For-Profit and Formerly for-Profit Private Universities, Capstone Project Example

Introduction

Background

Sources report that certain for-profit universities had been under pressure from the federal government since prior to the last quarter of 2010 (Keller, 2010). Undercover investigations found that a number of such universities used high pressure marketing tactics to gain student enrollment for federal student aid funding (Keller, 2010). As the Department of Education began revamping rules to limit such behavior, the Florida Attorney General Wiggins launched her own investigation into the trend toward misrepresentation of retention rates and job placements (Keller, 2010).

Context

Although a number of institutions have been implicated, two are the most notorious offenders with respect to the number of complaints: Everest University and Kaplan University (Scott, 2011). Most of the complaints center around non-transferrable credits, billing problems, and deceptive sales practice (Scott, 2011). Nevertheless, to keep the problem in perspective, such complaints constitute less than .5% of the student body (Scott, 2011). Although it is better business practice to keep consumers happy, it is simply not always possible to achieve (Scott, 2011). Invariable, every business is going to have at least some dissatisfied customers (Scott, 2011).

Problem

The problem from a business standpoint is three-fold. It is incumbent upon university administrators to demonstrate a profit to stakeholders, to maintain operation within federal and state guidelines as well as demonstrate an ethically sufficient business paradigm. The antecedent organizational imperative appears to be at the level of management and leadership. In order to proficiently address these functional requirements, management must implement certain changes. To delineate what these changes should be facts of the matter are analyzed and specific questions with respect to operational procedures are proffered.

Questions

The average university retention rate from 1^st time freshmen to sophomore in the United States is about 70% with variation between states (Total, 2012). For 4-year private for-profit colleges it was less than 50% (Private, 2012). Overall graduation rates for bachelor degrees in the United States are only 55% (Graduation, 2012). The for-profit private universities are not even meeting that average with freshmen retention. The range of reported data is highly variable between institutions. Everest’s overall returning student body is reported at about 36%. Kaplan is at 70% (OEDb, 2012). The following queries represent the core questions this research is intended to address.

1. What customer services challenges are interfering with retention?
2. What are some of the cost barriers associated with the dissatisfaction trend?
3. What can these universities do to improve brand images, enhance reputations, and competitive status?

Hypothesis

This research presents a hypothetical response to these questions. As previously stated, the business imperative is at the center of the se controversies. In essence, the allegations are for the most part the result of shotty management processes at the level of marketing and sales as well as accounting and billing. Typically, we a business starts to cut corners to such an extent one or a combination of a few things must be happening. It could be the customer service personnel are not properly trained, management is leading by poor example, accounting, finance and collections are adhering to unethical business practices, operational personnel are underperforming, or you have a client who is unsatisfied by due diligence. It is probably a combination of these factors, but with for-profit institutions the imperative usually boils down to a problem with the bottom line. The fact may be that no matter how well a business is run, ROI just cannot justify proper operations. What this really means is that wherever theses universities started, they have adapted (albeit unbecomingly) to the fiscal reality. Part of this fiscal reality is depending on drop-out rates for profit. After a certain point in every semester, tuition is non-refundable at any institution of higher learning. So, if a depending on the number who drop after that time, marginal profit increase with respect to resources required to complete the semester. Furthermore, it appears as if these institutions have become overly dependent on federal student funding. What they need to do is restructure the organization such that it can remain profitable without these dependencies.

Conclusion

Certain for-profit universities had been under scrutiny from federal sources for years now (Keller, 2010). Operational defects on part of such organization prompted the Department of Education begin implementing stricter regulations (Keller, 2010). Florida Attorney General Wiggins launched an investigation triggered by a trend of complains about misrepresentation of retention rates and job placements (Keller, 2010). Two of the most notorious offenders with respect to the number of complaints: Everest University and Kaplan University (Scott, 2011). Most of the complaints center about these organizations centered around non-transferrable credits, billing problems, and deceptive sales practice (Scott, 2011). Invariable, every business is going to have at least some dissatisfied customers (Scott, 2011), but the problems associated with these organizations point to an issue of fiscal responsibility as well as moral thinking about appropriate business strategies. It is incumbent upon business leaders in these institutions to implement changes that bring their organization more into line with publicly acceptable business practices and more fiscally responsible measures.

References

Keller, J. (2010). Florida Attorney General Opens Investigations into 5 For-Profit Colleges. The Chronicle of Higher Education. Retrieved from http://chronicle.com/article/Florida-Attorney-General-Opens/125016/

The National Center for Higher Education Management Systems. (2012). Graduation. NCHEMS Information Center for Higher Education Policy Making and Analysis. Retrieved from http://www.higheredinfo.org/dbrowser/index.php?submeasure=27&year=2009&level=nation&mode=graph&state=0

The National Center for Higher Education Management Systems. (2012). First Year Retention: Retention Rates – First Year College Freshmen Returning Their Second Year, Four Year Total. NCHEMS Information Center for Higher Education Policy Making and Analysis. Retrieved from http://www.higheredinfo.org/dbrowser/index.php?submeasure=227&year=2010&level=nation&mode=graph&state=0

The National Center for Higher Education Management Systems. (2012). First Year Retention: Retention Rates – First Year College Freshmen Returning Their Second Year, Four Year Private For-Profit. NCHEMS Information Center for Higher Education Policy Making and Analysis. Retrieved from http://www.higheredinfo.org/dbrowser/index.php?submeasure=223&year=2010&level=nation&mode=graph&state=0

OEDb. (2012). Ranking by Retention. OEDb.org. Retrieved from http://oedb.org/rankings/retention-rate.

Travis, S. (2011). For-profit colleges: Everest, Kaplan have highest number of complaints before Florida attorney general. Sun Sentinel. Retrieved from http://www.tcpalm.com/news/2011/feb/10/-profit-colleges-everest-kaplan-have-highest-numbe/?print=1