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Tags: higher education | earning power | student debt | obama | trump | online learning

George Mentz: The Fall of Taxpaying Universities & the Rise of Online Courses

George Mentz: The Fall of Taxpaying Universities & the Rise of Online Courses

George Mentz By Friday, 06 January 2023 11:42 AM EST Current | Bio | Archive

Over the last 25 years, one of the most exciting sectors of the stock market was elearning. It was destined to grow and flourish. With companies like University of Phoenix and DeVry growing to great heights as publicly traded companies. These “for-profit” universities pay state, federal and local taxes in the billions with students in all 50 states and people taking classes from anywhere in the world.

As an online professor, I will be the first to tell you that online universities were able to educate millions around the country who were disabled, stay at home parents, road warriors and millions of folks that never could have gone to college without the e-learning option.

This sector of stocks in the area of e-learning even had coverage by major Wall Street Firms. However, for whatever reason, for-profit publicly traded education got in the crosshairs of politicians. As such, when the crash of 2009 set in after Obama became president, 5 million lost their jobs, and millions of new graduates from colleges and graduate schools could not find work. Many had to move back into the homes of their parents and many defaulted on their student loans.

Then, graduates of expensive colleges began to complain about their tuition and student loan debt. This was the beginning of a new paradigm of criticism. While online education is just as good as on-site education, DC began to look for a scapegoat. Some students even sued for their money back.  While COVID has proved that online education is the same quality as any other type of learning, the government began to go after accredited online colleges that were either “for profit” or publicly traded companies around 2010. I suppose bureaucrats needed to go after the colleges that were not owned by the state to avoid irritating the teachers unions.

Then, the Obama administration created the 90/10 Rule. This rule limits how much federal financial assistance can go to for-profit colleges. First of all, why would the government want to punish “taxpaying schools”? Secondly, taxpaying schools hire thousands of workers who pay taxes, and the taxes from any profits help fund: social security, Medicaid, health care, infrastructure, jobs, and even helps widows and orphans. In contrast, non-profit schools pay zero taxes to city, states and federal governments. In sum, the logic of punishing work or success is not sustainable.

Schools Shuttered

In the Obama years, many for-profit schools were put out of business, lost the majority of their students and market cap, and were regulated out of business. The bizarre twist is that former Obama insiders even tried to buy some of these “publicly traded” schools after the stock value was driven down toward bankruptcy.   Recently, even Aspen University has been overregulated. This company and others like them have been hit by regulators who are driving the entire e-learning sector into the ditch.

In contrast, the Obama administration did not see the MOOC sectors meteoric rise. MOOC means Massive Open Online Courses. The MOOC online e-learning opportunities began to become popular after 2009, and now command most of the eyeballs in the education world online. If you look at companies such as 2U, Coursera, Futurelearn, Udacity and others, you will see billions and billions of stock value. What is interesting is that the MOOCs do not even create the classes, as the courses are built on the learning platform by public and private colleges, universities and education companies.

Thus, the MOOCs house hundreds if not thousands of courses. Udemy which is a MOOC company has over 100,000 courses and thousands of certificates for sale and is worth about 2 Billion today. Coursera offers thousands of courses and sells hundreds of types of certificates online generating millions where Coursera is also worth about $2 billion. Some of the MOOCs sell their own mini-diplomas or course-certificates which used to be regulated by individual states. For profit Laureate Education has stayed afloat quite well also, and they actually hired Bill Clinton as their honorary Chancellor where Laureate paid Bill about 15 million or more for an honorary job while Hillary was Secretary of State.

Therefore, Obama and those angered by high student debts have not gotten rid of a single problem. State universities are still charging an average of $35,000-$60,000 per year for a student to attend. Most students who borrow money can accumulate $200,000 or more of debt to achieve a degree in journalism or cultural studies. Any of the top ranked colleges cost about $55,000 or more per year according to Bloomberg. As such, the overpriced burden of state education upon working class families still exists.

Free Skills Training

President Trump did implement the executive order on skills equivalence. This order will allow working-class students to take free MOOC courses online in hundreds of areas to obtain skills needed by businesses such as programming, software, technology, teaching, robotics, cyber-security, and even things like electrician skills or plumbing skills.

Trump’s order did what many had been trying to do for 50 years, which is give students who can afford a college degree a path to work in government or armed services. A student can go to a community college on online college and take a certificate, certification training or short diploma program without needing a degree. Nowadays, a resume with a dozen skills certifications may be worth more than a degree and the US law supports this form of hiring and non-discrimination.

The harsh reality is that selling a 4 year diploma program is a competitive businesses with over 1,500 state subsidized schools and 4,000 colleges in the USA alone.  Further state and private colleges use taxpayer and subsidized loan dollars to recruit and engage marketing their programs. In sum, it is a brutally competitive environment with state colleges using taxpayer money to pay up to $50 dollars per click through to search engines and social media online to provide a potential referral.

Overall, education is adapting. E-Learning had a meteoric rise during COVID, and now most teachers from kindergarten to college know how to teach online. It is my hope that the government continues to allow “Taxpaying Educators” and “ For Profit Colleges” to flourish rather than punish educational companies who want to provide learning online to Americans domestically and around the world.
Commissioner George Mentz JD MBA CILS CWM® is an international lawyer, speaker, educator, tax-economist, and CEO of the GAFM Global Academy of Finance & Management ®. The GAFM is a ESQ accredited graduate body that trains and certifies professionals in 150+ nations under CHEA ACBSP and ISO 21001 standards. Mentz is also an award winning author and graduate law professor of wealth management for a top U.S. law school.

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Over the last 25 years, one of the most exciting sectors of the stock market was elearning. It was destined to grow and flourish. With companies like University of Phoenix and DeVry growing to great heights as publicly traded companies.
higher education, earning power, student debt, obama, trump, online learning
Friday, 06 January 2023 11:42 AM
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