Huge news in my email today- EDMC (Education Management Corporation) which is arguably THE biggest for profit player right now, is done. Selling their inventory of colleges. A non-profit called Dream Center Foundation will buy them for an undisclosed amount. It’s a philanthropic organization of the Pentecostal church. (the colleges will remain secular)
What did EDMC own?
All of the Argosy University campuses (18 locations)
All of the Art Institutes (45 locations)
All of the Brown Mackie colleges (20 locations)
For-profit vs non-for-profit education- it’s a big battle. Have you heard? In short, for-profit education has been severely criticized in the past few years for taking advantage of students and selling a product that results in high student loan debt and underwhelming employment rates. Add to the mix that the most of us look for “accredited” programs, and never dig deep enough to understand the nuances of accreditation types…accreditation isn’t a yes/no question, it’s a category with hierarchy.
I’d love to remind you that just 6 months ago it was GAME OVER for the HUGE national accreditor Accrediting Council for Independent Colleges and Schools, causing 245 for-profit schools/colleges to lose their ability to participate in the Federal Student Financial Aid program. It’s not nearly as important to have customers as it is to have paying customers. R.I.P. Le Cordon Bleu.
So, what happened? The for-profit bubble just burst. On one hand, the market loved these programs, evidenced by soaring enrollment! But, we live in a country that tangles higher education and our tax dollars. It’s not as simple as “buyer beware” when our government *literally* backs the student loans that drive enrollment. In other words, if your son can’t repay his $60,000 student loan to Sallie Mae after graduating from Argosy, we’ll pick up the tab.
I love the summary provided by By Daniel Moore / Pittsburgh Post-Gazette (link above)
EDMC again became a publicly-traded company in 2009 and its stock price soared to a high of $27.99 a share on Dec. 30, 2011.
But lawsuits from the U.S. Department of Justice, along with attorneys general from 39 states, claimed EDMC illegally paid incentives to recruiters based on the number of students they enrolled. The suit demanded $11 billion in federal student loan money be returned and tarnished EDMC with allegations of fraud, deceptive marketing and steering students into debt they couldn’t pay back.
EDMC’s stock plummeted to $3.27 a share in August 2012. By 2014, when the stock was worth a few cents, the shares were delisted from the Nasdaq stock exchange.
So, that’s it. Buh-bye.
There are a few stragglers in the for-profit arena, and there always will be. Some occupations like barber and cosmetology or massage therapy just haven’t broken into the community college arena like culinary arts, automotive, allied health, computer tech, and apprenticeship.
What does this mean for parents of teens? As a parent of 3 teen sons myself, the short answer is to choose programs that are non-profit private or public. The risks of losing financial aid, losing accreditation, being bought or sold, and closing doors are real. It’s happening now. What will happen to these schools as they change from for-profit to non-for-profit? Only time will tell.