Published on 2012/10/01

Exploring the Dangers of the Education-Industrial Complex

While the growth of for-profit education has given rise to the accessibility of distance learning options, the fact that these institutions prioritize generating revenue has negative implications for the quality of learning and the ability for students to finish.

The following interview is with Anthony Picciano, the Executive Officer of the PhD Program in Urban Education at the Graduate Center of the City University of New York. At this October’s Sloan Consortium Conference, Picciano will be discussing the American education-industrial complex and its implications for online learning. In this interview, he discusses the major issues the education-industrial complex presents for students, including the challenges it presents to completion, and shares a few ideas about how they can be overcome.

1. For a little context, please briefly explain the education-industrial complex.

I think, simply—and anytime you use the word complex it’s never simple—but simply, the education-industrial complex can be defined as networks of ideological and technophile and for-profit entities that seek to promote their beliefs, ideas, products and services in furtherance of their own goals and objectives.

The complex is fueled by entities with significant resources and advocacy provided by companies, foundations and the media that want to shape American educational policy to their own ideals. This is to shape policy at all levels, but I think in the last five to six years most of this activity has been at the federal and state levels.

Furthermore, it’s important to keep in mind that it isn’t a single entity that’s conspiring in some way. It’s really made up of multiple networks that sometimes share agendas, but frequently operate independently and compete with one another for contracts and sales of goods and services.

2. What are some of the characteristics of this educational complex? What are these corporations and these entities and these interests turning education into?

The nature of these entities would be large corporations. If we’re talking about higher education right now you would look at the corporations that manage the for-profit education industry… The Apollo Group that owns a large number of for-profit colleges and universities, they are a company; they are there to make profit. They are very large and have lots of resources. And they use these resources to, for among other things, to influence policy at various levels of government.

3. What is the biggest problem with these networks’ influence in higher education?

I think there are a number of problems. First: education traditionally in this country grew out of the need to develop educated citizens, to support the society, to participate in a democratic system of government. I think that these entities basically look at education as a means to profit. In some cases it’s ideology and I have to try to distinguish that, some people have a total belief in technology—the more technology you have the better it is—but some of it is there because there is money to be made.

If you look at all education in this country, there’s more than a trillion dollars that’s spent on it. I think there are lots and lots of opportunities to reap significant profits from this enterprise.

In addition, what we’ve seen particularly in the last five to eight years is that the ideologues see technology as the vehicle to reduce the cost of higher education. We hear a lot about how expensive higher education is in this country—and I’m not one to shy away from that issue, it’s an important issue, higher education has become a very expensive proposition for middle-class families to say nothing about lower class families—but there’s a whole ideology out there that the more we do with technology the cheaper it will be. That may or may not be true, and if we look historically at how technology has been used in businesses and other endeavors, sometimes it’s worked very well and sometimes it hasn’t worked very well.

Here we’re dealing with a very human-intensive activity that, traditionally in this country, whether we think it’s good or bad, has had a very human touch to it. I think that we also talk about the expense of higher education in this country… it is perceived around the world as the best there is. I think we have to keep that in mind and we should be careful that we don’t just do things because the technology makes it available to do.

That being said, we’ve had a number of reports over the last several years… that basically some entities and some corporations are using online learning and higher education to entice some students to go into significant debt and there’s little chance that these students are going to realize a degree. These are not students who’ve done well previously in any level of education, and in order for them to succeed they will need lots and lots of services and most of the time the online colleges do not provide these. That’s a problem. If you look recently at the Senate Report, some of these institutions are spending 3-4 times more on marketing, public relations and lobbying than they actually do on instruction. To me, there’s something fundamentally wrong when institutions of “higher education” are enticing vulnerable students, vulnerable individuals, who are struggling economically and educationally, to get them to commit to tens of thousands of dollars of tuition debt without any likelihood of graduating with a degree. …

4. The critique of the educational-industrial complex is more looking at the proliferation of online learning technologies at for-profit colleges and universities and the negative impact that it’s having on students?

I’m a proponent of online learning, I think it’s done some very good things in higher education in particular. I think it’s working its way into the K-12 environment now but it’s been in higher education for the last not quite 20 years. For me it’s been an important vehicle to open up access to education for those who either are physically separate, geographically separate or for issues of time and pressures of work cannot get an education. …

I think online learning is something good, it’s something positive and it has proliferated. We have seen where the education-industrial complex has done things to move this forward. The best example I can give you is in 2006, there used to be a 50% rule in terms of qualifying for federal financial aid. Essentially, what that 50% rule said was that any organization providing distance learning of any time—whether it was online or televised courses or whatever—that they could not offer more than 50% of their coursework in any individual program in a distance learning mode. In other words, half of it could be distance learning; the other half had to be face-to-face. That little 50% rule was eliminated in 2006 and there’s a couple of interesting stories about this, but essentially it’s been documented in a number of different places that there was an 82,000 word budget bill that was passed in 2006 by the United States Congress, and there were eight lines of regulations buried in that budget bill that basically eliminated that 50% rule and established that, in a sense, you could offer distance learning programs of 100% [distance coursework] and still qualify for financial aid. … The relaxing of that regulation never really got any major airing in terms of any of the normal education policy vehicles. It was just put into a much larger budget bill. As a result of that, and if you look at any enrollment trends in online learning, 2006 is where the big spike is. I think that was the educational-industrial complex at work. There was lots of influence being peddled with congressmen to approve that particular relaxation of the regulations. …

5. Has this been negative for the quality of online higher education?

I think it has been incredibly helpful in terms of expanding online learning. Just as it was beneficial for the for-profit online providers, it also allowed the not-for-profit and public institutions—some of which have very, very well-deserved reputations such as University of Maryland University College, and Penn State World Campus…—it allowed them to expand significantly also. If you look at their enrollments since 2006 you will see they have had some significant increases also.

That’s not the problem. We’ve expanded online learning, but we’ve had some providers and I would even say companies that looked at this as an opportunity to significantly reduce costs. So you can have a fully online program without any physical facilities whatsoever. If your attitude or your goal is to maximize profits, you’ve significant reduced one element of the profit equation, that is, cost. We’ve had a lot of providers go into this with the idea of, “We’re going to make significant profits because we no longer have the cost to provide a traditional education environment, we can do everything online.”  I think some of that has been to the detriment of online learning. I think it has been the profit that has driven the proliferation of online programs, not necessarily the idea that we’re going to provide a quality environment. … There have been a number of major providers of online learning that have pushed aside quality in order to maximize enrollments, to maximize their profits and the problem is they’re dealing with a vulnerable student population with very, very little likelihood of every achieving a degree as a result of the debt that they’re carrying.

6. Is there a solution to this education-industrial complex which is dragging the quality of online higher education through the mud?

I think there is a solution, and it’s not necessarily the best of solutions, but it would have to do with lots of federal government regulation because the main driver of it is federal financial aid. … If the student drops out, and is not able to make [financial aid] payments, the provider—the college—still gets the money paid by the federal government, the student owes the federal government the money and in many cases the student cannot pay and they go into a default situation, which by the way is one of the few aspects of if you ever declare bankruptcy, you can never eliminate the debt for a student financial loan. You can never eliminate that debt, it stays with you for life.

Now if the student had gone through this program and graduated and now advanced his or her career or somehow improved their skills to make money; that would be good. But the fact of the matter is, the vast majority of these students are not graduating. They rarely last more than a year or so into the program. This is a quick turnaround of tens of thousands of dollars, the student has the debt, the federal government guarantees the loan, the college gets paid. The college has made a profit; the student is left with a loan, no degree and no prospects for getting a degree anytime soon.

7. Is the answer, then, more a shift towards regulation on the federal level?

It has to be. If you leave access to federal financial aid as an easy vehicle to guarantee tuition, it’s the federal government that has to provide regulation to oversee that so that it is not abused. It is the opinion of myself and probably many others that there have been a number of unscrupulous for-profit higher education providers, particularly using online technology because you can deliver a course so much cheaper online, that they have abused it. They use it as a way to basically reap significant profits on students who, in most cases, are the most vulnerable. …

It’s my sense that many of these online providers are guaranteeing students—oh, they will be admitted, and once they get in there’s no way they can do the work.

8. We’ve talked at relative length about for-profit institutions engaging in these practices. Do you think that not-for-profit and public institutions are engaging in similar practices, given that they are trying to account for significantly reduced funding amounts, and that many institutions are looking to online education as an alternate revenue stream?

I think there’s an element of that, but the big difference is that typically, if you look at the major non-profit online learning providers, they tend to be the large public university systems and the community colleges. Typically, these institutions, their tuition is nowhere near as expensive as it is at a for-profit institution. You can have a community college that charges probably no more than $3,000-$4,000 for a semester of coursework. If the student goes into that and fails, well the student is only out a couple of thousand dollars. The difference is that at a for-profit, the student is going to be out tens of thousands of dollars.

To me that’s a significant difference in terms of the risk on the part of the student.

I do think that some of the non-profits are doing this. Some of it is to compete, because we’ve established a whole new level of competition for higher education in this country, a lot of it fueled by online learning and social networking and advertisement on the internet. So I think some of these not-for-profits and public institutions like the University of Maryland University College, Empire State College, they’ve moved towards more advertisement for their programs, for their courses, but the big difference is the investment on the part of a student who’s going to be trying it out and who does not succeed after a semester or two is a much, much lower investment than if they go to a for-profit. …

9. Is there anything you’d like to add about the educational-industrial complex and its impact on the expansion of online learning?

I think my final comment would be that the education-industrial complex has definitely expanded online learning in this country and higher education, and to me that’s good. But I think some of it has been done at the expense of quality and unfortunately there’s been a number of unscrupulous providers of online learning who see this as strictly a cash cow and a way to make significant profits. If you look at some of the for-profit colleges in particular, you’ll see that they’ve reaped… in excess of $1 billion in federal financial aid tuition in the past year or so.

I think there’s significant money to be made here and there needs to be a certain amount of federal regulation, particularly with financial aid, to make sure that we’re not sending students down some path that looks rosy but is full of thorns.

For more information on Picciano’s presentation, which will be on October 10, 2012 at the SLOAN Consortium International Conference on Online Learning, please click here.

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Readers Comments

Paul Maurice 2012/10/01 at 10:22 am

When I started reading this piece I was concerned that it would be another unbalanced critique of the for-profit industry, but this author seems to weigh the positives with the negatives.

It’s great that the for-profit institutions helped to expand the breadth and reach of online learning, as well as societal respect for (and understanding of) the delivery method.

However, they are too focused on bringing in more students and not focused enough on ensuring that current students have the best ACADEMIC experience possible. No amount of spending on non-academic support services will ensure that students graduate.

The for-profits need to put more resources into ensuring that current students are ready and able to finish their education

Mitchell Young 2012/10/01 at 3:30 pm

This is a really unfair assessment of the impact and priorities of for-profit higher education providers. The landscape is simply not nearly as bleak as Mr. Picciano makes it out to be, nor are the practices of the industry.

I would think that, if these critiques were fair and justified, the call would not be for the federal government to alter its tuition reimbursement protocol, but to more stringently review the activities of for-profits.

Let’s not forget, for-profits are accredited. They are subject to the same regulations as not-for-profit and public institutions.

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