For-profit education, a sector that generates $30 billion in annual revenues, has become increasingly volatile, having fallen victim to a number of economic and legal pressures that have eroded enrollment in for-profit schools by 16 percent between 2007 and 2014, and continues to drop, with some companies facing enrollment declines up to 50 percent. Numerous companies in the sector are facing mounting assaults by regulators and alumni, with associated litigation adding significantly to operational costs. New regulatory requirements also have increased administrative burdens and frustrated innovation. It is not surprising that in a recent survey by Gallup of college and university business officers, only 64 percent of business officers strongly agreed or agreed that their institution’s financial model was sustainable over the next five years. That level of confidence dropped to only 42 percent when considered over a 10-year horizon. It is against this backdrop that we must reassess the policies that have resulted in this precarious position.

Several for-profit giants suffered staggering setbacks over the past few years. Education Management Corporation, which serves more than 100,000 students nationwide, suffered a 97 percent drop in stock value amid negative press and investigations. ITT Educational Services faced legal and regulatory scrutiny, and its stock lost more than 70 percent of its value over the past year. Most famously, Corinthian Colleges collapsed altogether under a U.S. Department of Education directive to sell 85 of its 97 schools and to close the rest.

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