Indian Computer Science (CS) & Information Technology (IT) Academic Reform Activism Consolidated Blog Document


For-profit Corinthian Colleges goes for orderly dissolution of company; One of the largest USA higher education closures; Lessons for India



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For-profit Corinthian Colleges goes for orderly dissolution of company; One of the largest USA higher education closures; Lessons for India


Net url: http://eklavyasai.blogspot.in/2014/07/for-profit-corinthian-colleges-goes-for.html



Last updated on July 6th 2014

In response to a mail with similar content as that of this blog post, "Prof. Yashpal Committee: Renovation and Rejuvenation of Higher Education Report (2009) - Extracts related to private higher ed. providers and capitation fee", a US based academic shared the following New York Times, July 2nd 2014 report, "Corinthian Colleges Is Closing. Its Students May Be Better Off as a Result.", http://www.nytimes.com/2014/07/03/upshot/corinthian-colleges-is-closing-its-students-may-be-better-off-as-a-result.html.

Some notes from the article [The Creative Commons Attribution License, CC-BY, does NOT apply to this post.]:

* Corinthian Colleges, a for-profit company, which enrolls 72,000 students across over 100 campuses, announced its imminent bankruptcy.

* The company was being investigated for bad educational and financial practices from multiple govt. agencies including the US Department of Education.

* The US Department of Education was investigating allegations of "falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance." and announced temporary withholding of part of federal student aid money. The cash delay was enough to send the company into imminent bankruptcy, as federal student aid money was a vital part of its annual revenues!

* The US govt. had proposed a new set of regulations to govern for-profit colleges which has been challenged in court by the for-profit education industry. But the govt. has gone ahead and released a report which has the results of the test it proposes to apply to these programs (a chart with the percentage of for-profit company programs that are deemed to be failures or are in a warning zone is included in the article). [Ravi: I am impressed with the transparent way in which the US government education regulator is handling this challenge of keeping for-profit education companies in check. I think Indian top education regulators should carefully study the methods used by the US govt. education regulator.]

* The report has 35 % of Corinthian Colleges programs (numbering 162) deemed as failures and 15 % (numbering 68) in the warning zone.

*  But some for-profit education companies have zero failures and zero warnings! [Ravi: So there are some good for-profits too in the USA higher ed. sector.]

* "At its peak, Corinthian received more than half a billion dollars per year from the federal Pell Grant program, more than the entire University of California system." Due to federal law limiting federal financial aid to no more than 90% of company revenue, it seems that Corinthian invested some of its own money for student loans! The calculation being that for every one dollar Corinthian itself gave as student loan, it enabled the company to receive 9 dollars of federal student aid! [Ravi: These sort of financial gimmicks to dig into government aid for economically challenged students, well within the law, is the real scary part for me. Already Andhra Pradesh state in India seems to have had a higher education bubble in engineering colleges fueled by the state govt. fee reimbursement scheme for economically challenged students. That bubble is bursting due to the state government's precarious financial state not allowing it to provide the promised fee reimbursements in a timely way (and perhaps the poor quality of education imparted in colleges mainly dependent on such students). From http://en.wikipedia.org/wiki/Fee_Reimbursement_Scheme_(Andhra_Pradesh), "Fee Reimbursement Scheme also called as Post Matric Scholorship is a student education sponsorship Programme by Government of Andhra Pradesh. It supports students belonging to economically weaker sections in the state. In 2012-13, more than 600,000 students in professional colleges were covered under the scheme, including around 150,000 students in engineering colleges." and "The scheme has been under controversies with some institutions misusing it. The government is planning to reduce the scholarship to Rs.35,000 for the year 2013-14. After the separation of Telangana from Andhra, the fee reimbursement has become a bone of contention between Andhra and Telangana. The new clause introduced by the Telangana government has affected around 39,000 Andha-origin students who had done their schooling and college education in Telangana."]

* The article concludes that more scrutiny and regulation of the for-profit higher education companies is working with those that fail to serve students well being faced with closure and those that provide job skills at affordable price remaining open.

--- end notes ---

Ravi: This is a lot of food for thought for me. A materially advanced country like USA with its far stronger implementation of law and regulations has had to struggle to differentiate between good for-profit education companies and bad. In India, the brutal truth seems to be that even though the law allows only not-for-profit private educational trusts to run educational institutions, there are a lot of private educational institutions which seem to be under-the-table for-profit trusts! The government and regulatory agencies have not been able to prevent clearly illegal activities like capitation fees of large value being taken on a large scale by these under-the-table for-profit education trusts. [For more, please see the post titled, "Private study (informal data): (Illegal) Donation/Capitation fees in India from KG to PG of Rs. 48,400 crores (US $ 8 Billion) per year"]

If this corruption in a lot of private educational institutions in India is so bad now itself, what could be the picture if the government changed the law to permit for-profit education companies to operate! Yes, that certainly may allow some genuine and law-abiding education entrepreneurs to enter the field of private education in India but, at the same time, the floodgates may get opened for scamsters and tricksters to swamp the private education sector in India, who will adroitly use legal loopholes and their clout & leverage with the political system, to create fortunes for themselves, at the expense of students, parents and government aid money for economically challenged students & parents. Given the very poor track record of Indian higher education regulators in preventing malpractices and fraud, I doubt whether they will be able to implement strong regulation like the US department of education and other US agencies like consumer protection agencies.

In conclusion, I am now having a serious re-think about supporting policy changes allowing for-profit education companies to operate in India, given today's rather dismal state of affairs in prevention of malpractice and fraud in some parts of Indian higher education. Maybe India is just not ready for such free market education entrepreneurship in the field of higher education.

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Dr. Srinivasan Ramani, one of India's eminent computer scientist-cum-administrators, first director of National Center for Software Technology. NCST (now CDAC-Mumbai, http://www.cdacmumbai.in/), significant contributor to India's academic network, ERNET, http://www.eis.ernet.in/, first director of HP Labs. India, and 2014 Internet Hall of fame inductee, http://internethalloffame.org/inductees/srinivasan-ramani, has put up a post on his blog titled, Regulating private educational institutions, http://obvioustruths.blogspot.in/2014/07/regulating-private-educational.html, which refers to this Indian CS & IT academic reform activism blog.

Thursday, July 3, 2014




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