Friday, May 28, 2010

A spitting contest on HuffPost

Okay, I really wanted to title this, "A pissing contest," or worst case, "A urinating contest," but decided that was not decorous and dignified enough for The Itinerant Professor.  So I toned it down a notch.

Michele Hernandez, admissions consultant extraordinaire of whom I previously wrote, published a piece in HuffPost yesterday blaming Harvard for hyping the admissions market for selective institutions.  Far be it from me to defend Harvard; I've been plenty critical of the institution in this blog (just do a search for "Harvard" in the search box).  I wrote a comment to her post stating that she was playing loose with the facts, and that she and her industry were as much to blame for the frenzy and anxiety students and parents face when dealing with trying to get in to these institutions.  She then responded, and. . . .well, you can guess where this is going.   She accused me of directing "anger" toward her, which was (I thought) not my tone at all.  Guess some people believe anytime you disagree with them you're showing anger.

For some reason, HuffPost deleted parts of my response, I think because I posted too many times.  So I'm reprinting the entire thing here:

There is no "anger" whatsoever in my original comment; I didn't intend it as a wild rant, and if it came across that way, I apologize [I usually keep my angry rants anonymous :) ]. I'm merely questioning some of the facts you provided in your post, along with your assumption about where the admissions frenzy comes from. I questioned in your original post when you said that students were applying to 15-30 schools a year. You said in your comment that "My data is not based on anecdotes but rather on the actual data provided by colleges." I think you need to provide some citation for these numbers. I recognize HuffPost is not a scholarly journal, but there is still an obligation to inform your readers where these numbers come from.

My suspicion is that your "15-30 schools a year" is a wild exaggeration that is not based on reality, but based on the frenzy created at least in part by the admissions industry, as well as by the media. How many students are really applying to this many schools?

The U.S. Department of Education conducted a nationally-representative survey of students graduating from high schools in the U.S. in 2004; this survey found that only one-half of one percent of graduating seniors applied to 11 or more schools. Even allowing for the changes in college admissions that have occurred since 2004, due to Harvard's dropping of ED and other changes you describe, you would still be a long way from a norm of students today applying to 15-30 schools. Yes, there may be a very small number who do this, but to put this out there as the norm for those applying to the most selective schools I would describe as fear-mongering.

You are right that the colleges are to blame in part for this frenzy, as well as the media as I said earlier, but I believe the admissions consultant industry (of which you are certainly a very prominent member) is at least equally to blame. You try to convince parents that the only way to get their children into one of these institutions is by using the insider knowledge that you and others have, and that without that information (and the often five-figure fee that obtains it), their child has a snowball's chance in Miami of getting into one of those colleges. The fact that you state that “I turn away almost as many students as I work with” is no defense of what your industry helped to create.

In last year’s article in The New York Times (July 18 2009) on the admissions consultant industry, you were quoted as saying: "‘It’s annoying when people complain about the money,’ the Vermont-based counselor, Michele Hernandez, said. ‘I’m at the top of my field. Do people economize when they have a brain tumor and are looking for a neurosurgeon? If you want to go with someone cheaper, or chance it, don’t hire me.’" Is this really the impression we want to send to parents and prospective students, that getting into college is as complicated – and dangerous – as brain surgery?

Another way you add to the frenzy is through the impression you and some in your industry help to promulgate that the Ivy League institutions (and the small handful of others with similarly low acceptance rates) are the only reasonable destination for bright, motivated students. This does a terrible disservice to many students who could and would receive an excellent undergraduate education, often better than they would receive at one of these low-admittance schools, at many of dozens of other schools around the country that have much more reasonable acceptance rates and sometimes lower costs (see the work of The Education Conservancy – – for helping to combat this). I imagine you’ll respond by saying that that’s part of your service, to help students find the right schools for them. But it’s hard to deny that your website and publicity emphasizes the Ivies, and by featuring so prominently their low acceptance rates, you help add to the anxiety and insecurity these families face.

We'll have to wait and see if she responds.

The Itinerant Professor curse

Well, just as I was writing something nice about the proprietary sector, word comes out that an influential analyst has trashed it.  Steve Eisman of FrontPoint Financial Services Fund, an analyst featured in Michael Lewis's book The Big Short, spoke at the Ira Sohn Investment Research Conference on Wednesday.  He was quoted as saying (by Inside HigherEd):
"Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry," said Eisman. "I was wrong. The For-Profit Education Industry has proven equal to the task."
Pretty strong words from someone who supposedly has a good track record for reading markets and industries.

Mother Jones has a good recap of Eisman's perspective on the sector, and why he thinks it's ready for a tumble.  He blames the Obama administration's push for gainful employment regulations, which would force the sector to demonstrate that graduates of their institutions make enough money to shoulder the higher debt burdens students there have, on average (see the recent College Board report, Who Borrows Most? for more on this issue).

Criticism of this sector is not new; as far back as almost two decades ago, in the 1992 reauthorization of the Higher Education of 1965, the regulations on student loan defaults were changed and hundreds of proprietary institutions were thrown out of the Title IV programs.  But the sector has demonstrated an incredible resilience - and profitability - over the years.  The Chronicle of Higher Education had been doing a good job tracking the share prices and market cap of the key players in the sector, but it seemed to have stopped this in recent years (here's the most recent article on it I could find, from 2008 - you need to be a Chronicle subscriber to read it).  Its reporting has shown how stock prices of many of the large companies, such as Apollo Group (parent company of the University of Phoenix, the 640 pound gorilla in the industry), ITT Tech, Capella, and others, have risen far in advance of most market indices over the last decade (and fell less rapidly in the decline of the last couple of years).

Many in the proprietary sector broke out the champagne, I'm sure, when Bob Shireman announced last week that he was leaving the Department of Education.  He was seen as the leader of the efforts to rein in the sector, which has seen its share of Pell Grant dollars increase to 21 percent, even though they represent 9 percent of undergraduate enrollment (data from the College Board Trends in Student Aid website).  Their glee may be shortlived, however.  It is likely that others in the Department, as well as Congress, will continue the scrutiny of which Shireman was the figurehead.  Steve Eisman obviously agrees.

Wednesday, May 26, 2010

Building linkages with the proprietary sector?

A couple of weeks ago I attended a meeting at the American Enterprise Institute titled "AEI Forum on Higher Education."  From the invitation, it was a little unclear what the focus of the meeting was going to be.  But given that it was being sponsored by AEI, my assumption was that it was going to revolve around something to do with markets and market forces in higher education, given AEI's fairly conservative orientation.  My first thought was, "Are you sure you want me there?", but I figured it could make for an interesting event so I agreed to attend.

The meeting did, in fact, focus on markets in the sense that there was a heavy does of proprietary sector institutions and other companies represented.  It was a small group of people, only about 25 or so, including (I believe) just five of us "traditional" academics.  We've been asked not to divulge the details of what was discussed at the meeting, as it was designed to create an open dialogue between the participants, and make some connections between those of us on the traditional (i.e., public or not-for-profit institutions) and for-profit sides.

What I can say was that it was interesting hearing people from the proprietaries talking in detail about some of what goes on in their institutions.  I've read quite a bit about this sector, and have heard bits and pieces at conferences, but not to this level of detail before.  I've also written some about my interactions with this sector.before.  The meeting also included representatives from companies that were not direct postsecondary providers, like some of the institutions whose logos I included at the top of this post.  These other companies provide a variety of services to both for-profit and not-for-profit institutions alike. 

Part of AEI's agenda for the meeting was tto spur more research on the new providers in higher education.  It's unclear yet where this will go, but there is at least one lead I am following up on with one company. Stay tuned for more details.