Cross-posted at bobgiloth.com.
"Like other for-profit schools such as DeVry and ITT, Phoenix offers the educational equivalent of a subprime mortgage; not the best product the industry has to offer, but a potentially valuable option for people who might not otherwise get into a desired market."
Katherine Mangu-Ward, Education for Profit: Why everyone is flaming the University of Phoenix, Reason,July 2008.
Let's kick the tires of this analogy -- for-profit schools equal subprime mortgage. This is an especially provocative analogy in the midst of our subprime meltdown.
- Subprime means not as good as prime education -- public or nonprofit colleges and universities, especially community colleges. Not as good as might include lack of meaningful credentials, quality of teaching,etc.
- Subprime may also mean hidden costs, fees, balloon payments. This certainly was the case in the past with proprietary schools that made off like bandits. A lot of these have closed down. Payments are now somewhat in line, but they have to be viewed in relation to what you get -- the labor market effects of this schooling.
- Subprime says something about the borrower or student. For loans, this refers primarily to credit score. For students this may mean effective literacy level, standarized test scores, or GPA. Can graduation rates be any lower than what we see at community colleges? Probably.
- Subprime is about access. For students, access relates to costs and eligibility but also to flexibility, course hours, online courses, course or degree compression, packaging of courses, etc.
When you take out a subprime mortgage loan you get a house, at least for a while. What do you get with a subprime educational credential? That's the question? And, as with a subprime mortgage, how long does the educational effect last? Is it durable in a sense -- recognizing that we all have to retrain ourselves umpteen times?
So, does the analogy work? Somewhat. It would do better if we had more data on the impacts of subprime education on wages, careers, etc.? A low bar for success might be if subprime education outfits get tuition reimbursement from employers and other third-party payers. And, we have something to learn from subprime educators about product design and delivery.