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Embrace 'Learning From For-Profits'
November 8, 2010 - 9:00pm

The growth of the for-profit education sector, and the tension between for- and non-profits to claim resources and control the educational policy agenda, will be the defining theme of postsecondary education over the next 20 years. Incumbents, not excluding myself, have a hard time conceiving what the rise of for-profit providers will mean to our industry.

There are many reasons why we need to embrace 'Learning From For-Profits' - here are a few:

Quality: Traditional non-profits (us, me) are often skeptical and critical of for-profits because we fear that the profit motive will compromise quality. The quality argument is not new. AT&T, before it was broken up in 1984, made a similar argument as to why the phone company should remain a regulated monopoly. Any entity or organization with a monopoly on the platform will strive to maintain this control, and do so in the firm and sincere belief that competition will bring about the market failure of poor quality. Why are we so convinced that increases in for-profit education will necessarily result in decreases in educational quality? Hasn't the opposite actually occurred in industries where entrenched incumbents have been challenged a diffusion of new players, new business models, and new technologies?

Openness: The only path forward for both non-profits and for-profits is greater openness and transparency. As far as I can tell, the major for-profit institutions have failed to significantly contribute to the open education movement. They lock-up their courses, their course designs, and their curriculum as protected intellectual property. This is a shortsighted and ultimately self-defeating strategy. If the for-profits want to be evaluated as co-equal members in the educational community it is first necessary that they adopt, embrace and advance the higher ed culture of openness and transparency. This means a commitment to education on a broad scale, and a willingness to openly share the educational content produced at their institutions. Of course, the same can and should be said of us non-profits, we have very little excuse for not contributing in meaningful ways to the open education commons.

Costs: Beyond quality, the second most common complaint about the for-profits is that they are more expensive than public options. We complain (legitimately) about the high default rates for government financed student loans that make up most of the for-profit revenues. Over time, however, greater competition in the higher ed market will drive down costs, as the for-profits find ways to bring disruptive innovations to post-secondary education. We don't know what these innovations will entail (unbundled learning?, true personalized learning environments?) - but we can be sure that they will arrive if the incumbent players fail to derail new entrants to the market.

Emerging Markets: We tend to think of higher education primarily in the U.S. context (I know I do). This is a mistake - as in my lifetime the biggest market for higher ed services will be outside of the U.S. The BRIC's (Brazil, Russia, India and China) will be where the true action, innovation, and dollars will be. The for-profits should be in the best position to provide quality and affordable education to these emerging markets. Non-profits will make some inroads, but I'm not sure we have the agility or the appetite for risk and failure that will be necessary to leapfrog the existing higher educational structure and provide these countries (and others in the emerging world) the scale of higher ed services that will be necessary.

Despite my belief in both the importance and potential of the for-profit sector, I have not succeeded in developing any real understanding of this industry. Nor have I succeeded in building relationships with people who work in the for-profit education sector. It sounds like the TIAA-CREF Institute's 2010 Higher Education Leadership Conference would have been a great place to start. I'm sorry that I missed it.


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