In Defense of “For-Profit” Education

Friday, the House held hearings on the dangers and evils of “for-profit” education. In a recent Mother Jones piece, subprime mortgage critic Steve Eisman is quoted as follows: “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. I was wrong.”

I respectfully disagree.

I spent a dozen years in post-secondary education on my way to a Ph.D. I worked as a Teaching Assistant for my first few years in grad school. The last couple of years I held an appointment as an instructor in physical science at a major research university. I also worked part-time for a couple of the big names in for-profit education: ITT Technical Institute, and Kaplan. I taught math, physics, and electronics at ITT Tech and test prep classes at Kaplan. Upon graduation, I worked full-time at ITT Tech for three years. Now, I’m a principal at a high-tech start-up company. I am regularly involved in hiring decisions where I have to evaluate the educational qualifications of potential employees. I’d like to share some of my experiences and insights into “for profit” education.

My very first grad school assignment as a teaching assistant was as a recitation instructor in a freshman engineering class. I showed up bright and eager to the office of the professor for whom I was working as soon as I learned of my appointment to see what he wanted me to do. He blew me off and said not to worry until after the first class. As I left he commented that he liked getting to teach freshman physics because he didn’t have to think much. This attitude showed in his teaching – he was bored, unengaged, unmotivated, and drifted through the semester. But he had tenure, so no one was going to do anything about him. This was an unlucky experience for me (and worse, for our students) – most of the other professors did a much better job. But I made the best of a bad situation and helped motivate and educate our students as best I could. The textbook was quite good, and any student with the appropriate skill and background who honestly applied themselves should have gotten through the class fine, despite the professor’s lackadaisical lectures.

As an instructor for my own class, I learned what a cushy job teaching can be at the university level. I had a half time appointment teaching two sections of physical science. The class was an introduction to physics for elementary education and other liberal arts majors. Each class was about four hours of combination lecture and lab each week. I had about eight student contact hours for a twenty hour appointment. The curriculum was largely determined by the department. I could have slid by with an hour prep per week, but I tended to do more and go above and beyond the bare minimum to scrape by. Even with a couple of office hours (during which I mostly graded), and additional homework and grading, I probably worked 12-15 hours per week for my “halftime” appointment.

ITT Tech, by comparison, was an educational sweatshop. I would normally have 30-35 student contact hours per week, and I used most of the rest of my hours in grading and preparation. You never really understand a subject until you have taught it, and by teaching my way through the electronics curriculum at ITT Tech, I mastered a great deal about solid state electronics, digital electronics, and integrated circuits, that I had merely regurgitated on tests in my undergraduate physics studies without really understanding. I can personally attest to the value of the ITT Tech electronics curriculum, because I use concepts that I mastered while teaching at ITT Tech all the time in my current job. It was hard work, but I enjoyed it, and I did well – one year I was honored as Instructor of the Year for my campus.

All the while I was teaching at ITT Tech, I was applying for faculty positions in physics. That was also quite an eye opener. I discovered my outstanding teaching skills had no value. Physics departments – even at the “liberal arts” institutions where I was applying – generally valued research skills above all. If a faculty member could teach, that was nice, but what really mattered was ability to pull research dollars into the department. One faculty member told me outright that “proven grant getting ability” was what I would have to demonstrate to be seriously considered as a faculty candidate. The contrast with ITT Tech was striking. When a potential candidate was interviewed for a faculty position at ITT Tech, they’d be given a few minutes to prep and then they were brought into a classroom to teach a fifteen minute or so “audition lecture” to whichever faculty members were present. The faculty members would ask probing questions of the candidate – often quite grilling. The administration then took our feedback which was a big factor in the hiring decision. At ITT Tech, teaching was the skill most highly prized in a faculty candidate.

The campus of ITT Tech at that time only offered two year degree programs, which put it in direct competition with the local community college. The community college was government supported and tuition was much cheaper than ITT Tech, but was not as successful at attracting students. At ITT Tech, classes were regimented – no electives, and everyone took the same classes in the same four hour block. There were three shifts of classes, a morning shift from 8am – noon, an afternoon shift from 1pm – 5pm and an evening shift from 6pm – 10pm. That was great for students, because they could be working a full time regular job during the day and take classes during the evening shift, for instance. At the community college, classes were offered at random times, making schedules very inefficient for students. The regimented ITT Tech schedule was rough on teachers, but great for part-time students who were working jobs on the outside.

I actually looked into teaching at the local community college. Despite its problems, the community college offered more advanced and interesting classes to teach and a much more relaxed teaching schedule at a higher salary. I was one of two finalists, but I missed getting the job. A friend of a friend relayed to me that the hiring committee agreed I was the better candidate, but the guy they gave the position to was adequate and by hiring him they could steal the best part time instructor at another campus of the community college, thus inflicting pain on a rival campus with which they had some kind of grudge. I’m actually grateful, because I hate to think how I might have stagnated if I’d ended up there.

The students at ITT Tech were a variable bunch. I taught lots of very serious and motivated construction and other workers who were looking to better themselves by making a switch to a new career. Some of them were there because of various disabilities that were forcing them to pursue a less active line of work, others because they sought better opportunities in life. Helping these hard-working students was a great pleasure. Some students were there for lack of anything better to do, or because Mommy and Daddy said they had to go to school and were paying the bills. They generally didn’t last long and dropped out in the first couple of quarters.

There were some really sharp students, but many were very poorly qualified. All the students were supposed to have a high school diploma or equivalent which meant they were supposed to have had algebra. On my first day teaching first quarter Algebra-I, I did a brief review: “a = b/x, so x = b/a” A wave of hands greeted my pronouncement. “You’re skipping steps!” my students complained. “Start with a = b/x. Multiply both sides by x. Divide both sides by a.” Ahh! Now most of them got it. The quarter was as long and painful for me as it was for my students. Entry standards were low and drop-out rates were high. We’d start with a couple of 30 student classes in Quarter 1 and be down as low as a single class of ten by Quarter 8. But most of the dropouts were in the first two quarters, before students had racked up much debt. The bulk of the students who got through the first year, got through the second year. I was never pressured to pass a student on who didn’t deserve it, or to change a grade so a student could come back and pay another quarter’s tuition.

Placement rates were also quite good. Almost every student who graduated landed a position in electronics at a high enough salary to be able to afford paying off their debt. Our top students often got jobs paying more than faculty at the school.

The administration at ITT Tech was under great pressure to cut costs. At one point, despite my having stellar teacher performance ratings, an administrator re-evaluated me and just so happened to knock my rating down one level from perfection – costing me some small fraction of a percent in an annual raise. I thought that was really petty. Once I’d already been through the ITT Tech curriculum and there was no reasonable prospect of moving on and up to teaching physics at a higher level, I decided to leave education and go into industry. When I finally resigned I gave the administration a couple of months notice so they had plenty of time to recruit a replacement for me.  I assumed they would pay me for the break between semesters. At the last minute they decided that my employment would terminate early, right at the end of the semester, so they wouldn’t pay me for the extra week. I pointed out loudly and in the presence of other faculty that that set a really bad precedent for future faculty departures not to provide ample notice for a smooth transition. The administration backed down, and I got my last weeks’ pay.

The curriculum and the lecture plans were fixed by headquarters in Indianapolis. There were even common final exams used nationwide. This tight control means that the quality of the education is very consistent and uniform. Think of ITT Tech as the “McDonalds” of education – it may not be gourmet, but the product is extremely consistent and generally good quality and good value. As an employer who now hires electronics technicians, I trust a technician who has graduated from ITT Tech to be generally competent, particularly if they can back it up by answering simple questions (I have lost count of the number of undergrad electrical engineers nearing graduation with a B.S.E.E. whose job applications I have stopped considering when they couldn’t correctly explain Ohm’s Law). The staff at ITT Tech are regimented and operations are streamlined to an extremely high degree of efficiency and cost effectiveness. There were more faculty than administrators. Compare this to the typical non-profit institute of higher education which inspired the classic joke about the mythical element known as administratium:

This element has no protons or electrons and thus has an atomic number of 0. However, it does have one neutron, 125 assistant neutrons, 75 vice neutrons and 111 assistant vice neutrons, which gives it an atomic mass of 312. These 312 particles are held together by a force that involves the continuous exchange of meson-like particles called morons.

ITT Technical Institute is spectacularly successful at what they do. I had a chance to buy into ITT ESI stock when they were spun out from ITT in 1995. That stock has increased in value by a factor of forty (nearly sixty not long ago). Talk about being in the right place at the right time and not recognizing opportunity. Instead I invested in an ultra-wideband company that just reduced the value of my holdings to zero, but that’s a story for another time.

Yes, many of ITT Tech’s students receive federal assistance – in fact a larger share than most traditional institutions of higher education because ITT Tech provides educational opportunity to a less affluent population of students than most schools. The question nobody is asking in all this concern about for-profit education is how ITT Tech can possibly be so spectacularly successful. ITT Tech charges tuition on par with their government subsidized competition and nevertheless makes enormous profits. This is due to a combination of two factors – ITT Tech is really very good and highly efficient at what they do, and most institutes of higher education are abysmally inefficient and wasteful. They require additional subsidies beyond federal support to their students to perform the same service ITT Tech does while making extraordinary profits.

There is indeed a “bubble” in higher education. Elsewhere, I passed on Glenn “Instapundit” Reynolds’ insightful article on the pending collapse of the higher education bubble, as well as Eight Reasons College Tuition is the Next Bubble to Burst. But while ITT Tech and its shareholders are benefiting from the bubble, they are not its cause. ITT Tech offers an improved, low-cost, high efficiency educational model that is ultimately part of the solution  to the higher education bubble, not part of the problem. And when the bubble bursts, ITT Tech’s profits might decline, but they will be around long after the non-profit, government- subsidized dinosaurs against which they compete are fossilized. There are some additional historical precedents worth noting too, but I will have to save them for a future post.