The Vital Role Of Private-Sector Education

Our purpose is to empower our students to achieve their educational and career goals

Dr. Harold Shapiro, who recently retired as the board chair of DeVry Education Group—and who has served as president of the University of Michigan and of Princeton University—says that “one of the strengths of the American system of higher education is its diversity of choice. Public sector, private sector, independent universities, community colleges—they all serve different niches in higher education, and there is strength in this variety.”

In the 1970s, the U.S. was ranked first in the world in college attainment among 25–34 year olds. By 2014, it was ranked 12th.

A study by Georgetown University’s Center on Education and the Workforce projects that by 2018, the U.S. economy will need 22 million new workers with college degrees—but today’s colleges are equipped to produce only 19 million graduates.

And according to the Department of Labor, in the U.S. there are currently more than 4.7 million job openings, but more than 18 million Americans aren’t working or can’t find full-time jobs because they don’t have the right skills.

DeVry Education Group is deeply engaged in solving these issues. We’re committed to helping provide the educational access that will return the U.S. to No. 1 in college attainment, to helping the U.S. and other countries around the globe meet their workforce needs, and to closing the skills gap.

DeVry Group is an integral part of a system of higher education that includes three diverse types of institutions: public-sector, independent and private-sector. Meeting our nation’s workforce needs means maximizing capacity in all three.

  • Public-sector, state-supported schools such as the University of Wisconsin, Illinois State University and the City Colleges of Chicago make up 71 percent of higher education, or 20 million students.
  • Independent schools such as Harvard and Princeton Universities make up about 17 percent, or nearly 5 million students.
  • And private-sector schools like those run by DeVry Group make up about 12 percent, or just over 3 million students.

Private-sector institutions are well positioned to meet the needs of working adults and other underserved populations. Only 15 percent of today’s college students can be called “traditional”; that is, recent high school graduates living on campus at a four-year college or university. The other 85 percent are non-traditional: older, raising children and balancing the demands of work, school and family. Just 31 percent of students at public universities are non-traditional; 63 percent of private-sector college students fit that description. And between 1993 and 2013, while public-sector and independent colleges added 370,000 seats for working adult students, private-sector colleges added 900,000.

Moreover, private-sector colleges provide this capacity at a lower cost to taxpayers than either public-sector or independent colleges. Factoring in state taxpayer subsidies, federal student grants, the cost of student loan defaults and the taxes paid by private-sector schools, public-sector schools cost taxpayers $15,500 per student and independent schools cost $7,100 per student. Private-sector colleges cost taxpayers just $2,400 per student—one-sixth the cost of the public sector.

Key to the private sector’s ability to invest in building capacity is its ability to attract private capital. Our Chamberlain College of Nursing has invested more than $81 million in four new locations, bringing its total to 18 campuses nationwide. This is how we are helping to address the Bureau of Labor Statistics’ prediction of a shortage of 1 million U.S. nurses by 2022, at a time when our nation’s nursing colleges are turning away nearly half of all qualified applicants every year because there simply aren’t enough spots available.

The story is the same around the globe: Anyone who wants a better life needs an education. Governments that want their nations’ economies to grow need an educated workforce—but they lack the capacity to meet the need on their own, so many are working in partnership with the private sector. For example, nearly two decades ago, government officials in Brazil recognized that an educated workforce was the key to their economic future. The government didn’t have the funds to meet their capacity needs, so they turned to the private sector. Today, more than half of all Brazilian college students study in private-sector colleges such as DeVry Brasil, where more than 100,000 degree-seeking and test prep students are enrolled.

Some critics of the private sector ask how it can be possible for an institution to earn a profit while providing a high-quality education. Every organization, whether labeled for-profit or nonprofit, taxpaying or tax-exempt, has to have sustainable, positive economics. At tax-exempt colleges, this is called “increase in net position” rather than “profit.” An institution’s income must exceed its expenses or it will cease to exist. In fact, many colleges have found that out the hard way. In the last 10 years, 50 colleges have closed their doors.

As for providing a high-quality education, there is no question that some of the stories we have heard about private-sector colleges are true; some have acted badly and should be held accountable. However, there have been good and bad actors in every sector. And regardless of sector, the quality of all colleges and universities needs to be measured according to a consistent set of rules.

Over the last few years, Congress and the Department of Education have been looking at how to ensure quality in higher education across all sectors, but particularly in the private sector. Legitimate questions have been raised about some private-sector colleges’ performance on issues like graduation rates, graduates’ employability and student debt loads. (Of course, similar questions have also been raised about public and independent colleges, e.g., what to do about liberal-arts majors who graduate with tens of thousands of dollars in debt and no jobs.)

Policymakers say that higher education needs to be held accountable. We agree, and DeVry Group is working to put accountability rules into place by advocating for a new policy framework that is based on two pillars—outcomes metrics and standards of professional practice—and applied to all colleges and universities.

  • Learn?
  • Graduate?
  • Gain employment?
  • Repay their student loans?

These metrics need to account for all students, not only those attending college full-time for the first time. They should also be viewed in comparison to results from colleges that serve similar student populations; for example, it makes sense to compare Harvard with Princeton and to compare DeVry University with Chicago State or Northeastern Illinois Universities.

The standards of professional practice we propose would include:

  • Robust disclosure of outcomes
  • Annual compliance training
  • A fair process to address student disputes, and
  • A way to incorporate these standards of practice into a college’s regulatory audits.

Senator Lamar Alexander, chairman of the Senate Committee on Health, Education, Labor, and Pensions, has repeatedly stated his belief in one set of rules, saying in a recent white paper that “some policies only focus on a certain sector of institutions instead of holding all schools to the same standards.” And even President Obama has said that “this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”

The U.S. has a dynamic, competitive higher education system, including a vibrant private sector that has increased educational capacity and access at a lower cost to taxpayers than other sectors. This system can play a key role in returning the U.S. to the top in college attainment and in educating underserved populations around the world to strengthen the global economy. We are fortunate to enjoy this breadth of diversity and innovation—and DeVry Group is working hard, in partnership with other institutions, to keep it that way.