Friday, November 4, 2011

Issue 2, the Business Model, and Ohio Schools

Pedal across Nevada
and you have plenty of time to think.
 This summer I took a solo bicycle trip across the United States to raise money for research on juvenile diabetes. 

When you pedal 4,615 miles alone, you have plenty of time to think about all kinds of political issues.  This is especially true when you're crossing the barren stretches in Nevada.

At one point, after I reached Reno, I passed a billboard advertisement for some private school.  And that got me thinking about Issue 2, here in Ohio. 

By now, you probably know that our Republican governor and our Republican-controlled legislature want to introduce "business efficiency" to Ohio schools.

Well, really, how can opponents of Issue 2 argue against that?  Efficiency!  That's always good.  And business is all about profit, right?  You can't make a case against "profit," can you?  That's capitalism at it's finest.  Right?

Look at the record of for-profit colleges, however, and you may start to wonder.  If Issue 2 passes, is the key word, at the K-12 level in Ohio, going to be "profit" or "education?"

If you haven't been following the news, you may not realize that in recent years enrollment at for-profit colleges, in Ohio and elsewhere, has ballooned to 2,000,000, with much of that growth fueled by $25 billion in federal student loans. 

So:  with all that money dangling in front of your for-profit nose, what's a for-profit school to do?  Well, advertise, of course.  Make it look like going to the University of Phoenix, for example, is a sure-fire path to success.

Only--in too many cases--it's not.  For-profit colleges, which account for 12% of U. S. students in "higher education," rake in more than a quarter of federal student aid money, and end up with an abysmal record when it comes to preparing "graduates" for gainful employment.  As a result, for-profit colleges account for half of all student loan defaults. 

Consider the "business efficiencies" introduced by the Education Management Company (EDMC), based in Pittsburgh and 41% owned by Goldman Sachs.  (With his Lehman Brothers background, Mr. Kasich must salivate when he sees the piles of dollar businesses can make running the state schools.)  The company, which made 89% of its net revenue on student loans, runs Argosy University and Brown Mackie College, among others.

If you want to educate the young--and turn a tidy profit--well, you have to rely on "business efficiencies."  So EDMC developed a system to reward the most successful recruiters, creating what is know in the bowels of  Wall Street as a "boiler-room culture."  Really, it was a telemarketing scheme:  recruiters, and phone banks, and the hard sell, no matter what.  Get those students IN THE DOOR--and bonus pay for solictors who bring in the most business every day.  Take that student loan check, cash it, and put the money in the EDMC account. 

It doesn't matter if EDMC employees enroll students who can't write simple essays.  It doesn't matter if they prey on the desperate unemployed during hard times.  It doesn't matter if they promise to turn marginal students into doctors, lawyers, teachers, computer programmers and nurses.  Students who were clearly on drugs were encouraged to sign up--even students without computers--to take online classes.

So what, if you "hijack the American Dream," as one observer put it?  Sign up those poor suckers, with no chance of graduating, and stick them with hefty federal loans.

Capitalism is about profit--first, second and last. 

Governor Kasich knows that.  He, better than any public sector worker, knows that in the end the free enterprise system has a cash register for a heart and a bank balance where a conscience should go.

I understand if someone wants to vote for Issue 2, if all they care about is keeping their taxes low. 

But don't be fooled by the rhetoric.  There are several provisions buried deep inside Senate Bill 5, that spell disaster for our schools.

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