Home > Uncategorized > Times Article on Randian For-Profit College Tycoon Describes Debt Conundrum

Times Article on Randian For-Profit College Tycoon Describes Debt Conundrum

Today’s NYTimes article by Patricia Cohen on for-profit college entrepreneur and Ayn Rand devotee Carl Barney not only describes the contradictory nature of Rand’s objectivist philosophy but also describes the conundrum of student debt.

In one of the opening paragraphs Ms. Cohen describes the conflict between Mr. Barney’s life work and Ms. Rand’s philosophy:

Mr. Barney, who opposes government-backed loans and grants on principle, has made his fortune in a business that is almost wholly dependent on them. His students borrow heavily to pay for their studies in hope of replicating Mr. Barney’s up-by-the-bootstraps success, but often find themselves dropping out and burdened with loans. And while he invokes a rigorous Rand-inspired ethical code of fair dealing, he is in an industry with a history pockmarked by fraud and abuse.

The article is mostly a profile of Mr. Barney’s rags-to-riches story, focusing on his adoption of and proselytizing for Ayn Rand’s philosophy of objectivism which glorifies individualism and deplores government regulation of any kind— including the issuance of government loans. And that’s where the source of Mr. Barney’s wealth clashes with Rand’s beliefs:

The bad economy turned out to be good for (Mr. Barney’s) business. Stranded without jobs, people flocked to enroll in college. Yet the budgets of many state-run schools were slashed as the economy contracted.

People turned to for-profit schools. “The phones were ringing off the hook,” Mr. Barney said. “Along with the students came a lot of money. There is no question it was massive.”

Many of the winners were on Wall Street. Private equity and other investors bought several of the largest for-profit systems after realizing the federal government was providing a virtually endless source of cash, chiefly in the form of student loans. Students at for-profit institutions went from receiving 13 percent of the outstanding federal student loan balances in 2003-4 to 21 percent 10 years later. This turned teachers’ unions and some public officials against the industry, Mr. Barney said.

Not only does Mr. Barney understand the indignation about profiting off public funds, in one sense, he shares it. “I don’t think taxpayers should pay for our students,” he said. He says he believes that government should get out of student loans and grants altogether and leave the financing to the schools, potential employers and banks.

While the article describes the way the student debt problem emerged over the past several years, it under-emphasizes the flaws in the narrative that led to that debt, which are underscored above. The recipe for this predictable crisis is:

  1. Offshore factory jobs, eliminating work for millions who have only a high school degree
  2. Agree to the premise that government funded job-retraining is the best way to increase he skill level of the displaced workers
  3. Short change all state schools that provide such training
  4. De-regulate for-profit job training education programs, making it possible to advertise that a student who works hard can their education faster… that is assuming they learn at a faster rate than ever and suddenly develop the self-discipline required to complete independent courses
  5. Make government guaranteed loans available to students wishing to enroll in any courses, even those sponsored by for-profit schools with no proven record of performance
  6. When students fail to succeed in school, blame it on teachers unions or K-12 education
  7. Offer to provide K-12 programs using the same “independent learning” model and continue to collect government funding.

One thing Mr. Barney DOES get partially right: the government should abandon the loan and grant business and let potential employers foot the bill. Public schools CAN provide the basic education children need given time and resources… and can do it in a cheaper and more equitable fashion. If the money that will be paid to bail out the banks who made loans to risky students was instead used for K-12 education and employers paid directly for the training they need to offer, if those two things were in place the taxpayer would be unburdened, schools cold focus on what they do best, and students wold graduate without debt into a workforce that wold offer them the training the need on an ad hoc basis. Why aren’t we doing this? Because e prefer the Horatio Alger story over the reality students face today… we need a different and better narrative.

 

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