I am nursing faculty. The second poster is correct: There is a huge lack of faculty so there are a limited number of slots in nursing programs. You cant have a program if there is no one to teach, right Lack of faculty leads to the huge wait lists that the OP mentioned. As a result, not enough nurses are being produced. Hence, a nursing shortage (it is worse in some areas of the state and country).
A few reasons for the faculty shortage: pay (some nurses who have been in the field for years make considerably more more working at the bedside than they would as a faculty member); hours (36 hrs work week at bedside vs. a typically faculty work week of 50+ hours); lack of credentials (most schools of nursing require at least a Masters degree if not a doctorate; many nurses do not want to commit that many more years of schooling); and loss of contact with patients (although many nursing schools now require their faculty members to continue practicing-or working with nurses-in order to remain competent in patient care). And lets face it, it is not quite as glamorous as working at the bedside (think of the TV shows "ER" or "Mercy"); you are not knee deep in blood and guts. That being said, it is really neat to see the light bulb go on when the students start putting things together and you know that they are going to make a fabulous nurse (and you had a little bit to do with it!).
Fortunately, I still practice as well so I get the best of both worlds. When I first started teaching, I was not able to practice at the same time (no time for it), and I really missed working with patients.
As for your comment about DSN, a proprietary nursing school, some employers do look down upon these types of schools (whether or not the nurse is bachelors or associate degree prepared). This can be due to a number of reasons including the admission requirements (often they are less stringent than the state and private colleges/universities, like CU and Regis); the lack of academic rigor during the nursing program; and/or lack of program accreditation by nursing organizations. If you do choose a proprietary school, be sure they are accredited and that the accreditation is accepted by employers and other nursing schools (in case you want to go to graduate school). I know some who have ran into this problem because they went to proprietary schools.
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