Higher Education Inquirer

Monday, May 9, 2022

College Meltdown 2.2: Who’s Minding the Store?

The latest report by the Government Accountability Office (GAO) about wrongdoing by higher education online program managers (OPMs) felt disappointing to social justice advocates who watch the space and know the bad actors who were unnamed in the GAO document.

US higher education has always been a racket, but its latest pursuits have gone untouched and even unmentioned. GAO’s behavior, though, is no worse than the many other corporate enablers who are supposed to be minding government funds wasted –or worse yet—used to prey upon US working families.

The US Department of Education has done little lately to safeguard consumers from predatory student loan servicers like Maximus and Navient, or subprime universities like Purdue University Global and University of Arizona Global, and hundreds of small players who offer marginal education leading to less than gainful employment.

The Department of Veterans Affairs has done little lately to protect veterans and their families from being ripped off by subprime schools. At one time, VA was a leader in tracking GI Bill complaints and making them public, but transparency and accountability are far from what they were.

The US Department of Defense (DOD) has been asleep at the wheel with its distribution of DOD Tuition Assistance funds to subprime colleges. Its complaint system is close to nonexistent.

The US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) have done little to rein in bad actors in higher education, leaving the work to states attorneys general. Hate crimes on campus have also been ignored. In other cases, elite university endowments have received little notice despite eyebrow raising profits. Student loan asset-backed securities are also below their radar.

During the pandemic, The Department of Treasury has failed to adequately oversee funds issued to the Federal Reserve and the Small Business Administration funneled to subprime schools.

The Federal Trade Commission (FTC), which had done an adequate job investigating predatory lead generators and marketing and advertising false claims has been hamstrung by a recent court decision and can no longer fine higher ed wrongdoers. Predatory companies know this and will act accordingly—as criminals do when cops are not on the beat.

What lack of oversight have you seen with federal agencies tasked to protect higher education consumers?

Wednesday, April 27, 2022

Paying the Poorly Educated (Jack Metzger)

Joe Biden was right to propose free Pre-K education for 3- and 4-year-olds and free community college in his initial legislative package, rather than pushing for free public university education and the cancellation of college debt. All four progressive education initiatives would serve the public good by making education more available to millions. However, policies that promote university education do little to help the working class. They also feed into the false and damaging narrative that college is the right path to upward mobility for most people.

While free public universities could be transformative in the very long term, most of the benefits of this policy would go to higher-income families. They are more likely to live in areas with high-quality K-12 schools, and their children also are more likely to have the kinds of social and cultural capital that are especially advantageous for getting into and succeeding in college.

Similarly, while forgiving all or some portion of existing student loan debt would likely benefit low- and middle-income young people, who are more likely to have higher levels of debt than their more affluent contemporaries, this too has limited benefit for the working class, because it only helps those who have gone to college. That’s a large group, but forgiving their debts does nothing for the many others who aren’t in debt because they didn’t go to college at all or for very long.

Free public Pre-K and free community college, on the other hand, disproportionately benefit working-class children and adults. Free Pre-K will not only improve the educational prospects of children, but it also saves families money. For those currently using the cheapest day care, this would save some $10,000 to $15,000 a year – a significant increase in spending power for all income classes, but transformative for low- and middle-income family budgets. What’s more, for low-income parents who currently can’t afford day care and thus can’t work full time or at all, free Pre-K would allow them to work and earn more in the paid workforce.

Likewise, free community college would disproportionately benefit low-income adults and young people who cannot go to college full time because they need to work. Community college education includes apprenticeships and other pre-training that is needed for entry into many middle-wage jobs, including in the soon-to-be-expanding building trades. Free public university would mostly benefit those young people who have more time to take the long road, while free community college is more valuable for working adults who already have work and family responsibilities.

The class-skewed benefits of these initiatives are relatively complicated, but we should also pay attention to the messages they reinforce. Prioritizing free college and student debt forgiveness plays into a toxic narrative that has deep roots in our public discourse: that college-educated people are more valuable, more worthy of public subsidy, than the so-called “poorly educated.” This narrative accepts that college graduates deserve to be paid more, but it also offers a false promise: that the primary way to increase wages and living standards – or more grandly, to restore the American Dream of upward mobility — is for more and more people to get college degrees. Both these messages are false. The first reflects a nearly impregnable professional-middle-class prejudice, but the second is an intellectual error that, if corrected, could burst a professional-class bubble.

College education cannot be a path for widespread upward mobility because a large majority of jobs in our economy do not require a college education or anything like it. 61% require high school or less and another 11% require an associate’s degree, some college, or other postsecondary education – but not a bachelor’s degree. Only 28% of jobs in 2020 required a bachelor’s, a far lower percentage than the nearly 40% of workers over 25 who had that degree.

That is why we find so many men and women with bachelor’s degrees as fast food workers; retail salespersons or cashiers; waiters, waitresses or cooks; freight, stock and material movers; janitors and cleaners; and home health care or child care workers. These occupations are among those with the largest annual job openings , and all of them have median annual wages ranging from $22,740 to $29,510 (that is, less than $15 an hour).

This is a tragedy for college graduates who were told that becoming part of the exam-passing classes would lead to better lives. But for most people doing those jobs, it probably never crossed their minds that they could go to college. Still, that work needs to be done, no matter the educational attainment of the people who do it. The work they do is socially valuable, some of it even “essential,” and those jobs need to be paid a living wage. To be told that the only way to improve your life conditions is through more (and more) education is demoralizing and, especially for those who work alongside college graduates doing the same work, palpably false.

Higher education is a circuitous route to improving one’s economic prospects, a route that will not work for at least a third of those who can afford to take it, and a route that is not realistically available for the majority of our population. If we want to improve wages and conditions, we need to improve them directly, not by producing more college grads.

President Biden’s initial transformative legislative package that got whittled down to Build Back Better (BBB) embodied the understanding that education was neither the answer nor even an important part of the answer for achieving upward mobility. That initial package included a $15-an-hour minimum wage and the union-empowering Pro-Act that were quickly jettisoned because they could not avoid a Republican filibuster the way budget bills can. But, equally or even more important, many elements of Build Back Better provided for a series of enhanced social wages that together would have dramatically improved life prospects across the board – none more important than the package of child care subsidies that included universal free Pre-K.

Social wages explicitly recognize that even with better minimum wages and stronger unions, most wages will not come close to reflecting the collective social value workers provide. Nor are wages going to be sufficient to provide decent incomes for most people most of the time. Reducing the cost of health care, housing, transportation, and child care (all of which BBB would have addressed) increases the real incomes of all workers, and it has the most dramatic effect on low-wage workers.

By prioritizing those workers, most of whom do not have college degrees, the Biden package had the potential to pierce the professional-class prejudice that has dominated public policy. Both Presidents Bush and Obama proclaimed that more and better education was the only way to address our savage inequalities of income, wealth, and opportunity. Biden, by contrast, is the first president in memory to actually brag about creating well-paying jobs that do not require any college.

Alas, Build Back Better – let alone the initial, larger version of itself – is dead for now, and the possibility of a truly transformational package becoming law is probably gone for the immediate future. But a healthy majority of the public and more than 90% of Congressional Democrats supported the core idea of increasing taxes on corporations and the rich in order to transfer money to workers and citizens in ways that could dramatically increase working-class people’s chances for creating better lives. Hopefully, that support shows a shift away from the idea that education is the only path to improved life prospects. A public consensus may be developing that even the poorly educated deserve to earn a good living.

Jack Metzgar

Jack Metzgar is author of the recent Cornell ILR Press book, Bridging the Divide: Working-Class Culture in a Middle-Class Society.

*This article first appeared in Working Class Perspectives.

Wednesday, April 13, 2022

College Meltdown 2.1

The Higher Education Inquirer has added three companies to its College Meltdown watchlist: Ambow Education (AMBO), SoFi (SOFI), and Adtalem (ATGE).

Leading the way is National American University Holdings (NAUH), which is down to less than $50,000 in cash. Ambow Education (AMBO) and Aspen Group (ASPU) are near penny stock territory and Barnes and Noble Education (BNED) and SoFi (SOFI) are also in deep financial trouble.

Declining share price is not the only factor to make the College Meltdown list. Government contractor Maximus (MMS), for example, is on the list for its predatory behavior with student debtors and its own workers, as well as its questionable contracts with the US Department of Education.

Adtalem makes the list for continuing to put lots of working-class folks (particularly women and people of color) into a lifetime of student loan debt.

2U is identified for its fleecing of its clients (universities), end customers (students) and shareholders. In its last annual report, the company told shareholders that the number one risk was that it may never make a profit.

2U (TWOU) Shares have dropped 70 percent over the last year (Source: Seeking Alpha)

Shares of student loan refinance company SoFi (SOFI) are down 70 percent over the last year

(Source: Seeking Alpha)

Barnes and Noble Education (BNED) shares have dropped 66 percent over the last 6 months.

(Source: Seeking Alpha)

Aspen Group (ASPU) shares have declined 82 percent over the last year.

(Source: Seeking Alpha)

Friday, March 25, 2022

Online Program Manager for University of Arizona Global Campus Facing Financial Collapse

Zovio (ZVO), the for-profit online program manager for University of Arizona Global Campus (UAGC)*, is facing a financial collapse.

With three consecutive years of financial losses, Zovio (formerly known as Bridgepoint Education) lost a record $61 million in 2020. Over the trailing 12 months (ttm) the company has lost $76 million. Cash assets have decreased from $357 million in 2016 to $33 million in 2021.

Zovio's cash runway (a key indicator of financial health) is now less than a year from zero, with revenues amounting to a fraction that they once were. Liabilities are also greater than all assets.

Zovio is working with a new CEO, Randy Hendricks, who has limited management experience, and the company has already been pared down to about 1500 full-time employees.

Insiders tell the Higher Education Inquirer that the deal between Zovio and University of Arizona was a deal between people of low integrity and a lack of imagination.

According to the Department of Education's College Navigator, University of Arizona Global Campus has just 194 full-time instructors for about 35,000 students, and many of those full-time instructors are also tasked with management roles: the tell-tale traits of a subprime robocollege.

To make matters worse, ZVO, which was already financially unstable, was recently ordered to pay $22 million in compensation to California students who were defrauded.

While Zovio's 2021 Annual Earnings will not be presented until ~~Tuesday, March 29, 2022~~, there are strong indications that ZVO has reached a point of no return in its balance sheet.

Zovio's Assets (2009-2021) Source: Macrotrends.net

Zovio's Annual Report is coming out weeks late, ~~just before the Securities and Exchange Commission deadline,~~ and ZVO has not presented any revenue numbers to relieve shareholder anxiety.

Since March 18, ZVO shares have been below the $1 per share threshold to remain on the NASDAQ. Thirty consecutive trading days below $1 will trigger the first stages of a delisting from the stock market.

Zovio Share Price, March 3-March 28, 2022 (Source: Seeking Alpha)

What we are seeing looks very much like Corinthian Colleges and ITT Education before they collapsed. Each day, ZVO is getting closer to being delisted from NASDAQ and they are quickly running out of cash.

But what happens to federal government funding and oversight if Zovio collapses? And how about UAGC--will it end up costing Arizona taxpayers?

With UAGC, only a handful of edtech companies could handle such a large transition. Experts we have contacted do not agree on potential surrogates for the online university or whether a surrogate is even necessary.

Will the US Department of Education (ED) try to get another company to take over the business? In the Corinthian Colleges collapse, ED was able to get ECMC to take over operations.

Will the US Department of Education require a special monitor, as they did with Corinthian Colleges?

University of Arizona could hire key executives and personnel, but that could cost the State of Arizona to hire those folks as state employees.

These are issues that need to be addressed by the Department of Education and the State of Arizona now, to avoid another student loan train wreck.

[Post script: On Monday, March 28, 2022, Zovio announced that their 2021 Annual Earnings would be delayed. No new date was reported.]

*University of Arizona Global Campus was previously known as Ashford University. According to the US Department of Education's College Scorecard, Ashford University has a 22 percent 8-year graduation rate. The College Scorecard reported that of student debtors two years into repayment, 32 percent were in forbearance, 28 percent were not making progress, 13 percent defaulted, 12 percent were in deferment, 7 percent were delinquent, 5 percent were making progress, 2 percent were paid in full, and 2 percent were discharged.

Related link: Verdict Against Zovio Adds to Peril for Arizona Global Campus (David Halperin, Republic Report)

Wednesday, February 23, 2022

The Power of Recognizing Higher Ed Faculty as Working-Class (Helena Worthen)

Just over 20 years ago, Michael Zweig published The Working Class Majority: America’s Best Kept Secret. At that year’s How Class Works conference at SUNY Stony Brook, academics from history, political science, labor and industrial relations, and other fields debated Zweig’s use of the term “working class.” Some thought it was a throwback to the 1930s or a tip-off that someone was a Marxist. But even at a conference attended by many academics from working-class backgrounds, no one pointed out that academics are working class. Twenty years ago, academia still seemed like a middle-class or even an upper-class job, even though that had started to change in the mid 1970s.Young academics expected that if they did “all the right things,” they would get tenure and live happily ever after.

That expectation was wrong in 2002, and it’s even worse now, as this grim report shows. Nearly 75% of faculty in higher education are precarious workers, more like restaurant and hospitality workers, gig performers, contract healthcare workers, and delivery drivers than the tenured professor. They are hired on a per-class, per-semester basis. They do not control the conditions of their work. They often lack access to offices, professional development, research funds, and opportunities to collaborate with peers or vote in faculty meetings. They may be asked to take on a new course with a week or less warning. Many are told what textbooks to use and what tests to give. They are likely to have to apply for a new campus parking permit or library card every semester. But they also don’t get personal respect. They are vulnerable to management whim, favoritism, harassment, and simple forgetfulness, not to mention a complaint from a single disgruntled student who wanted a better grade.

Many contingent faculty are shocked to realize that college teaching is a working-class job. But recognizing that can be liberating. Thinking about ourselves as “working class” clarifies our understanding of our contingency by helping us identify with the 99% instead of the 1%. It can also inspire us to build alliances to improve our conditions and our industry.

First of all, it helps us appreciate and identify with our students, who are increasingly working class, and like us, probably working more than one job to make ends meet. We see their problems as our problems and become open to talking about common solutions. In turn they can see more accurately what it takes to be an academic and live the paradox of “love the work, hate the job.”

Second, it helps us understand and appreciate graduate student’s efforts to win the right to be recognized as employees (not “apprentices” on a stipend) who rely on their jobs for living. Graduate student organizing is one of the hottest areas in the campus labor movement – and possibly in the labor movement overall — these days, with wins coming in from unions like USW at the University of Pittsburgh, UE at University of Iowa, UAW at Harvard and the University of California and SEIU at Duke, Northwestern, Saint Louis University, and American University, just to name a few.

Third, thinking of ourselves as workers can help us understand the value of building campus labor coalitions, organizations that include not just academics but also clerical workers, the trades, transportation, custodial, food service, and technical workers. Such coalitions create power through the interdependency of all the workforces in a college or university.

Fourth, concerns about the working conditions of contingents can form a basis for solidarity with the privileged 25% who are tenured and tenure-line faculty. They usually resist this idea, but the reality of how their work has changed provides a strong argument. Over the worklives of senior faculty, colleges and universities tightened their belts, drained resources from the classroom, built arenas instead of libraries, created freestanding “foundations” that were outside faculty control, and engaged in a series of internet-based shocks like contracting out administrative functions like payroll to IT companies, putting journals on line, shifting classes to Blackboard and Moodle, experimenting with MOOCs, and much more. At the same time, requirements for tenure-track hiring and promotion were raised, contingent faculty became the majority, and administrative and advising work for tenure-line faculty increased. Some schools hired CEOs to run institutions like businesses. With all this, tenure-line faculty were progressively cut out of the full exercise of shared governance. All this degraded the institution of higher education, and not just for the contingent majority. These changes affect students, tenure line and contingent faculty, and staff alike.

The good news is that some are organizing for change. Higher Education Labor United (HELU), a new organization that came out of the organizing around College for All, has been endorsed by 117 locals from eight national unions and organizations. HELU uses the term “labor” broadly: its membership includes unions representing clerical, staff, and other workforces as well as faculty. The leadership team comes from colleges and universities in 29 states. HELU aims to establish a national strategy for higher education, something that the traditional faculty unions, AAUP, NEA and AFT, were never able to cooperate to achieve.

To get this rolling, HELU is convening a free Winter Summit, February 23-27, on Zoom. The conference will feature four afternoons of workshops and several keynote presentations, all focused on three goals: coordinate the surge of higher education worker organizing across the country, develop federal policy proposals to reverse the trends that have damaged higher education over the last several decades, and support politicians who will advance a program of democratizing higher education. Members of endorsing organizations will have opportunities to participate in decision-making.

The vision guiding the young leaders of HELU is broad working-class mobilizing to address the crisis in higher education. To accomplish that, it’s time for faculty see themselves as members of the working class and stand together to fight for change.

Helena Worthen, University of Illinois

This essay first appeared in Working-Class Perspectives. Thank you Helena Worthen, Sherry Linkon, and John Russo for permitting us to reprint this important article.

Helena Worthen is the co-author, with Joe Berry of Power Despite Precarity: Strategies for the Contingent Faculty Majority in Higher Education (Pluto, 2021). She has worked and taught as a labor educator and teacher unionist in California, Iowa, Pennsylvania, and Illinois.

Related link: Working-Class Perspect ives

Sunday, February 20, 2022

College Meltdown 2.0

College Meltdown 2.0 is distinctly different than the College Meltdown that started in 2010.

The first wave of the College Meltdown (2010-2021) resulted in a slow and steady drop in overall US college enrollment, with dramatic losses among for-profit colleges and community colleges. Corinthian Colleges, ITT Educational Services, and Education Management Corporation were three large for-profit chains to close. Small private liberal arts schools and regional universities also experienced losses. More folks were moving into the growing educated underclass.

Elements of College Meltdown 2.0 include publicly held corporations. Click on the image to see the chart (Source: Seeking Alpha)

College Meltdown 2.0 comes as the Coronavirus becomes more manageable. However US fascism continues to advance, student loan debt is slowly approaching $2 trillion, and the 2026 enrollment cliff is just a few years away. This new wave includes remnants of for-profit colleges like National American University, Stratford University, South University, the Art Institutes, University of Phoenix (owned by Apollo Global Management), Career Education Corporation (aka Perdoceo), and DeVry University (owned by Cogswell Education) as well as national accreditor ACICS.

The largest element of College Meltdown 2.0 is federal student loan debt, which appears to be rising to an unsustainable level--as it hamstrings the lives of millions of families. When mandatory student loan payments resume (scheduled for May 1), long-term default rates may range from 30 and 50 percent. It also appears that at least $500 billion of the Federal Student Aid (FSA) student loan portfolio will be unrecoverable.

College Meltdown 2.0 also involves online program managers (OPMs) that service elite schools (2U), regional universities (Academic Partnerships), and subprime robocolleges (Zovio-University of Arizona Global and Graham Holdings-Kaplan-Purdue University Global).

Student loan servicers and private student loan companies (Maximus, Navient, Sallie Mae, Nelnet), publishers and other edtech enterprises (EducationDynamics, Chegg, Barnes & Noble Education, Coursera, and Guild Education) are implicated or at least entangled in the mess. Higher education accreditors and student loan asset-backed securities (SLABS) are also worth monitoring.

Tuesday, February 15, 2022

Terri Givens and “Radical Empathy: Finding a Path to Bridge Racial Divides”

[This article is part of the Transparency-Accountability-Value series.]

Terri E. Givens is a seasoned (and storied) political science professor currently teaching at McGill University, in Montreal, Canada. Professor Givens has recently produced two essential books on the politics of race: “Radical Empathy: Finding a Path to Bridge Racial Divides” and “The Roots of Racism.”

While there are a number of outstanding historical and social science works to inform readers about racial issues, Radical Empathy is valuable for moving folks towards justice and solidarity—in Trumpian times that are challenging at best.

One valuable tool for her has been to weave her own individual stories of geography, personal evolution, social location (not just race, but also class and gender), privilege (being middle class) and vulnerability with social and larger historical forces (what C. Wright Mills called The Sociological Imagination).

By sharing our stories, all of them, it's hard to be just enemies. And when we can see our similarities and respect our differences (at least some of them) maybe we can even move together.

But understanding is not enough. And radical empathy takes practice. Lots of practice.

Rather than describe Professor Given’s work, it would be best to provide some free resources for Radical Empathy.

Radical Empathy - Google Books

Radical Empathy Reader’s Guide

Book launch: Radical Empathy (with Julie Lythcott Haims - YouTube)

Book review: Radical Empathy, by Terri Givens – The Earthbound Report

Tuesday, February 8, 2022

One Fascism or Two?: The Reemergence of "Fascism(s)" in US Higher Education

The Higher Education Inquirer is conducting an extensive investigation of the reemergence of fascism in US higher education. The examination aims to: define and operationalize the concept of fascism, investigate the roots of American fascism since the 17th century, and chronicle the most important cases of fascism in US higher education today. As part of a democratic process, we ask readers to be involved in the research and writing of this project.

Reader Input

Additions and corrections will be made with input from readers of the Higher Education Inquirer. Please add your comments in the section at the bottom. For those who wish to remain anonymous, you can provide feedback by emailing me at dahnshaulis@gmail.com.

Definition(s) of Fascism(s)

The word fascism has been used by politicians and American writers on the Left and Right for generations. It may not be possible to create a consensus of what fascism is, or how it appears in US society. This space is likely to be edited as more comments are received.

*Laurence W. Britt, the author of Fascism Anyone, described 14 elements of fascism here.

*Italian historian Umberto Eco described 14 elements of fascism here.

*Yale professor Jason Stanley explains "How Fascism Works" here.

Origins of Fascism in US Higher Education

US higher education was founded on the taking of land from indigenous people, and oppressing people of color for four centuries. Enslaved Africans and their descendants were part of the origin and continuation of elite American schools for two hundred years. White, Protestant, males from elite backgrounds had most of the higher educational opportunities--and the names of robber barons and tobacco magnates (Stanford, Carnegie Mellon, Johns Hopkins, Duke) became part of the elite pantheon. Thorstein Veblen and Upton Sinclair provided a great deal of information on this.

While there has been more democracy at times, people of color, women, and working-class folks have been excluded or discriminated against for all of US history. The federal government (Department of Defense, CIA) and US corporations (particularly federal contractors) have also held great importance in the direction of higher education, servicing their most oppressive anti-democratic, colonial elements.

In the 21st century, historians Craig Steven Wilder and others dug up the white supremacist roots of elite universities. In a zero-sum game, historically privileged groups and individuals may also feel aggrieved and oppressed when others succeed or are placed ahead of them in line.

Propagation of Fascism in 2022 (Contemporary Examples in No Particular Order)

This section will evolve with the help of reader comments. Here are some preliminary examples of varying importance:

Role in Mass Surveillance

"Savage Inequalities" in the K-12 Pipeline

Hunger, poverty, prostitution, and drug sales among college students

Sexual assault of college students

Anti-intellectualism in America

Rise of Charlie Kirk, Turning Point USA, Turning Point Action, and Students for Trump

Turning Point USA's Professor Watchlist

Police State and Strong Military Supported

Use of Propaganda and Disinformation to Oppress "Minorities" and Empower Big Corporations

Predatory Marketing and Advertising

Legalization of Hate Speech in US Higher Education

Book Burning and Censorship in US Society

Role of Corporate Power in Higher Education (e.g. Boards, Endowments, Contracts)

Role of Elite Families in Higher Education (e.g. Walton Family Foundation, Koch Brothers)

Land Theft Through Gentrification and College Expansion

Tax Avoidance by Elite Schools to Rob Public Coffers

Colleges Colluding to Limit Financial Aid

Role of Higher Education in Educating Reactionary Judges and Politicians

State-Sponsored Think Tanks to Support Elites and Oppress Others (e.g. Liberty Institute at University of Texas)

Bomb Threats Against Historically Black Colleges and Universities

End of Affirmative Action for African Americans but Continued Use of Legacies

Reduction of Needs Based Grants and Scholarships

Management Corruption, Robocolleges, and the Loss of Labor Power in US Higher Education

Expenditure of Elite Endowment Funds to Fund Anti-Democratic Organizations

Role of NCAA Football in Promoting Oppressive Values (No Wages, Poor Safety, Sports Gambling)

Role of US Universities in Supporting Human Rights Violators (e.g. Russia, People's Republic of China)

Role of US Universities in Undermining Foreign Efforts in Democratization

Use of "Credentials" as a Legal Form of Discrimination

Non-Disclosure Agreements

Anti-Union Efforts in Higher Education

Student Loan Peonage, Declining Social Mobility, and the "Educated Underclass"

Dahn Shaulis

Higher Education Inquirer

Thursday, February 3, 2022

"20-20": Many US States Have Seen Enrollment Drops of More Than 20 Percent (Glen McGhee and Dahn Shaulis)

In 2013, Futurist Bryan Alexander aptly talked about peak college enrollment in the United States. And over the last decade or so, higher education enrollment has declined in almost every state. Now at least 18 US states have experienced enrollment drops greater than 20 percent--and five more are close to that threshold.

People can watch the College Meltdown in real time at thelayoff.com.

Enrollment declines are the result of several interrelated economic and demographic shifts. Reduced populations of college age people, economic distress, growing inequality, and migration are some of the interacting factors. College is expensive and time consuming for working folks.

While programs like College Promise can help with shoring up community college enrollment, they cannot make up for deep social and economic problems. Online learning has made school more convenient, but the quality and value of several of America's robocolleges (colleges largely free of full-time instructors) is often substandard.

For many working-class families, college is no longer perceived as the golden ticket to upward social mobility. And a growing educated underclass, based on their own personal experiences with underemployment and student loan debt, are skeptical about the value of higher education for their children--if they choose to have children. Many are not.

Without significant change, we estimate that the 2026-27 enrollment cliff is likely to put almost every US state above a 25 percent decline over the last 15 years. With another economic meltdown, the numbers could get worse without major reform--smart social reform--not reform that lines the pockets of the rich and powerful.

Though consumer demand for college has declined significantly, college costs have not. Increasing federal funding, though, especially to subprime robocolleges like Purdue University Global, Liberty University, University of Phoenix, and University of Arizona Global Campus may not lead to lower college prices, better quality curriculum, or better jobs at the end of the pipeline.

*major colleges' data missing from the chart

(Source: National Student Clearinghouse)

Sunday, January 30, 2022

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

The failure of University of Phoenix (UoPX) is more than a dark moment in higher education history. It should act as a lesson learned in the higher ed business. Executives at 2U, Guild Education, Coursera, Liberty University, Purdue University Global, University of Arizona Global, Chegg, Academic Partnerships, Pearson PLC, Navient, Maximus and other for-profit and non-profit entities must take heed of the mistakes and the hubris of Phoenix, the wisdom of its cofounder John D. Murphy, and the silencing of important worker voices.

For several decades of the 20th century, hundreds of University of Phoenix campuses dotted the American landscape, conveniently located in cities and growing suburbs, off major highways. Founded in 1973, America's largest university became a for-profit darling of Wall Street in the 1980s and 1990s, and the provider of career education for mid-level managers in corporate America and public service. A Phoenix degree was the ticket to promotions and salary increases.

During its zenith, the school was backed by dozens of lawyers and DC lobbyists and a number of politicians and celebrities--including Nancy Pelosi, John McCain, Shaquille O'Neil, Al Sharpton, and Suze Orman. UoPX bought the naming rights to the Arizona Cardinals' pro football stadium in 2006. And in 2010, enrollment at the University of Phoenix stood at nearly a half million students. The school even had an enormous presence at US military installations across the globe. University of Phoenix's presence was everywhere.*

Phoenix's stock rose for many reasons. It was a leader in educational innovation. It was convenient and affordable for upwardly social mobile workers. Its profits were large, and its labor costs were relatively low because UoPX hired business leaders and experts in the field, not tenured scholars, to teach part-time.

But something went horribly wrong along the way.

In the 2010s, University faced government and media scrutiny for its questionable business practices, its declining graduation rates, and its part in creating billions in student loan debt. And when workers voiced their concerns, they were silenced in a variety of ways, from threats and intimidation to firings.

This enrollment collapse has now lasted a dozen years and counting.

Today, as a miniscule portion of Apollo Global Management's portfolio, UoPX's enrollment numbers are less than 100,000--and few of its physical campuses remain open during the Covid pandemic. It's not known how many campuses, if any, are financially viable.

University of Phoenix enrollment, 2009-2016 (Source: US Department of Education)

There are a several reasons why University of Phoenix is just a shadow of what it was. Businesspeople and lobbyists blame government regulation and oversight; others blame the relentless pursuit of quarterly profits and corrupt Apollo Group CEOs, including Todd Nelson.

Having talked to co-founder John D. Murphy and read his book Mission Forsaken, what I found out was that University of Phoenix began failing three decades earlier, during the Ronald Reagan era, when US companies chose to invest less in their workforces. When this post-Fordist shift happened, US companies reduced benefits for workers, and divested in the education and training of mid-level executives.

In order to keep the company growing in the face of this retrenchment, UoPX shifted its mission, from educating America's upwardly mobile workers to enrolling anyone--at any cost. The company could only decline as it preyed upon consumers and silenced its workers. After 2010, enrollment counselors were signing up people who were woefully unprepared academically and financially for college work.

By 2014, about 1 million University of Phoenix's alumni were saddled with more than $35 billion in student loan debt.

US Student Loan Debt by Institution (Source: Brookings, Looney and Yannelis, 2015)

In 2017, Apollo Group sold the company to Apollo Global Management, an investment behemoth, along with Vistria Group and the Najafi Companies. As part of its holdings, the school was a tiny portion of its portfolio. Barak Obama's close friend, Anthony Miller, was paid to be Board president.

Among national universities, UoPX is now ranked near the bottom in social mobility according to the Washington Monthly.

In January 2022, as a sign of its continued unraveling, Apollo Education appointed George Burnett, a former executive of three failed or predatory companies, including Alta College and Academic Partnerships, to be Phoenix's newest President.

UoPX's problems are a symptom of an economic system that despite the hype cares little about workers: a system that today looks at labor costs as something to be reduced--rather than an investment. With few exceptions, America's most powerful corporations: Amazon, Walmart, Target, Yum Brands, McDonalds--rely on low-wage labor and automation to make a huge profit. Companies in medicine, finance, and tech have smaller labor numbers--and while work may be lucrative at the moment, it's becoming more precarious.

*In the early 2010s, Apollo Group, Phoenix's former parent company, spent between $376 million and $655 million a year on ads and marketing.

Related link: Robocolleges and Robostudents

Sunday, January 23, 2022

Maximus, Student Loan Debt, and the Poverty Industrial Complex

The Higher Education Inquirer is taking a close look at who's invested in Maximus, the enormous social welfare profiteer. Maximus has been servicing student loan defaulters for years and has now taken over Navient's federal student loan business, branding it Aidvantage.

Since 1995, Maximus (MMS) has grown from $50 million in annual revenues to more than $4 billion in 2021.

Maximus (MMS) Share Price 1995-2022

(Source: Seeking Alpha)

With an army of more than 35,000 workers, Maximus' clients include 28 US agencies: the Internal Revenue Service, Department of Commerce, National Oceanic and Atmospheric Administration, Bureau of the Census, Patent and Trademark Office, Federal Student Aid, Department of Defense and US Army, Department of Veterans Affairs, Homeland Security, Health and Human Services, Medicare and Medicaid, Department of Labor, Office of Personnel Management, Securities and Exchange Commission and many more.

As a contractor to Federal Student Aid (FSA), Maximus has more than 13 million student loans to service. Its four contracts with the US Department of Education total almost $1 Billion.

While CEO Bruce Caswell made more than $6 million in total compensation last year, Maximus' customer service representatives, the people who have to make the calls to the growing number of student loan defaulters, make less money than workers at Walmart.

Maximus has recently posted federally contracted jobs on Indeed for $13.15 an hour in Texas and South Carolina, even though the federal minimum wage has been raised to $15 an hour. Wages for Maximus workers in other states are reportedly even lower, as little as $10 an hour in Kentucky and other states with regressive economies.

Maximus' largest institutional investors include BlackRock, Vanguard Group, and State Street Corp--three financial behemoths. BlackRock has $10 trillion in Assets Under Management (AUM), Vanguard Group has about $7 Trillion in Assets Under Management, and State Street has almost $4 Trillion in AUM.

Bank of New York Mellon, Wells Fargo, and Bank of America each own 900,000 shares or more.

Public retirement funds, including public school teachers retirement funds (see table below), are directly and indirectly invested in the Poverty Industrial Complex and the student loan mess through Maximus and other large corporations.

Maximus and its executives have spent more than $10 million on federal lobbying and political contributions since 1998. By 2020, Maximus had 14 lobbyists in DC and had contributed to the campaigns of Joe Biden, Bernie Sanders, and Donald Trump.

Maximus' strategic partners include AWS, Microsoft, Oracle, and Cisco.

Social justice advocates have to wonder, how can the student loan system be fixed if the US establishment has a vested interested in the mess?

Maximus (MMS) Top Institutional Investors

List of Public Funds Directly Invested in Maximus

Alaska Department of Revenue
California PERS
California State Teachers Retirement System
Colorado PERS
Florida Retirement System
Pennsylvania Public School Retirement System
Teachers Retirement System of Kentucky
Louisiana State Employees Retirement System
Ohio PERS
New Mexico Educational Retirement Board
New York State Retirement System
New York State Teachers Retirement System
Ontario Teachers Retirement System
Oregon PERS
State of Tennessee Treasury
Teachers Retirement System of Texas
State of Wisconsin Investment Board

Related link: Maximus Institutional Investors

Monday, November 15, 2021

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

It's commonly known that US student loan debt is now about $1.7 trillion and that more than 44 million Americans are laden with this debt. It's also known that student debt is not a problem for everyone who goes to college or everyone who takes out loans.

Student loan debt is not equally distributed: while the children of elites can go to school without incurring debt and find meaningful work after graduation, working families are burdened because so many cannot find decent, gainful employment after dropping out or even after graduating from college--work that would enable them to repay their loans.

Student loan debt is also not distributed equally among the schools that generate the debt. Working class people who have the opportunity to get to elite schools may incur less debt there than by attending state universities--but others who attend these elite schools, especially online at the graduate level, may not be so lucky.

Those who attend subprime colleges, and who take the wrong majors, may incur debt they can never repay.

And the multitude of debtors in between, the many millions going to less than elite schools, are having to restrict their dreams as they pay back their loans.

The US Department of Education and other organizations publish important information on student loan debt. The College Scorecard, for example, gives consumers information on the debt they can expect, gainful employment after attending, and the numbers on student loan repayment. The Washington Monthly also ranks colleges, and important numbers, like social mobility rankings and amount of principal paid are in the rankings. The Century Foundation and The Institute for College Access and Success (TICAS) also contribute to our knowledge.

But there are glaring gaps in our current knowledge about student loan debt, knowledge necessary for establishing greater transparency and accountability.

One of the most important knowledge gaps is in learning about student debt by institution. In 2016, Adam Looney and Constantine Yannelis presented a conference paper on student loan debt that listed student loan debt by institution.

Table 5 in this report showed an important aspect of the debt, of accumulated debt, the percent of principal still owed on debt, and the 5-year student loan default rate. University of Phoenix attendees had an estimated $35 billion in accumulated debt, outpacing Walden University. And Argosy, Strayer, Capella, DeVry, American Intercontinental, and Nova Southeastern attendees owed more money than the principal of their loans, 5 years after the loans were taken out. Kaplan University (know known as Purdue University Global) had a 5-year student loan default rate of 53 percent, and Ashford University (know known as University of Arizona, Global Campus) and Colorado Technical Institute had 5-year student loan default rates of 47 percent. These subprime colleges, in effect, were draining the student loan portfolio while providing a service that hurt many of their customers.

Even some big brand name schools like NYU, University of Southern California, Penn State, Arizona State University, Ohio State, University of Minnesota, Michigan State, Rutgers, Temple, UCLA, and Indiana University had students with enormous amounts of debt that they were having to pay off.

The data in this study were from 2009 and 2014. What has happened since then at the institutional level? What schools today are draining the student loan portfolio and financially crippling those who have attended? Consumers and tax payers should be allowed to know.

Monday, September 6, 2021

The Tragedy of Human Capital Theory in Higher Education (Glen McGhee*)

Related article: The College Dream is Over (Gary Roth)

Related article: When College Choice is a Fraud

Related article: The Higher Education Assembly Line

Have you ever wondered why US student loan debt has soared past all other debt but mortgages, to more than $1.7 trillion? Did you know $500 billion of that outstanding student loan debt will never be paid back to the US Treasury and that this huge black-hole is sucking the life from Millennials in debt peonage?

And did you know all of this mess can be attributed directly to a set of misguided economic nostrums that go by the name of "Human Capital Theory"?

This is the tragedy of deeply flawed Human Capital Theory. Having hijacked notable successes with professionalization (remember: not everyone can be a "professional"), human capital theorists in the early 1960s worked to spread and legitimize the idea that "learning means earning."

The sinister-side is that for the lucky ones, the motto proved true. But today's grievously high debt burdens and the growing number of precarious jobs for those not so lucky contradicts the idea that "learning means earning."

The seeds of Human Capital Theory have been growing for more than century, first through Madison Avenue marketing and then University of Chicago myth making.

Here's an ad from September 1920 issue of Popular Science Monthly that makes the point: the possession of knowledge means higher wages. In this case, the 1920's proprietary “correspondence” schools and colleges relied heavily on this basic message to sell themselves -- what was later to become the central tenet of Human Capital Theory.

The naivete of these one-hundred year old advertisements is obvious now. We know better; whether it's through our own bitter experience, or the experience of those around us -- life is not so simple. Such simplicity has been debunked, and the idea itself that knowledge always translates into higher earnings has lost its appeal.

But at the time, these advertisements picked up on the massive surge in economic changes -- the new jobs, new occupations, new companies -- sweeping the county. Commerce and business life expanded and was transformed in numerous ways. Using 1880-1930 census data, Cristina Groeger shows how upper-class elites benefited far more than, say, those suffering from racial discrimination that barred them completely from higher-wage employment.

Sadly, Human Capital Theory does not take any of this into account. Racial and gender-based discrimination through our social institutions is, unfortunately, completely missing from Human Capital Theory. Learning does not equal earning when you lack access to job opportunities due to discrimination, or when you were born to a certain set of parents at a certain place, at a particular point in time.

For those lucky enough to ride the wave of growing prosperity, the slogan was true. And that's what has been driving support for Human Capital Theory -- it's just a glimpse in a 100 year old rear-view mirror. Public policy at the federal level, state level -- and even local support of education -- has been premised on the myth that financial support of education "equals earnings" -- for everyone. This is, of course, not true for those faced with wage stagnation, high unemployment and under-employment, automation, out-sourcing of good jobs, and skill erosion -- all these factors come into play and complicate the picture.

Worse yet is the global reach of these misguided directives to developing nations to spend freely on education.

In 1960, Theodore Schultz highlighted the importance of human capital for economic development among poor nations in his presidential address to the American Economic Association. “Human capital investing” soon became a priority among economic development specialists and policy makers through the World Bank and the efforts of the Chicago School. "Learning means earning" became World Bank gospel, linking GDP and economic growth with a nation's investment in higher education. The Chicago School apparently falsified the direction of causality between higher education and economic growth, resulting in additional tragical consequences on a global scale.

Not all economists, however, are so deeply committed to Human Capital Theory.

In fact, the number of dissenters is on the rise, and include Phillip Brown, Hugh Lauder and Sin Yi Cheung, the authors of The Death of Human Capital?

University of Oxford economist Kate Raworth has developed "doughnut economics" as an alternative approach, even going so far as to encourage "guerrilla economics" and declaring "it's time to vandalize the economic textbooks"!

David Blanchflower, former Bank of England governor and Dartmouth economics professor, is another highly vocal critic of human capital theory. Cristina Groeger's History of Education in Boston 1880-1930: The Education Trap is another critique that runs the length of an entire book.

Gradually, the human capital theorists that were so popular in the 1960s and 1970s are being replaced by a new cohort that isn't interested in supporting outdated dogma.

But tragically, the damage has been done, and economists need to be held accountable. They can start by joining those that are denouncing Human Capital Theory.

*Glen McGhee is the Director of the Florida Higher Education Accountability Project (FHEAP)

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