(i) What do we know?
From the passage above we know that there is a two-year investigation of for-profit colleges, the Senate Committee on Health, Education, Labour, and Pensions illustrate that Federal taxpayers spent $32 billion on for-profit colleges in the last year. There are more than half of the students who entered in those colleges left without a degree and some of them quit within a median of 4 months. The investors play an important role to monitor the financial performance of these companies. A congress had been held to balance investor demands for increased financial returns for improve education quality, support and outcomes, but it is not successful. Since non-profit and public higher education cannot fulfil the demand for higher education, so for-profit colleges are very important to pay attention. For-profit colleges should understand the needs of non-traditional students who delayed college, work part-time or full-time, influenced by their parents, or some of them are getting married. Innovations made by the college had provide the opportunity for working adults and those who without a degree certificate to continue their study. Yet, students have been faced on financial problems by take a big risk to study in a high-tuition school. Therefore, they must take on student loan debt to attend school. Many for-profit colleges did not have a plan in student support services to help students in afterwards. The students quit with student loan debt may follow their income needs to be used to repay the loan, but it is difficult for those to create a financial burden and some of students will abscond. Because they don’t have finished their study in degree, when their get a job without the high salary. In this report, we will know that the companies spent on marketing and pocketed as profit by taxpayer dollars are used to advance the higher education of colleges. The students are facing in debt without degree while the taxpayers affect little return on the investment. (For profit higher education: The Failure to Safeguard the Federal Investment and Ensure Student Success, Committee Staff Report, July 30, 2012, p1-2.)
In this report, we know the external environment are happened in this scenario. External environment is all the outside factor that might influence an organization or the operation of business. One of factor is occurred in an economic environment which a economic system that affect the decision of consumers and organisation while we know about for-profit colleges are happened the more than half of students left without degree. In economic system is based on disposable income, inflation, unemployment, interest rates, etc. If economic strong, the consumer who will be spend more money to enter the high-tuition colleges. When their economic is weak that will less money to spend, this may the reason of the students quit without finished their study. (Lecture #2 chapter 1, The U.S. Business Environment)
(ii) What do we need to know?
Based on this scenario, what do we need to know is what the external environments of business is affecting the failure of for-profit college industry. The report criticized almost every phase of the booming for-profit college industry. The bulk of the for-profit colleges’ revenue, more than 80 percent in most cases comes from taxpayers (Tamar Levin, 2012). The report also found that many for-profit colleges are working desperately to find new way to execute with the federal regulation that at least 10 percent of revenue must come from sources other than the Department of Education because veterans’ benefits count toward than 10 percent even though they come from the federal government, aggressive recruiting of students from the military has become the criterion (Tamar Levin, 2012). In the absence of regulations that requires for-profit colleges to focus on high reservation or other measures of student success, some for-profit colleges devote up to 30 percent of revenues to marketing and recruiting efforts that ensure a stream of new “starts”, while minimizing spending on academic and education support services (US Senate, 2012). Some for-profit colleges including many with the highest margins, spend more per student on marketing, recruiting, and profit than on instruction (US Senate, 2012). Furthermore, recruiters are often encouraged to avoid directly answering questions about costs and instead emphasize that with federal aid, student will pay little out of pocket and costs are not easy for students to determine (Tamar Levin, 2012). On average, the report found that associate-degree and certificate programs at for-profit colleges cost about four times as much as those at public universities and community colleges (Tamar Levin, 2012).
Throughout this examination, the advisory group found out few element in the business environment that either help or hinder the development of business. One of the external environments of business that affect this happen is economic environment. Economic environment is the sub-field of economics that is concerned with environmental issues and the totality of economic factors such as income, inflation, employment, productivity, interest rates, and wealth that influence the buying behaviour of consumers and institutions (Business Dictionary, 2018). The indicators of an economic system included Gross Domestic Products, disposable income, inflation, unemployment rate. For an example, if the economics of a country strong then every people in that country have enough money to afford the tuition fees to study in for-profit colleges but if the economics of a country is weak then every people in that country could not afford the tuition fees to study in a for-profit colleges therefore the majority of students goes to study in community colleges and public universities. Moreover, the legal environment affects the managers and business. Legal factor involve how flexible and compliant the law and legal rules govern the business are. Legal provisions may also help to more or less revenue depending on the environment of business. It refers to the rules and regulations in the society / country that may affect the business. As the example, taxes structure, recycle rules, GST etc…. The economic and legal environment affect an organization through minimizing spending , keeping taxes and regulation to a minimum as refer to the scenario mention that taxpayer spend 32 $ billion on for profit collage but major of students leave without complete their education of degree (arrange four month to leave ) because they feel they do not have the ability to pay out the loan .On the other hand , they think that education of degree was hard to achieve and its was waste lot of time and capital .
Next, the element that effect organization is technological environment. This element can help the the fresh graduate getting job that need the technological, it’s because most of system need manually to control or service maintain the system. Technological factors affects business concerning technological application and the effect of technology on markets.So, the advancement of the technology is effect the business in a country. Technology benefits to the workers and students through make business more efficiency and effectiveness. Business with higher efficiency can help the worker to complete theirs assignment and jobs with more easily. They can find the information that they need through the online with just a few easy step. Last but not least, business with higher effectiveness that mean organization producing the desired result. When a organization have higher effectiveness it’s profitable and the stuff can get the extra bonus or commission. (US Senate, 2012).
(iii) What do we need to do now?
Through the span of this examination, the advisory group identified a few issues that demonstrate significant shortcomings with the adequacy of the current administrative plan in guaranteeing assurances for taxpayers and students .While remiss State oversight and insufficient quality control by authorizing offices are in charge of huge numbers of these shortcomings, it is Federal policymakers who have neglected to enough shield the $32 billion yearly citizen interest in the for-profit college sector. (US senate, 2012)
The most important factors in the external environment is economic environment. Economic environment is the sub-field of financial aspects that is worried about natural issues and the totality of financial factors, for example, salary, swelling, work, profitability, loan costs, and riches that impact the purchasing conduct of shoppers and establishments (Business Dictionary, 2018). The markers of a financial framework included Gross Domestic Products, discretionary cashflow, expansion, joblessness rate. Besides, technological environment also influences business concerning innovative application and the impact of innovation on markets. The headway of the innovation is impact the business in a nation. Innovation advantages to the laborers and understudies through make business more proficiency and viability. Business with higher proficiency can also assist the specialist with completing theirs task and employments with all the more effortlessly.
Because for profit institutions, particularly those owned by publicly traded and private equity-held corporations, are generally not quite the same as public and private non-profit organizations because of profit incentives and fiduciary responsibilities, such foundations have dependably been, and should keep on being, dealt with diversely under Federal law. While there are additionally issues that rise above the for-profit sector and ought to be tended to on an area impartial premise, Congress has neglected to change the one of a kind authoritative structure that administers this segment of advanced education to guarantee that the requests of investors and speculators don’t invade those of taxpayers and students. Not just has Congress neglected to reinforce assurances for taxpayers and students, it has really made rehashed moves to rollback or debilitate existing directions. In this way, arrangement changes to represent the changing scene of the part are required.
Specifically, the board of trustees trusts that a modified structure must address three principle territories in critical need of change: enhanced transparency through the accumulation of applicable and exact data about understudy results, stronger oversight to check misrepresentation and mishandle, and meaningful protections for understudies. (US senate, 2012)
Enhanced Transparency (US senate, 2012)
Enhanced Data on Student Outcomes – Any discourse of authoritative arrangements must start with new prerequisites for the accumulation and investigation of significant and exact data on understudy results over all segments of advanced education. Require that the Department of Education gather exhaustive understudy result data and empower information recovery by corporate proprietorship.
Private loaning – Recommendation to require the announcing of the terms of private and institutional credits, and in addition the number and measure of credits made, and the qualities of such borrowers. Require obligatory institutional confirmation of private understudy advances to check the utilization of private advances by understudies who have not depleted their Federal advances and to all the more likely advise understudies in regards to the dangers of private credits. Enable private credits to be released in insolvency.
Stronger Oversight (US senate, 2012)
Results Based Thresholds – With the citizen speculation quickly developing and an expanding number of understudy borrowers attempting to reimburse their credits, Congress needs to analyze putting more thorough execution construct confinements with respect to access to Federal money related guide. Propose to analyze boosting higher benchmarks of understudy achievement and binds access to Government monetary understudy help to establishments of advanced education meeting least understudy result limits.
Limits on Use of Federal Financial Aid Dollars – In this condition of troublesome spending decisions, enabling citizen dollars to be utilized for showcasing, promoting and selecting as opposed to on training related costs, for example, direction and understudy administrations is unsatisfactory. It is suggested to prohibit establishments of advanced education from subsidizing showcasing, promoting furthermore, enlisting exercises with Federal money related guide dollars.
Enhanced Cohort Default Rate Tracking – Keeping in mind the end goal to all the more likely ensure against endeavors to put understudies in restraint or delay, which may not be to understudies’ greatest advantage, it is recommendation to expand the default announcing period and keep utilizing the default rate limit for motivations behind restricting access to Federal budgetary guide by expanding the limit for deciding proceeded with qualification for Federal money related guide from 3 to 4 years after an understudy enters reimbursement.
Meaningful Protections (US senate, 2012)
Enhanced Complaint Process – At the inception of the board examination it was hard to make an exact evaluation of the level of understudies concerns in light of the fact that there was no concentrated or evident place to swing to assess understudy grumblings. It is propose to create an online understudy objection clearinghouse at the Department of Education for the gathering and referral of understudy protestations to the fitting office or division, also, require all foundations of advanced education to give a connection to the grievance focus on their sites.
Making Students Whole– Arbitration Clauses – Students ought to have the privilege to seek after a legal claim against their previous schools if the school hoodwinked them about costs, understudy credits, programs, work situation or pay after school, and not be constrained into mediation as generally enlistment contracts as of now stipulate. Require that foundations of advanced education tolerating Federal budgetary guide may exclude required restricting discretion provisos in enlistment understandings.
Enforcement – The department of education has not actualized a powerful authorization plan to guarantee that schools sanction new directions on incentive-based compensation and misrepresentation. They should create an authorization team inside the Department to center around focused authorization of new and existing controls and require the department to grow clear hazard based criteria that will trigger reviews or program audits.
These proposals speak to a portion of the components of an exhaustive administrative system that ought to be created to sufficiently offset the monetary weights that traded on an open market and private value possessed revenue driven schools convey to the part. Much work stays to be done to guarantee that enactment is created to guarantee that revenue driven universities appropriately organize students achievement and convey on the part’s potential not only for get to and included limit, but rather for affordable quality projects also. ( US senate, 2012 )
(i) What do we know?