• Abstract and Figures
• Public Full-text

SUBSCRIBE SHARE FACEBOOK TWITTER EMAIL April 1, 2019 https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 1 of 38 Just a few years ago, universities had a chance to make a quality education affordable for everyone. Here's the little-known and absolutely infuriating history of what they did instead. By Kevin Carey he price of college is breaking America. At a moment when Hollywood celebrities and private equity titans have allegedly TT been spending hundreds of thousands in bribes to get their children into elite schools, it seems quaint to recall that higher learning is supposed to be an engine of social mobility. Today, the country’s best colleges are an overpriced gated community whose benefits accrue mostly to the wealthy. At 38 colleges, including Yale, Princeton, Brown and Penn, there are more students from the top 1 percent than the bottom 60 percent. Tuition prices aren’t the only reason for this, but they’re a major one. Public university tuition has doubled in the last two decades, tripled in the last three. Prestige-hungry universities admit large numbers of students https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 2 of 38 who can pay ever-increasing fees and only a relative handful of low- income students. The U.S. now has more student loan debt than credit card debt—upward of $1.5 trillion. Nearly 40 percent of borrowers who entered college in the 2003 academic year could default on their loans by 2023, the Brookings Institution predicts. The colleges would have you believe that none of this is their fault. They would point out that public schools took a huge financial hit during the recession when states slashed their education budgets. This is true, but that hardly explains the size and pace of the price hikes or the fact that tuition at private schools has exploded, too. [1] It also doesn’t explain why colleges have failed to take advantage of the best opportunity to radically drop the price of a good degree that I’ve seen in 15 years of watching and reporting on the industry. This opportunity doesn’t have the daunting price tag of worthy proposals like “free college.” It doesn’t require any action from Congress at all. The answer is online learning. When online degrees started proliferating 20 years ago, they earned their reputation for being second-rate or just plain scammy. Many were little more than jumped-up correspondence courses offered by for-profit colleges out to make a quick buck, and they were particularly ineffective for low-income students. But there have been remarkable advances in online learning in the last decade. Nearly every prestigious college and university now offers multiple online degrees taught by skilled professors. And many of the courses are really good—engaging, rigorous, truly interactive. They are also https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 3 of 38 a lot cheaper for universities to run. There are no buildings to maintain, no lawns to mow, no juice bars and lazy rivers (https://www.nytimes.com/2018/01/18/l earning/are-lavish-amenities-on-college-campuses-useful-or-frivolous.html) to lure new students. While traditional courses are limited by the size of a lecture hall, online courses can accommodate thousands of people at a time. This is how universities could break the tuition cost curve—by making the price of online degrees proportional to what colleges actually spend to operate the courses. So far, colleges have been more aggressive in launching online graduate programs. But there’s huge potential for undergraduate education, too, including hybrid programs that combine the best of in-person and virtual learning. And yet nearly every academic institution, from the Ivies to state university systems to liberal arts schools, has refused to pass even the tiniest fraction of the savings on to students. They charge online students the same astronomical prices they levy for the on-campus experience. https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 4 of 38 This is because many colleges don’t actually run online programs themselves. They outsource much of the work to an obscure species of for- profit company that has figured out how to gouge students in new and creative ways. These companies are called online program managers, or OPMs, an acronym that could come right out of “Office Space.” They have goofy, forgettable names like 2U, HotChalk and iDesign. As the founder of 2U puts it, “The more invisible we are, the better.” But OPMs are transforming both the economics and the practice of higher learning. They help a growing number of America’s most-lauded colleges provide online degrees—including Harvard, Yale, Georgetown, NYU, UC Berkeley, UNC Chapel Hill, Northwestern, Syracuse, Rice and USC, to name just a few. The schools ofen omit any mention of these companies on their course pages, but OPMs typically take a 60 percent cut of tuition, https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 5 of 38 sometimes more. Trace Urdan, managing director at the investment bank and consulting firm Tyton Partners, estimates that the market for OPMs and related services will be worth nearly $8 billion by 2020. What this means is that an innovation that should have been used to address inequality is serving to fuel it. Instead of students receiving a reasonably priced, quality online degree, universities are using them as cash cows while corporate middlemen hoover up the greater share of the profits. In a perfect twist, big tech companies are getting the spill-off, in the form of massive sums spent on Facebook and Google ads. It’s a near- perfect encapsulation of the social and structural forces that allow the already-rich to get richer at the expense of everyone else. And it all started with a man named John Katzman, who has come to deeply question what has become of his own creation. t’s 8:00 a.m. and John Katzman, education entrepreneur, is doing his morning workout while simultaneously explaining how he upended II the business of American higher education not once but twice. I had suggested meeting for coffee. But Katzman had just arrived in Washington, D.C., on the red-eye from California and he likes to attack sleeplessness with exercise, which is how I wound up conducting an interview on side- by-side elliptical trainers in the gym at the Ritz-Carlton. Katzman likes to https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 6 of 38 describe himself as “the ghost of unintended consequences”—a man who sees the corruption and inefficiencies at the heart of the education system and leverages them to get very, very rich. Katzman is now in his late 50s, but you can still see traces of the boyish upstart who founded his first company out of his parents' apartment on Central Park West in 1981. He got the idea as an undergraduate at Princeton University, when he tutored local high schoolers for the SAT to earn extra cash. Pretty soon he was making so much money he nearly dropped out. He didn’t, but shortly afer graduating, he founded a test prep company called The Princeton Review. There were other test prep companies out there, but no one in the business embodied his customers’ aspirations quite like Katzman—old money, Ivy League degree, cool and a little bit brash, always willing to explain to a reporter that the SAT was a “scam” and “moronic” and that its supposed value as a meritocratic sorting instrument was “bullshit.” In attacking the SAT’s flaws, Katzman only created more demand for a service that could exploit them. Princeton Review was ultimately valued at $300 million—and helped spawn an entire industry of companies that would teach kids to game the test, if their parents could afford to pay. Elite universities became even more swollen with the children of the 1 percent. https://www.huffpost.com/highline/article/capitalist-takeover-college/ 4/3/19, 11>59 PM Page 7 of 38 Yet Katzman was still only tinkering on the margins of the higher education market, which is worth at least $300 billion. The majority of that money comes, in one way or another, from the government: state funding for public universities and community colleges, federally guaranteed student loans, tax credits, grants for low-income students. For most of the past seven decades, private companies could build thriving businesses on the periphery of higher education—broadcasting football games or selling expensive textbooks. But the big pile of government money was largely off- limits. It remained in the control of public and nonprofit colleges that, whatever their shortcomings, weren’t explicitly designed to put profits ahead of students. That is, until the arrival of the internet. One of the first companies to locate a loophole was Kaplan, Inc., Katzman’s biggest rival in SAT prep. In 2000, Kaplan bought a chain of vocational schools called Quest Education. Most of the schools were modest storefronts serving a few hundred students. The real value was in the Davenport, Iowa, campus, which had “regional accreditation”—the same stamp of approval given to schools in the Ivy League. [2] The genius of this move was that 1) any accredited school can be paid for with federal grants and loans and 2) thanks to a 1998 reform intended to encourage distance learning, the Davenport college's accreditation magically extended to everything Kaplan did online.

Load more

  38

Copy Link