Information about For Profit School

For-profit schools are educational institutions that are run by private, profit-seeking companies or organizations.



There are two major types of for-profit schools. The first type operates as a business, receiving fees from each student it enrolls. The second type is known as an educational management organization, or EMO. EMOs work with school districts or charter schools, using public funds to finance operations. The majority of for-profit schools in the K-12 sector in America function as EMOs, and have grown in number in recent years.

EMOs function differently from charter schools created in order to carry out a particular teaching pedagogy; most charter schools are mission-oriented, while EMOs and other for-profit institutions are market-oriented. In theory, the competitive market orientation provides the schools with better teachers and administrative staff, leading to a better, more efficiently funded education. However, this profit motive has drawn controversy and criticism.

There was a boom in the 1990s in the for-profit college and university sector, particularly in the United States.

Growth of for-profit schools

Although for-profit schools still make up only a small percentage of America's educational institutions, in just a few years their numbers have grown dramatically. In February, 2000, there were hundreds of thousands of students being taught at 200 for-profit facilities, with approximately six percent of students nationally enrolled at a for-profit institution ^[] Eduventures, Inc, a Boston research firm, states that nine percent of all U.S. college and graduate students attend for-profit institutions.^[]

Between 1998 and 2000 a Boston-based company named Advantage Schools saw its revenue increase from $4 million to approximately $60 million.^[1]. Between 1995 and 2000 the Edison Schools' yearly revenues grew from $12 million to $217 million. In 2000 Edison Schools projected that by 2006 it would manage about 423 schools with 260,000 students, giving it revenue of $1.8 billion.^[1]

Potential benefits

The basic idea of EMOs is to use the same amount of money that the government would spend to educate a child and drastically slash bureaucratic overhead. One advantage of being a market-oriented school is that the school must function as a business to stay afloat. The schools' drive to attract new customers pushes them to innovate and improve at a faster rate than traditional public schools.

Financial competition encourages the schools to seek out and retain only the most skilled and qualified teachers. For-profit schools rely on attracting students rather than compelling attendance and therefore tend to be more responsive to parents' wishes, and encourage policies that address bottom-line academic performance.

Proponents of for-profit schools claim that market operations governing the school promote effective decision- and policy-making. By their example, for-profit schools have the potential to encourage reform in public institutions. Thus, for-profit schools theoretically benefit children, parents, investors, and those who rely on public education.

Potential drawbacks

One major point of opposition to for-profit schools is the question of ethics. Opponents say that the fundamental purpose of an educational institution is to educate, not to turn a profit. In 2000, Bob Chase, president of the National Education Association, stated that "Educating children is very different from producing a product."

Others claim that because for-profit schools have never been a mainstream idea, no thorough blueprint for running a for-profit institution really exists, which may lead school administration to make disastrous mistakes. For example, in order to maximize profit, valuable services and activities are often eliminated. Extracurricular activities such as sports teams or volunteer clubs are left with little or no budgeting in order to keep costs low. This loss of non-academic activities may hurt a child's ability to enroll in some colleges or universities later on. The two largest EMOs in operation today, Edison and Advantage, claimed to have high school juniors completing college-level coursework, but recent studies have shown that many of these students are performing at or below the 11th-grade level.^[1]

The same profit motive can also lead to weak admission and academic standards, misrepresentations made to prospective students to induce them to enroll, and cost savings realized at the expense of education. Several of the largest for-profit education schools have alleged to have suffered from these situations including University of Phoenix, a division of Apollo.

Transfer-of-credit issues affecting for-profit higher education institutions

Many for-profit institutions of higher education have national accreditation rather than regional accreditation. Regionally accredited schools are predominantly academically oriented, non-profit institutions.^[1][1] Nationally accredited schools are predominantly for-profit and offer vocational, career or technical programs.^[1][1] Many regionally accredited schools will not accept nationally accredited schools' credits for transfer.^[2][3][1][1]

In the 2005 Congressional discussions concerning reauthorization of the Higher Education Act and in the Secretary of Education's Commission on the Future of Higher Education, there have been proposals to mandate that regional accrediting agencies bar the schools they accredit from basing decisions on whether or not to accept credits for transfer solely on the accreditation of the "sending" school.^[2][3] They could still reject the credits, but they would have to have additional reasons.

The American Commission Career Schools and Colleges of Technology (ACCSCT) wholly supports the proposed rule.^[3] In fact, it and other nationally accrediting institutions and have been lobbying for it for some time.^[3][2] The ACCSCT claims regionally accredited schools will not accept nationally accredited schools credits for purely arbitrary, prejudicial and/or anti-competitive reasons.^[5] It further states that, since the Department of Education recognizes both national and regional accreditation, there is no reason for regionals to differentiate between the two and to do so amounts to an unwarranted denial of access.^[5][3][2]

The American Association of Collegiate Registrars & Admissions Officials (AACRAO), which sides with the regional accreditors, claims that national accrediting standards are not as rigorous and, though they might be well suited for vocational and career education, they are ill suited for academic institutions.^[0] AACRAO alleges that this proposed rule is unnecessary and unjustified, could threaten the autonomy and potentially lower the standards of regionally accredited schools, and drive up their costs.^[0] Furthermore, it states the proposed rule is an attempt by the for-profits' "well-funded lobbyists" to obscure the difference between for-profits' "lax academic criteria for accreditation" and non-profits' higher standards.^[0] AACRAO claims only six percent of American students attend for-profits and only four percent attempt to transfer to non-profits.^[0] Eduventures, Inc, a Boston research firm, states that nine percent of all U.S. college and graduate students attend for-profit institutions.^[0]

Admission representatives at Crown College (Tacoma) and Florida Metropolitan University allegedly made various misrepresentations concerning the transferability of their credits to entice students to enroll in those schools.^[0]

Several of the larger for-profit schools have sought and received regional accreditation, including Capella University, University of Phoenix, DeVry University, Strayer University, Kaplan University and American InterContinental University among others.

There have been some spectacular failures of for-profit schools, including Business Computer Technology Institute (BCTI)^[9][10] and Court Reporting Institute (CRI)^[11][12][13]. These two schools allegedly violated numerous federal statutes, were funded mainly from federal and state loans and grants given to attending students, and then closed, abandoning many of their students.^{[13][9][10][11]}

See also

• List of for-profit colleges and universities
• Proprietary colleges
• Charter school

External links

For-profit charter schools

• Tooling University http://www.toolingu.com/
• Edison Schools http://www.edisonschools.com
• Mosaica Charter Schools

Opinions of for-profit schools

• Common Wealth Institute http://commonwealinstitute.org/reports/ed/introduction.html -- Notable For-Profit Education Opponent
• Education Next http://www.educationnext.org/unabridged/2001sp/levin.html -- Detailed Forum on For-Profit Education

References

• Brown, H.; Henig, J.; Holyoke, T.; Lacireno-Paquet, N. (2004). "Scale of Operations and Locus of Control in Market- Versus Mission-Oriented Charter Schools" Social Science Quarterly; 85 (5) Special Issue Dec, 2004. pp.1035-1077
• Levin, H. (2001). "Thoughts on For-Profit Schools" http://ncspe.org/publications_files/7_OP14.pdf
• Symonds, W. (2000). "For Profit Schools" BusinessWeek. February 7, 2000.

Notes