I'm not saying make it literally impossible for an institution to fail, I'm just saying we should mitigate the risk by making sure there's some funds in reserve to act as collateral and mitigate cash flow problems while they're winding down. In addition pass some of that liability off onto the directors. Just making it clear that they have a fiduciary duty to students would go a long way.
Right now if a for-profit college is going under there's no incentive at all to try and minimize the impact to students. If you know that a degree program is getting the axe in 6 months it's pretty scummy to still be accepting freshmen into it. From a business standpoint not doing that means passing up hundreds of thousands of dollars in tuition while still incurring the same costs in terms of facilities and faculty.
Right now if a for-profit college is going under there's no incentive at all to try and minimize the impact to students. If you know that a degree program is getting the axe in 6 months it's pretty scummy to still be accepting freshmen into it. From a business standpoint not doing that means passing up hundreds of thousands of dollars in tuition while still incurring the same costs in terms of facilities and faculty.