Private Sector Institutions Save The Taxpayer Money

Private sector institutions play a vital role in educating new traditional students and help set the country on track to meet the President's goal of having the highest proportion of college graduates by 2020. Studies are now showing that not only do they provide access to postsecondary education, but they also relieve taxpayers of a significant burden.

The vital role private sector institutions play is illustrated in a recent study from Nexus Research and Policy Center. The Center studied the economic implications of ending private sector institutions in four states (California, New York, Ohio and Texas) based on calculations from the academic years 2007-08 to 2011-12. In the period, 1.4 million students were enrolled in proprietary two-year and four-year colleges in the four states.

The author found that, in order to meet the demand for postsecondary education, the four states would have had to increase their funding for public colleges by almost $8.4 billion over the five years. This is money that states simply do not have.

The report offers two options to avoid the increased spending that would be needed to accommodate the swell of new students if private sector institutions were closed.

The first way to lower cost would be to shut out students whose finances alone wouldn't cover tuition. Shutting eligible students out goes completely against the President's 2020 goal and excludes millions of people from access to the increased opportunities afforded by higher education.

The alternative to this is to enroll more students without increasing state funding. However, the consequence to this is offering fewer classes and services, increasing class sizes, and likely increasing tuition for all. Given the huge increases in the cost of college over recent decades, and the corresponding pressures on students from loans, this is also an undesirable scenario.

These statistics demonstrate the need for regulators to take into account the financial impact of moving responsibility from the private sector to the state. Proprietary education fills a gap in the market which the public education sector is ill-equipped to deal with. If the U.S. is to reach President Obama's 2020 education goals it will need the bridge provided by proprietary schools that allows non-traditional students a pathway to further education.




PSCUs open doors to many of the 9 million unemployed and 90 million undereducated Americans by providing a skills-based education. To remain competitive over the next decade, we must identify between 8 and 23 million new workers with postsecondary skills. PSCUs are a necessary part of that solution, having produced over 800,000 degrees last year alone.