 17, 2010 * The Accountability/Improvement Paradox April 30, 2010 * Looking Before They Leap April 27, 2010 * Retention, From Beginning to End April 26, 2010 * What the Pledge Means April 21, 2010 FREE Daily News Alerts Advertisement Even longtime advocates of higher education appear to be coming around to the conclusion that the status quo won't suffice. But acknowledging that fact is a far cry from identifying a framework that might lead to such a transformed future. It was in recognition of the latter goal that an unusually diverse group of college administrators and professors, higher education analysts, state officials, and others gathered here last week to talk about how to use data to provoke change and improve performance in higher education"

"Advancing by Degrees" is designed to help college officials monitor and improve graduation rates by providing a framework of on-track indicators that reveal patterns among groups of students-including those who are struggling and need help to graduate. These data, in turn, can help drive changes in policies and practices that can boost the number of college graduates. Great report...wonderful questions, practical, focused! Terrific.

"Last night, the PBS show Frontline tackled the business of college in a one-hour special on for-profit universities, which have carved a multi-billion-dollar niche for themselves in the higher education sector."

"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."

"The U.S. government is giving away prizes. In seeking solutions to problems, it has discovered the magic of contests, or challenges -- also known as open grant-making or open innovation. Or crowd-sourcing. This Story Whatever you call this new way of doing business, it represents a dramatic departure from the norm for the bureaucratic, command-and-control federal government. To be sure, the agencies won't abandon the traditional method of doling out grants to predictable bidders. But in the new era of innovation-by-contest, the government will sometimes identify a specific problem or goal, announce a competition, set some rules and let the game begin. Anyone can play. The idea is to get better ideas, cheaper, and from more sources, using the Internet and social networking and all the Web 2.0 stuff as a kind of vast global laboratory. NASA is already doing it -- offering prizes for more flexible astronaut gloves, a lunar rover and wireless power transmission. The Defense Advanced Research Projects Agency, a Pentagon think tank, meanwhile, has staged "Grand Challenges" that lured inventors to create self-navigating robotic vehicles. And on Friday, hoping to scatter the concept more broadly throughout the government, the White House and the Case Foundation will team up with federal employees from 35 agencies in an all-day strategy session titled "Promoting Innovation: Prizes, Challenges and Open Grantmaking.""

With James Surowiecki, we discuss crowdsourcing theory and explore how companies of the future might harness new technology to mine the collective wisdom of the crowd - tapping into new levels of ideation and innovation, intelligent prediction and solution-finding schemas.

"Higher education is a $400 billion industry fueled by taxpayer money. One of the fastest-growing--and most controversial--sectors of the industry is the for-profit colleges and universities. Unlike traditional colleges that raise money from wealthy alumni and other donors, many for-profit schools sell shares to investors on Wall Street. But what are students getting out of the deal? Critics say a worthless degree and a mountain of debt. Proponents insist they're innovators, widening access to education. FRONTLINE follows the money to uncover how for-profit universities are transforming the way we think about college in America. "

Innovative system for grading that encourages collaboration and a high degree of creativity on the part of students.

21st Century Classrooms

This seminal critique of American Higher Education, by Lion F. Gardiner, is a good starting point for re-examining how an undergraduate education is delivered. It points to the critical importance of student involvement in learning and the importance of relating curriculum to student development. Gardiner notes the disconnect between faculty claims that critical thinking is the most important learning outcome to be sought and the methods used to teach students. The article also notes that research calls into question the validity and reliability of teacher made tests for assessing student learning and points to the ineffective use of questioning students in the classroom.

"Gov. Mitch Daniels called on Indiana's colleges and universities to give Hoosiers the chance to push "fast-forward" on their college careers with the option of earning a bachelor's degree in just three years. Only two schools in Indiana -- Ball State University and Manchester College -- offer such an accelerated degree program, and relatively few students take advantage of it. But cutting out one-fourth of school could save some students up to $25,000."