In a world that now places a greater emphases on outcomes, the distinction between what constitutes nonprofit and for-profit is becoming less clear. This distinction appears to have even more importance for nonprofit higher educational institutes who are positioned to effectively "win" the fight against the many for-profit institutions that in some ways are "eating" some of their "lunch".
According to a Philadelphia Inquirer article, the for-profit trade schools have been very successful in drawing-down substantial amounts of federal "subsidies" while producing far less results for their students than perhaps the nonprofit schools like community colleges.
For-profit schools consistently take in more federal loan money than nonprofit schools, despite enrolling a smaller number of students. Yet, for-profit students also account for 47 percent of all federal student loan defaults, according to a 2012 Senate investigation."
But on this coming Wednesday, in part as a reaction to this reality, new Federal rules will begin:
for any school with a career-training program. Graduates have to be able to earn enough money to repay their student loans, or a school risks losing access to financial aid. In general, annual loan payments shouldn't exceed 20 percent of a graduate's discretionary income or 8 percent of total earnings.
This is clearly an outcomes-driven effort aimed at accountability and not necessarily, as suggested by politically motivated critics of this change, specifically targeting the for-profit trade schools although evidently big abusers of the current system. At the same time, such measures do raise the question: will mission-driven nonprofits produce equally significant outcomes and earn their rights to provide services. I'm trusting that the same standards will indeed apply to the nonprofit providers and in due time, that nonprofits can demonstrate that nonprofit mission matters more because it produces higher and better outcomes.