Shifting Students Out of Community Colleges and Into For-Profits Last week I wrote about how cash-strapped state schools are cutting courses that cost more to teach, which unfortunately also happen to be the classes that are most likely to get students jobs (nursing, engineering, etc.). A couple of readers wrote to me asking why private schools don't just step in to fulfill unmet demand for job-friendly courses unavailable at community colleges. Many private colleges are doing just that. In fact, perhaps the biggest beneficiaries of state cutbacks for higher education are the private for-profit schools, like the University of Phoenix and Kaplan University. John Aubrey Douglass, a research fellow at the Center for Studies in Higher Education at the University of California, Berkeley, actually wrote a paper last month about this shift from public colleges to for-profits, which has precedents. He calls it the "Brazilian effect": ... when public higher education cannot keep pace with growing public demand for access and programs, governments often allow [for-profits] to rush in and help fill the gap, becoming a much larger and sometimes dominant provider. This is the pattern in many developing economies such as Brazil where some 50 percent of student enrollment is in profit-driven private institutions and in Korea, Poland and many other parts of the world. The merits of routing students away from public schools and into for-profits are debatable. The for-profits can be seen as "nimble critters" and/or "agile predators," to use the language of three Harvard economists who analyzed this sector in a recent paper. On one hand, these schools are very adaptive and are fulfilling unmet demand, particularly among a low-income population that could benefit most from more education. For-profits offer training for just about every possible career and generally serve as many students as they can. On the other hand, the for-profits are relatively unregulated, and many are fly-by-night operations that scam students. They also charge a lot more than community colleges and can afford to do so because the federal government helps pay their tuition. According to the Harvard economists" paper, nearly three-quarters of the revenues of Title IV-eligible private for-profits come from federal loans and grants. Title IV refers to requirements schools must meet, like formal accreditation, to qualify their students for federal aid. Many of these schools have a reputation for rigorously helping students apply for federal aid, and then less rigorously making sure students get a degree and marketable skills. So even though taxpayers have gradually withdrawn their subsidies for state schools, they are gradually increasing their subsidies for for-profits instead, in the form of federal grants and loans. And it's not clear that the educational outcome is better.