• Confessions of a Community College Dean

    In which a veteran of cultural studies seminars in the 1990s moves into academic administration and finds himself a married suburban father of two. Foucault, plus lawn care.


For-Profits, From Imitation to Infiltration

Shifting fortunes.

September 18, 2018

Several years ago, it was commonplace to argue that for-profit colleges were an existential threat to public higher education. (I even did that toward the end of my book.) Now, for-profit colleges are taking on water and losing market share much more quickly than their public counterparts. 

I’ve been mulling over what happened. Having worked in both sectors, I’ll offer a few thoughts.

The dominant model of entrepreneurial higher education is shifting from imitation to infiltration. In other words, we aren’t seeing as many fully parallel institutions setting up shop and going toe-to-toe with community and state colleges as we did fifteen years ago.  But we’re seeing much more of a for-profit presence within the operations of public colleges than we used to. That presence ranges from e-packs to LMS platforms to ERP solutions to research on colleges themselves.  In some cases, such as Purdue Global, for-profit and non-profit have merged, and it’s still not entirely clear where the boundaries are. Kaplan was able to shake off its tarnished name and pick up the respected Purdue name while maintaining its for-profit mission. Kaplan isn’t freestanding anymore, but it hasn’t gone away.

Publishers, too, are moving closer to full-provider status, while leaving it to the colleges themselves to deal with accreditation issues.  Pearson, for instance, covers everything from textbooks and lab manuals to online problem sets and tutoring. Cengage is countering OER with its “Netflix for books” model, in which it turns entire colleges into marketing arms for Cengage.  Investors are very much present and making money; they’ve simply changed the form of the investment.

Tressie McMillan Cottom’s excellent Lower Ed notes, too, the distinction between privately-held and publicly-traded for-profits.  The latter tend to be less stable, given investors’ insistence on constantly-increasing returns. When times are good, stock market money pours into the sector, allowing for a pace of expansion that no public institution can hope to match; that’s especially true when states have decided that higher education is a lower priority than it used to be.  But if returns start to lag, investors are unforgiving. They want what they want, when they want it.

I remain convinced that “patient capital” could do well, but that “impatient capital” is likely to struggle.  It takes years to show results in the higher ed sector, and years beyond that to build reputation. Phoenix, for instance, grew relatively sanely for decades until the mid-aughts, when it yielded to stockholder pressure and formed “Axia college,” effectively eliminating entrance standards.  From that point, the entire edifice started to crumble. Investors who are willing to put in the time (and take the initial operating losses) to build a reputation could see significant payoff eventually; in practice, that means going private.

To some degree, too, community colleges have adapted.  Some of the innovations that for-profits adopted to gain currency were relatively easy to imitate.  Evening and weekend programs, and later, online programs, met real needs of working adults. In some cases, for-profits had first-mover advantage in adopting those approaches.  But community colleges have caught up, and offer both lower prices and better reputations. The competitive advantages of those were always bound to be temporary.

The relative victory of the publics, though, comes in part by imitating what they opposed.  In the for-profit sector, student retention was always a paramount concern. After all, from their perspective, a retained student is a repeat customer, and it costs much less to retain a customer than to attract a new one.  The “guided pathways” movement resembles, in some basic ways, the curricular structure that DeVry used 20 years ago. When I was there, the NJ campus offered only five majors. The entire system didn’t offer many more than that.  Courses were scheduled around cohorts, with “gen eds” taking the midday slot so that both morning and afternoon cohorts could take them. A short list of majors meant that they always critical mass to run specialized classes, and advising was relatively straightforward.  The system had its share of implementation issues -- transfer credits have an entropic effect on cohorts -- but the underlying assumption was clear. Years later, when community colleges started moving in that direction, I recognized it.

And that’s before even touching on adjunctification. Anyone who wants to claim moral purity for non-profits has to come to terms with that. 

I don’t foresee a resurgence of the “imitation” model anytime soon, despite a remarkably different regulatory environment, but I do foresee the two models intertwining more.  The “infiltration” model fits well the needs of colleges facing public disinvestment, while maintaining deniability at the level of marketing. Purdue Global may look unusual now, but I wouldn’t be surprised to see similar hybrids develop as one sector craves respect and the other craves funding.  These days, the call is coming from inside the house.



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