The answer to this question is, it depends.  For public companies who sell their stock in the Wall Street—the CEOs often use the EPS (earning per share).  These companies are trying to beat the Wall Street analysts on the estimated EPS each quarter.  Otherwise, their stock price will be punished. Therefore, the motivation for these companies is profit margin.  This makes perfect sense for the for-profit entities.  The questions one may ask, will this EPS always has a positive correlation with time?  The answer is yes, so long there is a new innovation that will drive to the new product developments.  Otherwise, it will stagnant.

Let us turn our discussion to the education industry.  As the public may know–there are for-profit higher learning institutions and non-profit Colleges and Universities.  The for-profit certainly follows the Wall Street’s example.  Especially those institutions who are selling their stock in the Market.  Therefore, there is no surprise when the data show that attendees of these institutions are experiencing difficulties related to their student loans.  This may imply whoever permits these type of institutions to operate has made a suboptimal decision.

What about the non-profit higher educations?  What are the guiding principles that they look and apply in managing their institutions?  Do they have any guidelines?  Well, the School Board has the final say about a school policy.  Therefore, members of this Board also have to apply some sort of principles.  Did they?

If the current student loans data are the reflection of the results of these collective principles that have been applied in the industry for ages, then the answer is no.  Majority of the School Board and, therefore US Higher Learning institutions may not have a clear guideline when managing the school, except for using traditional metrics such as enrollment growth.  This student enrollment growth is equivalent with the EPS in the Wall Street.  Now that public may have a better picture what has happened.  This situation even more dire in the absence of strong regulations.

However, Adam Smith who is considered to be the Father of Capitalism has argued that including moral consideration when making strategic decisions produced results that are far superior than those of produced merely based on ratio or rational expectation.  Your thoughts?