My colleagues and I recently had a conversation about disruption innovation and how that could play out in the education space. Fresh off work on some Master’s level Public Administration curriculum work, I piped up something trenchant about change and bureaucracy, i.e. bureaucracies may not have an incentive to streamline their processes and get all down and disruptive with it b/c the bureaucracy itself is a source of power and privilege, with favors to be collected and goodies to be doled out. Our culture values lean, agile companies wherein efficiencies are a way to maximize profits. As such, private enterprise is commonly touted as superior to bureaucracies as they provide more benefits to shareholders.
In the education space, it seems like maximizing profits might take the shape of outright fraud, as was the case with Corinthian College:
Interviews with staffers and students, along with government lawsuits and company regulatory filings, reveal a systematic effort to manipulate data used to recruit students and retain eligibility for federal student aid — the lifeblood of company profits…
Boosting job placement figures was part of a larger pattern of Corinthian’s massaging data on student success, including graduation rates and loan defaults, according to former employees and company records cited in government lawsuits… [an educator] tried to fail a student who rarely showed up for class or completed assignments. Administrators changed the woman’s grades to pass her, he said.
“It’s all smoke and mirrors,” Rubacha said. “They were just chasing the numbers.”
Apparently, CC had been balancing the books by relying on financial aid money from the feds, otherwise known in some circles as ‘sucking off the government teat.” Once the DOE froze the college’s access to these funds, the writing was on the wall.
I am struck by the daring and audacity of a business model such as this one that opens up previously protected domains like education to the free market but depends on government subsidies to exist. The lamentable behavior of Corinthian College aside, this situation makes me wonder how many other de facto private colleges would not exist without generous handouts.