Prediction #1: Trump Pushes Back
The regulatory pendulum has swung for and against for-profits for decades, and a new swing is about to begin. The regulatory apparatus assembled under Obama, with for-profit schools as the main target, will be dismantled. Alleging both federal overreach and compromised rule-making, the new administration will consign much to the scrapheap.
Comments from Representative Virginia Foxx (R), expected Chairperson-Elect of the House Education Committee, about “diminishing” the role of the federal government in education, foretell efforts to turn the tide. On the chopping block will likely be the misrepresentation rules (which toughened federal action in the event of institutional misrepresentation of, say, accreditation or graduate outcomes), federal scrutiny of state authorization of distance learning, and the ban on incentive compensation for recruiters.
Gainful Employment—rules designed to hold mostly for-profit schools to account on graduate earnings but watered down through lawsuits—will also be ditched. Deregulation will be presented as an assertion of state’s rights rather than lack of concern about past or future abuses.
These rules came out of the federal government’s lengthy rule-making process, which must also be used to make changes. Trump appointees, however, could delay, suspend, or decide not to enforce certain provisions. Or, they could put forward novel interpretations of underlying legislation. Although a Trump Administration may not always follow due process, checks and balances will be needed to avoid lawsuits from aggrieved parties.
In our view, reduced regulation will, by itself, do little to revive for-profit enrollment. Nonprofit competition, savvier consumers, and degree alternatives are more important variables. Trump will favor non-degree and Associate’s provisions when it comes to higher education expansion.
Finally, we predict that Trump will attempt, through the reauthorization of the Higher Education Act, or perhaps under existing legislation, what no previous administration has managed: a single, market- and outcomes-based higher education accountability system spanning all colleges and universities— both nonprofit and for-profit. Many institutions may hope such ambition is delayed until after mid-term elections when Washington is likely to return to deadlock.
Prediction #2: MOOC Degrees
If the year 2012 was the Year of the MOOC, then 2017 will be the Year of the MOOC Degree. In December 2016, Australia’s Deakin University announced the first suite of (graduate) degrees offered entirely through the U.K. MOOC platform, FutureLearn. Expect more MOOC degrees to come this year, including from major universities through EdX and Coursera. The dot-com era dream of getting online degrees from some of the best institutions in the world will finally come true.
If MOOC degrees are priced conservatively, they will be lucrative but perhaps not game-changing. If MOOC degrees offer access to top brands but with a mediocre student experience, this will be just a prestige play. If MOOCs degrees leverage economies of scale, embody top-notch production values and deliberate pedagogy, and offer students the best of campus and cloud, other institutions better watch out. Best and biggest may start to reconcile. With degree pathways and alternatives such as micromasters as part of the mix, MOOCs will be disruptive all over again.
Prediction #3: Did I Mention I Just Founded a University?
In 2013, French tech billionaire Xavier Neil founded 42, a zero tuition coding university with no formal entry requirements, no faculty, and no lectures. Students learn through projects and from each other. Along with other founders that have together committed over $100 million of their own money to the project, Mr. Neil wants to train a new generation of talent to keep pace with tech innovation. In 2016, 42 opened a branch in Silicon Valley.
42 is not a one-off. Many universities trace their origin to a wealthy benefactor, and more of today’s super-rich will come to see a university as the ultimate investment. The Bill and Melinda Gates Foundation has labored for years trying to change the system from the bottom up, but Gates’ counterparts may be more attracted by the kind of disruptive play that made their fortunes. Part vanity project, part taking on talent generation as a cost of doing business, and part venture capital, billionaire universities will prove a mixed bag. Some, like the notorious Trump University, will be opportunistic and short-lived, but 42 is serious.
In 2017, expect another university or similar, to be founded by a billionaire. If such a venture can transcend 42’s bet on bricks-and-mortar alone, which puts a ceiling on scale, a powerful new university prototype will be born.
Prediction #4: ACICS Reinvented
The Obama Administration’s efforts to curtail for-profit schools included withdrawing recognition for ACICS (Accrediting Commission for Independent Colleges & Schools), the national accreditor that approved the two big, proprietary school casualties of the past two years: Corinthian Colleges and ITT. The Secretary of Education concluded that ACICS’ oversight was flawed beyond redress, and the accreditor is now fighting for its life in the courts. ACICS accredits hundreds of institutions which have 18 months to secure alternative accreditation or lose access to federal student aid. Over 500,000 students are affected.
We predict that Trump’s nomination for Education Secretary, Betsy DeVos, will change tack. Rather than simply let hundreds of for-profit schools stampede to another national accreditor, which may struggle to cope with the volume and inherit problems down the road, the Department will facilitate a reinvention of ACICS.
Accreditation is non-governmental, so the Department has no legal right to interfere, but in reality, federal funding is the ultimate arbiter. ACICS offers an opportunity to bring together schools, accreditors, employers and others to think through what 21st century national accreditor might look like. Development of a best-in-class accreditor would be a much more satisfactory conclusion to the ACICS saga.
Prediction #5: Not Over Yet
Corinthian Colleges collapsed in 2015, and ITT in 2016 (the latter we called a year ago, without naming names). We predict that a third major for-profit school company will exit the market in 2017. The cause of death may not be withdrawal of federal funding, but rather loss of market viability after years of declining enrollment, lawsuits, and investigations. Most major firms have rationalized or innovated, but not all.
Twelve months from now we’ll look back and see whether these predictions were on target. Regardless, 2017 will be full of surprises.
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