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Credit and Credibility
April 5, 2013 - 3:46am

Several years ago, I started musing about the potential for an upscale for-profit college.  (Here’s the first piece in which I floated the idea of “Mercedes U,” back in 2005.)  Since then I’ve returned to the idea several times (such as this piece from 2010, and this from 2012). Founders College gave the idea a shot several years ago, but flamed out quickly due to terrible planning and a quixotic Ayn Rand fixation. As far as I know, that has been the only credible attempt.

Now Tressie McMillan Cottom is trying to put some meat on the bones of the idea.  And she’s doing it in a wonderfully bloggy way, posting a work-in-progress on her blog for crowdsourced brainstorming.  

The idea of an upscale for-profit makes too much sense not to happen.  In fact, it makes so much sense that it’s worth asking why it hasn’t happened yet.

In most of American life, for-profit providers routinely capture the high end of the market.  Think about the image of “public housing,” as opposed to private homes, or of “public transportation,” as opposed to private cars.  Generally, we use public options to provide something minimally acceptable to people who otherwise wouldn’t have anything at all; we allow for-profit providers to cater to those with the means to pay for higher perceived quality.

As the distribution of wealth has polarized, and the political discourse has failed to catch up, public institutions that try to deliver high quality to large numbers at low prices -- such as public higher education -- are getting squeezed on all sides.  Student, parent, and employer expectations for performance are increasing even as operating funding is flatlining.  But strangely, even as the publics get squeezed, the private providers aren’t doing what we would normally expect.

In higher ed, for-profits have historically focused on the “low” end of the market, competing mostly with community colleges.  For a long time, there was enough financial aid and private investment capital floating around that for-profits could charge much more than community colleges and still be fine.  But financial aid is tightening, and MOOCs are free; on the low end of the prestige hierarchy, it’s getting harder to continue to ignore cost.  We’ve long had a robust “private” sector in higher ed, but most of the private colleges have been technically not-for-profit.  (The way some of them handle endowments casts doubt on the “non-profit” conceit, but that’s another issue.)  The same is true in K-12: there’s no shortage of private schools, but most of them are technically nonprofit.  

McMillan Cottom isolates “prestige” as a relevant variable, and I agree that it’s an obstacle for any new entrant.  But it’s hardly insurmountable.  Prestige can follow from exclusivity and money, both of which for-profit companies have shown themselves more than capable of providing in other contexts.  I’m wondering if something like religion is the missing variable.

Some private colleges have religious affiliations now, but many more of them started that way.  And while public colleges are expressly forbidden from being specifically religious, much of  traditional academic culture carries unmistakably churchly holdovers.  Graduation robes are obvious manifestations of that, but it goes much deeper: the entire idea of a tenured priesthood of self-selecting men who have special access to The Truth comes straight from the church.  Even now, many academics take a vow of poverty to fulfill their callings as teachers.  There’s a sense of mission -- a religious term in its own right -- among many academics that encourages them to take economically damaging deals just to stick around.

Americans are happy to pursue profit, and happy to talk about faith.  But we get a little jumpy about mixing the two.  That, I think, is where prestigious for-profits would face the real obstacle.  Part of the prestige that attends private higher education comes from the sense of mission that relies, in a fundamental sense, on the idea that they aren’t in it for the money.  They’re in it for the mission.  Anyone who has worked in administration knows that mission and money actually bump into each other every. single. day.  (I’m told that the same is true for people who actually run churches.)  But in the public mind, the two are largely distinct.  Anyone who’s willing to live on academic wages just to get to teach ancient history must really love teaching ancient history.  The purity of motive that comes from the absence of profit sacrifices credit for credibility.

As long as for-profits stayed away from anything mission-like, and just focused on very short-term job training, the fact that they were in it for the money didn’t matter much.  But as they have expanded their “mission” to overlap with much of what traditional higher ed has started to cover -- and even to seek approval from the same regional accreditors -- the purity of motive that nonprofits can claim isn’t there.  They’ll have to find a way around that if they’re going to break the prestige barrier.

I think it will happen, but more slowly than a strict economic calculation would suggest.  Ironically enough, much of higher education has become far more secular than its institutional design ever assumed, which leads to no end of cultural tension.  Vocabularies and assumptions based on very different worldviews survive in contradictory fragments, wielded by very smart people who often haven’t reflected on their history.  Logics of priesthood coexist with logics of industrial unions, as if the two are somehow compatible.  (Here’s one: “peer review” and “worker solidarity” are contradictory.  Discuss.)  I’ve never heard of a priests’ union.

Secularization is a powerful force in American culture, even if we generally don’t own up to it.  As it takes greater hold, I wouldn’t be surprised to see some of the stigma attached to for-profit education fade away, replaced by a more pragmatic, results-oriented view of it.  At some point, prestige might come to correlate with actual quality of performance; depending on your angle to the universe, that’s either exhilarating or heresy.  

But we’re not quite there yet.  

Anyway, I’m happy to see that some very smart people are starting to ask some of the right questions.  Why hasn’t the upscale proprietary caught on yet?  What’s stopping it, exactly?  In the meantime, if you have the chance, I strongly recommend checking out McMillan Cottom’s paper and offering constructive thoughts.  There’s something here, and I suspect it may shed light on more than just the next investment opportunity.
 

 

 

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