October 23, 2013

Maine Voices: New robber barons target education

Federal funds are being used to help students pay tuition to private education companies, while investors reap the profits.

By Ardis Cameron

PORTLAND — In 1882, William Vanderbilt summed up the philosophy of the Gilded Age: “The public be damned!” he bellowed.

ABOUT THE AUTHOR

Ardis Cameron is a professor of American and New England studies at the University of Southern Maine’s Portland campus.

Standard Oil, people joked, did everything to the Ohio Legislature except refine it.

When lawyers warned his dad, the wealthy magnate “Commodore” Cornelius Vanderbilt, that a move he planned was illegal, he shouted back, “What do I care about the law? Hain’t I got the power?”

And, sadly, he did.

Perhaps there is nothing more depressing for a historian than to see the past repeating itself. While it is probably more accurate to say that what we are experiencing today is more of a mutation than a repetition, it’s abundantly clear that the political and economic discourses that fed the bloated bellies of the 19th-century robber barons are alive and well. What Mark Twain dubbed “The Great Barbeque” is once again cooking the public goose.

But unlike their predecessors, the modern barons rob the public trough not only in the service of private profit, they do so also in the name of the public good!

In this new kinder, gentler model, the public is not damned but rather saved by free markets and those who try desperately to manipulate them.

Consider public education in general and the University of Maine System in particular. Public universities, we are told, are inefficient, costly and unsustainable. According to the $21 million ad campaign by the for-profit giant Kaplan Higher Education Corp., they are dinosaurs, “steeped in tradition and old ideas.” In short, they lack zip. Physics, classics, Western languages – gosh, who can afford them?

The inconvenient truth is that higher education is expensive. So expensive that nonprofit private colleges and universities depend upon endowments to make up the differences between what middle-class students can afford and the $50,000 or more in per student costs.

Bowdoin College recently announced that its endowment had reached a stunning $1 billion. Not far away was Colby College with $650 million and Bates with $233 million. Education is not cost-effective.

Also in the news was the University of Southern Maine with the announcement that the physics major was under consideration to be eliminated, and other programs would be reviewed. Where, we might ask, is the public endowment?

Enter the new robber barons and their zippy for-profit educational model that claims to save taxpayer money, promote “faculty efficiencies” and allow for more innovation. Consider Education Management Corp. and then please pass the barbecue sauce.

Education Management is a for-profit corporation, 41 percent of which is owned by Goldman Sachs, that operates 110 schools across the country. With no physical campuses, it depends upon adjuncts and low-paid faculty to “deliver” courses online. Despite various lawsuits, its earnings were up this year by 166.25 percent. Who needs public funding with profits like this?

Well, as it turns out, the public actually funds these places.

A civil complaint against Education Management, for example, alleges a scheme to use federal Department of Education funds to maximize profits through financial aid programs. Indeed, the for-profit educational firm (headed by former Maine Gov. John McKernan from 2003 to 2007) is accused of wrongfully securing $11 billion in federal aid so that students could pay their tuition – and we might add, investors could reap the profits.

Indeed, so much money flowed into another for-profit education company, Bridgeport Education Inc., that its CEO, Andrew Clark, took home $20.5 million in 2009, and then-Maine Sen. Olympia Snowe reported in her 2010 financial disclosure form that she and her husband, former Education Management CEO McKernan, had Education Management stock worth between $2 million and $10 million.

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