The case study that will be compared to College Inc. is Culture Barriers: When Equality Compromises Efficiency. The similarities of both cases are that the people like students or customers are not fully aware of what they will go through. For example, a hairdresser in the cultural barriers case signed a contract, but had to get a refund because she did not know about having to operate the online platform while students in for-profit colleges thought that they would get a credible degree, but ended up with no job and a huge debt.
However, the huge difference between the two cases are for-profit colleges’ and Ralph’s intention. Ralph sincerely gave important information about the contract to customers, and it was not entirely his fault that customers are not satisfied and had to get refunds because there is a communication barrier. The for-profit colleges, however, were not honest with their advertising. Their degrees do not give students jobs and these colleges already knew that they would have debt since most students are not financially stable to pay for college alone.
Both of these situations have different ethical reasons and methods. The cultural barriers study’s ethical reason is cross-cultural contradictions; the business wants to help people with non-native English speakers while the contracts are in English and is not clarified enough to understand. The method they should use is justice because they should focus on taking down the language barrier and make it accessible for every customer. For-profit colleges obviously have a problem with competitive pressures on profits; they are competing with every college and want to make as much profit as possible.
The method they should use is utilitarian because they focus on profits, but they should also focus on the benefits for students or else they will not make profit if potential customers know about the unemployed graduated students with debt. Both situations can be solved using ethical methods or reasoning. The key stakeholders are school executives, government officials, and former and prospective students. The school executives’s needs are to increase profit and gain more students annually; profit-making colleges are meeting this need because they are currently a $400 billion business and many students are attending there.
The government officials’ needs is to make sure the business is not violating any laws and that taxpayers are paid; their needs are not met according to the article, For-Profit College System Expected to Pay Millions, by the New York Times. The business was “under federal investigation for deceptive and unfair practices”, and the article also mentioned that the taxpayers are being ripped off because students cannot afford to pay their debt and most of the profit the colleges earn are from federal financial aid (New York Times).
The former and prospective students’ needs are to achieve their degree, obtain a successful career, and be debtfree. Obviously, the profit-making colleges are not meeting their needs because they are not being honest about their education system such as getting experience like co-ops and that they will get financial support that will not overwhelm students. Only one out of many stakeholders is satisfied with for-profit colleges mainly because school executives are working for the business.
The justification for government intervention as a regulator into the higher education industry are protection and cost. The reasons for regulation according to UBE Regulation in myCourses are that the government want to control negative externalities such as high debt for students and whistleblowers; the other reasons are excess profits from federal financial aid and excessive competition since there are so many higher education industries in America.
There are market failures in this industry because the for-profit colleges promised to deliver a high-quality education, but they failed. There are former students as whistleblowers to explain their experience of struggling to search for jobs and to pay their debt on time. The benefits of better self-regulation in the industry rather than government intervention are to gain trust from students, to decrease risks to students, and change people’s perception of for-profit colleges.
Without the government involved, it proves that the colleges can self-regulate if they satisfy everyone’s needs and focus on the industry to become less risky, more sincere, and also set up rules and regulations that are reasonable. However, there might be more issues without government regulation because the college are getting a big profit for the wrong reasons; so, it may be better if the government helps out this industry so there would be less lawsuits and more satisfied customers.
If the company asked me for advice for how to become a more conscious business in this sector, the recommendations I would provide to the Apollo Group or another for-profit education company are to focus on customers’ values than just to focus on profit; also to make sure all the employees are skilled enough for this industry and to become more strict on programs that require internship experience before graduating.
I would use RIT as an example of a conscious business because it requires cooperative education, gives out scholarships, and is also eco-conscious. The UBE Corporate Social Responsibility on myCourses shows the benefits and challenges of a corporate social responsibility program. The benefits are balancing corporate power with responsibility, discouraging government regulation, promoting long-term profits for business, improving stakeholder relationships, and enhancing business reputation (UBE CSR).
These benefits can apply to the higher education industry by self-regulating, helping out students with debts, and being responsible for their ethical issues such as not being deceptive about the students’ futures after graduating. The challenges are lowering economic efficiency and profit, imposing unequal costs among competitors, imposing hidden costs passed on the stakeholders, requiring skills business may lack, and placing responsibility on business rather than individuals (UBE CSR).
These challenges can apply to the higher education industry because becoming a corporate social responsibility program can be more expensive by charging the right price for tuition which is lower than the current tuition charge since they do not offer many opportunities and their course programs are not as advanced as private colleges. Therefore, they should become a corporate social responsibility program because they will gain better reputation and avoid less ethical issues.
