Does For-profit Education Make the Grade?

The growing gap in the United States between a job market increasingly in need of workers with a specialized college education and the number of young people actually earning diplomas is a problem that appears to cry out for a free-market solution, with for-profit education companies stepping in to fill that void.

"There's a saying that the bigger the problem, the bigger the opportunity," Michael Moe, CEO of GSV Capital, a Silicon Valley venture capital firm focused on education-related investments, said during a recent Wharton panel discussion on the role of for-profit education. Noting that currently 80% of job openings require college degrees but just 30% of Americans are graduating from four-year universities, he added: "In today's world of education, we can't imagine a greater problem or a greater opportunity." But panelist Peter Smith, senior vice president for academic strategies and development at Kaplan Higher Education, which runs one of the nation's largest for-profit universities, acknowledged that a major new initiative in the last year is actually sharply reducing Kaplan's enrollment -- by allowing new students to opt out of its programs at no charge after a brief trial period.

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