Higher ed is in trouble. Private equity could swoop in and take advantage.

Boston Globe

26-03-2025

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All of a sudden, banks might be willing to lend to 'people who are trying to become doctors or lawyers. But people who want to become teachers? Maybe not,' she says. 'People just need to be really clear-eyed about the fact that this is not something that we've ever seen before.'
Julia Barnard, who was
So what will happen if more of academia is privatized? Actually, we've seen this movie before. And it didn't end well.
Alyssa Brock is one of many students whose life was reshaped by private equity. In 2010, Brock was in her last semester of college at The New England Institute of Art, or NEIA, in Brookline. And she landed an interview at a small design firm, in what could have turned out to be a real break.
But it wasn't a break. It was a disaster.
'I felt like I had no idea what they wanted me to do,' Brock remembers. She was trying to do something on Photoshop, she says, 'and I'm like: 'Why am I fumbling?''
At NEIA, she says, 'quality wasn't incentivized and prioritized.' She notes that 'instruction often felt threadbare. ... They were showing us YouTube videos. And the teachers varied wildly in quality. There were some who definitely knew what they were doing ... And there were some teachers where it was like: 'Why are you here?''
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Brock knew little about the history of NEIA, but, as she later learned, the for-profit school's parent company
Alyssa Brock attended the New England Institute of Art in Brookline, a small school owned by a private equity firm, which shut down in 2017.
Suzanne Kreiter/Globe Staff
Though we tend to hear far more about
Using data from nearly 1,000 schools with private equity ownership,
Once, for-profit schools — which were often locally and family-owned — aimed to get students through two or four-year degrees, focused on a particular vocation, and place them in local jobs, according to Charlie Eaton, a professor at the University of California Merced and author of "
NEIA's parent company spent more on marketing than teaching. It boosted enrollment to more than 140,000 students nationwide but ultimately went bankrupt, leaving hundreds of thousands of students in debt and causing NEIA to shut its doors in 2017.
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Sabrina Howell, a professor at NYU Stern School of Business and a coauthor of the NBER paper, points out that 'private-equity-owned schools had double the share of employees in sales and marketing relative to other for-profits, and four or five times the share of a nonprofit or public school.' There was 'really pretty compelling evidence,' she says, 'that these buyouts were not in the interest of students.'
Many of the schools acquired by private equity and venture capital failed in the 2010s. But in the 2020s, new avenues for investment — including online education — have opened up. And corporate money now has the distinct advantage of being sheltered by marquis names — many of which are
'What you're seeing is not private equity in a consumer-facing brand,' argues Connor. 'You're seeing it in ed-tech. You're seeing it behind the scenes, like [in] online program management, enrollment management, and, to an extent, marketing.'
Connor emphasizes that, for these companies and their investors, growth is imperative. Take
The school's approach, she says, was: 'We're going to force [students] into hybrid online programs at facilities where we know that the internet is not up to par ... So our students are going to go to McDonald's to access Wi-Fi to take the classes.' Connor argues, 'they just didn't care that they were offering content that their students literally could not access.'
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Phil Hill,
Hill says OPMs make the pitch this way: 'Hey, you nonprofit university with your great reputation, you don't know how to do online.' He notes that 'a traditional school is set in their ways. Traditional marketing. People start in September..' But, he says, online is 'a different game.' You need to be more aggressive. And 'you'd better be answering the phone on Saturday at 11 p.m.'
Between 2009 and 2021, the private equity- and venture capital-backed company 2U made that pitch well. It struck impressive deals, partnering with Georgetown University, the University of Southern California, and the University of North Carolina. In 2021, 2U spent $800 million to
People walked on the University of Southern California campus in Los Angeles. In 2023, a lawsuit accused USC of using deceptive practices in the online Master of Social Work degree it ran with 2U, a private equity- and venture capital-funded company. About six months later, USC ended its agreement with 2U.
Reed Saxon/Associated Press
Then things started to unravel. In 2023, a
About six months later, USC ended its agreement with 2U. 2U filed for bankruptcy in 2024. The lawsuit is ongoing.
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Connor says that private equity sells itself as having an answer to the woes of higher education, 'which perceives itself to be under threat, partly because of demographic cliffs, partly because public sentiment is questioning the value of higher education, partly because of culture war things.... So the easy answer that's sold to higher education is that all they need to do is offer programs to meet students where they are, and that they can just enroll students. It's just enroll, enroll, enroll.'
In 2023, Massachusetts Senator Elizabeth Warren expressed worries about the role of online program managers in higher education,
Such debt loads can be crushing, as Alyssa Brock discovered. Brock comes from a small town in Maine, and wanted to stick it out and finish her degree at NEIA. But given the questionable quality of instruction, and her ever-increasing bills, she ended up leaving in her last year.
Brock says she took out about $80,000 in federal loans, about $100,000 in private loans, and tens of thousands in Parent PLUS loans. Her family, she says, is 'lower-working class. We're not poor, but we're definitely not rich ... And then they started throwing student loans at me and my parents.' She counts herself very lucky to have had most of her loans dismissed under various government actions.
After leaving NEIA, Brock worked at Forever 21 before moving back in with her parents and getting a front-desk job at an animal medical center. She says she'd love to attend community college someday. And she even thinks about getting back into creative work, though she says her NEIA experience 'kind of killed the passion for me.'
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