Diversity--In Their Income Streams

Earlier this month, DeVry University announced that it had entered into an agreement to acquire Faculdade Boa Vigem. DeVry expects to complete the transaction by the end of next month.  


I, for one, find it just a little creepy when an educational institution says it's "acquiring" another.  I think of all of those corporate takeovers, and how badly some of them ended.


FBV is located in the northeatern Brazilian city of Belem.  Enrolled in it are 5800 students in undergraduate and graduate programs in many of the same areas (e.g., business, communication, technology and hospitality) as the ones offered at DeVry's North American campuses.  


DeVry officers talk about "diversifying our offerings" and "expanding our profile in Brazil" when they discuss the move to acquire FBV.  Maybe I'm getting old, but I don't remember educators using that sort of language when I was an undergraduate, or even a graduate student.  Maybe I just wasn't paying attention.


Anyway, I don't mean to single out DeVry in this post, though I believe they deserve much of the scorn that has been heaped on them.  However, as one of the largest for-profit "higher" education institutions (and the one, along with the University of Phoenix, that people are most likely to have heard of), their practices bear watching because they are emblematic of what is happening in much of higher education.


It's not only the for-profits that are expanding into countries like Brazil. Some say that Brazil and India, among others, are "emerging" countries that need the expertise that these schools can provide, particularly in the so-called Global Economy. That is the rationale for, among other things, opening an ABA-accredited law school in China.


However, I think that there are three other reasons why schools like DeVry want to expand into "emerging" markets, and why there is a rush to open schools with American accreditation in those countries.


The first, and most obvious reason, is the outsourcing of much of the work that has been done by graduates of American for-profit, law, technical and business schools.  The officers of for-profit schools like DeVry and Phoenix are business people, first and foremost, and often have direct or indirect ties to financial, technological and other kinds of firms.  They want to hire people for as little money as possible; if they themselves are not in a position to hire, the companies that hire their graduates are happy to have credentialed professionals in their industries who make less than the burger-flippers at Mickey D's and BK.  


The second reason is that in countries like Brazil, India, Russia and China, there is much less oversight of post-secondary education, and even less of for-profit institutions.  Some argue that there is even less business regulation generally in those countries than there is in the US.  (Isn't it ironic that such would be the case in China, which is still--at least nominally--a Communist country?) And, whatever regulations exist are not enforced to the same degree that they are in the so-called developed countries.  It's common knowledge that in India, for example, one can buy one's way out of sanctions or even prison time, mainly because law enforcement and other public officials are poorly-paid and because when large numbers of people are in poverty, corruption among politicians and billionaires is seen as a high-class worry. 


So, schools like the ones I've mentioned can get away with their deceptive business practices more easily than they would in their home countries.  (How long before one of those schools incorporates itself in the Cayman Islands?)  Furthermore, the would-be students of those countries are easier to victimize through misleading employment and salary statistics because many of them still don't have access to the Internet and other sources of information Americans, Europeans and Japanese take for granted.  Also, the grinding poverty of many of those would-be students, particularly in Brazil and India, make them easier marks:  When people are desperate, they are more willing to hope for miracles.  To see what I mean, take a look at who buys lottery tickets:  They're usually not members of the "one percent."


Finally, the third reason I can discern for American schools expanding into developing countries is that executives (Let's call them what they are; they're not educators!) of those schools can read the writing on the wall.  They know that their gravy train has been financed, in large part, by the availability of loans for American students.  That is perhaps the main reason why tuitions have increased so much faster than the cost of living generally (or even medical costs!) over the past three decades:  Those executives are simply doing what their counterparts in other industries do, which is to charge whatever the market will bear.  And, to appropriate the words of the immortal Nando, if their IQs are above room temperature, they must know that sooner or later, the market will no longer bear it.  The loan money won't be there and, as large numbers of families fall from the middle class, they won't be able to afford to send their kids to those schools. 


But, knowing enough to parrot the politically-correct line, they are expanding into "emerging" markets in the name of "diversity".  Yes, they are indeed diversifying--their income streams.