Public Government Driving Colleges to Privatization

Each day, higher education as a whole is becoming increasingly politicized. Over the past few years, the U.S. government has become a hostile environment for corporate business, with some large companies leaving the country and others restructuring into S corporations or partnerships, both of which have lower tax rates and fewer regulations. Many public companies are flocking to privatization – and for-profit colleges or higher education institutions are doing the same.

Apollo, the owner, and operator of the University of Phoenix is the latest and largest for-profit higher education provider to move to private ownership. Following many attacks that have caused a declining enrollment, Apollo leadership found itself with one option – to sell Apollo to Vistria Group, a company headed by Tony Miller, former deputy education secretary in the Obama administration, and Martin Nesbitt, a purported friend of Obama. While there has been not even a whiff of impropriety, the movie is enough to make raise questions. One expectation for the company is that, under the leadership of friends of the current administration, the new business will be allowed to grow with less regulation.

The recent sale to Vistria Group has required the approval of the U.S. Department of Education, which has grown in power under the current administration. The department recently formed a Student Aid Enforcement Unit that, under the guise of protecting students and taxpayers, will attack misleading marketing, with for-profit schools being the most likely targets of these attacks.

Over the past few years, the targeting of for-profit educational institutions has decimated billions of dollars in market capitalization and forced operators like Corinthian Colleges to file for bankruptcy. When Corinthian Colleges closed U.S. operations in May 2015, 16,000 students and employees were directly affected.

The administration is not entirely wrong about the existence of deceptive marketing schemes – but this is the reality among both for-profit and not-for-profit colleges. By selectively targeting for-profit institutions, these colleges will continue to see out new ways to escape and hide from the increasing scrutiny of public regulation.

As for-profit colleges and other companies make drastic moves to privatize and get away from the government’s strict rules, they do have hope in the fact that a new administration that may be more supportive of free enterprise and less regulatory will soon be taking office.

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