For-profit and undeterred. See clarification below. By Katherine Ryder, contributor FORTUNE -- At a recent conference at the marbled University Club in New York City, the caveat-filled headline said it all: "Private Equity Investing In For-Profit Education Companies: Despite grumbling from activists & politicians, the industry is getting good results. " For-profit education is indeed growing at a remarkable clip -- enrollment in for-profit schools grew by 235% from 2000 to 2010. This growth also seems to be coming at a particularly opportune time.
President Obama recently set a goal of having the highest proportion of graduates in the world by 2020, yet cuts to community colleges and public universities, forced in part by fragile state finances, are undermining the ability of the public sector to support the president's mandate. And yet, as implied by the "grumbling," free-market education is hardly a silver bullet.
MORE: Does Baidu's Robin Li have the hardest job in the world? MORE: Can Singapore engineer creativity? For-Profit College Rules Scaled Back After Lobbying. For-Profit Colleges’ Mostly Black and Latino Students Face Higher Debt and Unemployment. Private for-profit institutions have been the fastest growing part of the U.S. higher education sector for decades now, but a new Harvard study finds students attending for-profit colleges end up with much higher student-loan debts, are less likely to be employed after graduation and generally earn less than similar students at public or private nonprofit schools.
The for-profit sector disproportionately serves older students, women, African-Americans, Latinos, and those with low incomes, according to the report “The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?” Published by Harvard’s National Bureau of Economic Research. African Americans account for 13 percent of all students in higher education, but they are 22 percent of those in the for-profit sector. Latinos are 15 percent of those in the for-profit sector, yet 11.5 percent of all students.
Colleges pay presidents millions as they raise tuition - Dec. 20. NEW YORK (CNNMoney) -- Some private colleges are paying their top executives millions of dollars, at the same time they're hiking tuition prices for students. Vanderbilt University paid its chancellor, Nicholas Zeppos, $1.9 million in 2009, according to the school's most recent tax filings -- enough for up to 43 students to attend Vanderbilt at current prices. His total pay includes a base salary of $673,002, as well as bonus and other compensation. That same year, Vanderbilt's tuition jumped 4.3%. Since then, the college has hiked tuition more than 3% annually, and now totals $41,332, according to the university. His overall pay was actually 21.5% lower than it was the previous year, according to the school.
Even so, Zeppos' 2009 base was almost four times the average professor's salary of $179,600, the college confirmed. Zeppos "deserves the compensation he receives," said Mark Dalton, chairman of the college's Board of Trust, in a statement. 5 biggest state tuition hikes. Maryland Politics: Cummings launches probe into for-profit schools - Politics and Policy from Baltimore, Annapolis and Washington.