For-Profit Colleges in the US: A Morally Bankrupt Sector?

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Case Details:

Case Code : BECG117
Case Length : 19 Pages
Period : 2008-2010
Organization : -
Pub Date : 2011
Teaching Note : Not Available
Countries : US
Industry : Education

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Putting Profits over Public Good? Contd...

The report also addressed several other questions that had been plaguing the for-profit education sector for a long time such as student enrollments and the methods these colleges were adopting to attract more students.

On release of the report, the shares of for-profit education companies in the US, including Apollo Group Inc.⁵ (Apollo Group), DeVry Inc⁶ (DeVry), Education Management Corp⁷, and Corinthian Colleges, Inc.⁸ (Corinthian), fell significantly. "GAO's findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight.

To the contrary, the evidence points to a problem that is systemic to the for-profit industry,"⁹ said Tom Harkin (Harkin), Chairman, US Senate Health, Education, Labor, and Pensions (HELP) Committee.¹⁰

Excerpts >>

5] Based in Phoenix, Arizona, Apollo Group Inc. is one of the biggest for-profit education companies in the US. Founded in 1973, Apollo is the parent company of the University of Phoenix.
6] DeVry Inc. is one of the largest publicly-held, international, higher educational organizations in North America. It operates several for-profit higher education institutions, including DeVry University, Ross University, Carrington College, Western Career College, and Chamberlain College of Nursing.
7] Based in Pittsburgh, Pennsylvania, Education Management Corporation is a leading private operator of post-secondary educational institutions, primarily in the US.
8] Founded in 1995, Corinthian Colleges, Inc. is a publicly-traded corporation based in Santa Ana, California, that owns and manages a collection of for-profit colleges in the US and Canada.
9] Emma Ashburn, "U.S. Senator Lashes Out at For-Profit Education," www.reuters.com, August 4, 2010.
10] The US Senate Committee on Health, Education, Labor, and Pensions (HELP) looks after matters relating to health, education, labor, and pensions.

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