Kaplan CEO: For-Profits Schools Are ‘Disruptive Innovators’

Kaplan University’s CEO Andrew Rosen defended the role of for-profit institutions at an event hosted this week by the American Enterprise Institute. But the event, billed as “Rebooting Higher Education,” focused more on buffing the image of for-profit institutions than on a change in course for the industry.

Rosen and the panel focused on what was framed as increasingly irrelevant degrees offered by traditional institutions, rather than on high student debt and default rates at for-profit schools.

“It is in the nature of our system to be skeptical of new entrants,” Rosen said. “That doesn't mean private sector schools are perfect. They aren't; they've made mistakes.”

Rosen compared criticism of for-profit institutions–which he called “disruptive innovators”–to the resistance encountered over a century ago by land grant universities, including Cornell and Rutgers.

The for-profit education sector has come under fire in recent years for aggressively pursuing potential students, high default rates and student debt, and for reporting fraudulent post-graduation job placement rates. Twenty-two percent of students who set out to get a four-year degree at a for-profit college succeeded in 2008, according to a 2010 report [PDF].

(Read more about for-profit accountability at Campus Progress)

Rosen argued that the higher education system should be evaluated based on learning outcomes, access, affordability and accountability–themes developed in his 2011 book, “Change.edu.” He also worried that highly-regarded universities are squandering resources on posh residential facilities, hot tubs, and lobster nights.

“Harvard’s endowment is $1.5 million per students,” Rosen said. “Isn’t it time for Harvard to start asking, ‘Can we make our educational bounty available to more students?’”

Rosen also disputed the staggering figure that 47 percent of student loan defaults are accounted for by for-profit college students. For-profit students, he said, were responsible for a lower percentage of total defaulted dollars.

“The percent of defaulted dollars is pretty much roughly proportional [at for-profit colleges],” he claimed during the event.

By proportion of students, the default rate in 2010 at public colleges was 7.3 percent, and 4.7 percent at private, nonprofit institutions.

The panel included Career Education Corporation’s Diane Auer Jones, the Chronicle of Higher Education’s Jeff Selingo, and White House Domestic Policy Council’s Zakiya Smith–none of whom, including Smith, pressed Rosen on debt or default rates.

Some critics do see a role for for-profit colleges in the higher education system.

Christopher Beha, an associate editor at Harper’s Magazine who enrolled at the for-profit University of Phoenix for an undercover investigation, concluded that while there is a niche in the higher education system for for-profit colleges, it is not working well for students to force them into a traditional, four-year model.

The American Enterprise Institute is a nonprofit think tank based in Washington, D.C.

Jon Christian is a reporter with Campus Progress. Follow him on Twitter @Jon_Christian.

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