New York Moves to Limit Colleges That Seek Profit

Education is a space that has truly benefited from the work of social entrepreneurs. You can tell by looking at the Social Capitalist Awards that a lot of great innovators are doing some good things to improve education, particularly in underserved areas.

At the college level, for-profit institutes have been popping up at a feverish pace and enrollment in them has grown explosively. However, the New York Times(sub. required) reports that the New York Board of Regents has placed a moratorium on new for-profit colleges in the state and is moving to better regulate for-profit colleges because of reports of increasing problems.

Merryl H. Tisch, a regent in New York, notes that “This is a cottage industry that needs to be better regulated, and more attention must be paid to it.”

The article notes that:

A recurring question is whether some schools are enrolling students who have little hope of graduating simply to capture the financial aid. In New York, their students drew $136 million in state tuition assistance grants in 2003-4 – 17 percent of the those grants – even though they accounted for about 7 percent of the undergraduates.

There are several cases of various colleges in New York City being scrutinized for their practices, including ASA Institute of Business and Computer Technology, Interboro Institute, and Taylor Business Institute.

I don’t doubt that the profit opportunity in this space has led to this situation, but I do think something has to be said for the explosive growth in enrollment for these colleges. There are a lot of people out there who want to be educated and they turn out to be the ultimate losers in a situation like this.

In my last post, I ended by posing a question about potential negative externalities from social entrepreneurship, and although this situation is a little bit different, I think my question is relevant because these colleges are focused more on seeking profit than educating, and it actually ends up hurting society.

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