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Are private sector schools doomed to fail?

By Corey Greendale and Martin Lind
June 23rd, 2016

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Analysts describe 4 characteristics of “healthy” private sector schools; include tech career alternative programs.

Newsworthy failures in proprietary higher education have led to generalizations about the career school sector as a whole. Most think of for-profits as a homogeneous group, but the reality is that few are failing. The business model of a small school that trains people to run an MRI machine or fix an air conditioner is very different than that of a large public company that offers a diverse array of certificates and degrees.

Members of the latter group get a lot of press due to their national presence, and, indeed, many are struggling. But smaller institutions make up the majority of private sector schools. There are 3,000 private sector institutions in the U.S. serving 3.5 million students according to the industry trade group, Career Education Colleges and Universities (CECU). And the programs these schools offer run the gamut, from bachelor degree programs to skills development and career training.

Observation of Velocify’s 150+ higher education clients contradicts the notion of widespread failure. In fact, over the past four quarters, 89 percent of Velocify education clients that have made any change to their accounts have added user licenses to accommodate larger admissions teams, an indication of growing enrollment (of the Velocify education clients in the past four completed quarters [2Q15-1Q16] that have added or subtracted enrollment representative seats [i.e. grown or contracted], 89 percent have added seats.]

Both Velocify and First Analysis have observed a number of somewhat consistent factors that separate healthy schools from those that are struggling.

Survival of the Fittest

Though no two institutions are the same, Velocify client schools that have weathered recent storms often share one or more of the following attributes:

1. An emphasis on workforce development. Staying true to the original mission of career schools by providing job skills training has been a source of sustained viability for many. And that strategy continues to have upside potential. According to a recent survey by the Business Roundtable, more than 95 percent of American CEOs believe their companies suffer from a skills shortage.

Adult students, too, are showing greater interest in career skills development via alternative credential programs. According to education analyst firm Eduventures, 76 percent of adult learners expressed interest in courses or programs that would advance their knowledge and skills but would not count toward a degree. The firm also expects acceleration of alternatives and complements to traditional degree programs (e.g., boot camps, competency-based education), touting faster, cheaper programs and enhanced employability.

Certificate style ‘boot camp’ programs that provide software development training are a relatively new category that’s seeing significant growth. In addition, while these programs are known primarily for training related to software development, they’ve expanded their programs, with some now offering data science, marketing, and other (primarily technology-related) vocational programs.

(Page 2: 3 other characteristics of thriving private sector schools)


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