For-profit colleges

For-Profits and the False Claims Act

Smart Title: 
Developments in two whistleblower lawsuits raise prospect that commercial colleges could face more U.S. pressure in the courts.

For-Profit Debate Redux

Smart Title: 
Senate roundtable features continued criticism of the sector -- and continued pushback against more regulation.

Stepping Out

Smart Title: 
With sector under continued attack, 20 for-profit colleges -- all regionally accredited -- seek to distinguish themselves with increased transparency.

Going After 'Gainful'

Smart Title: 

WASHINGTON -- Weeks after the U.S. Education Department issued softened regulations designed to ensure that vocational programs prepare graduates for "gainful employment," House Republicans made abundantly clear Friday that, in their view, the rules had not been eased nearly enough, and that they would continue to oppose them.

Targeting, or Serving, Needy Students?

Can we agree on this much?

That a large number of academically gifted and economically affluent students (or their parents) have become savvy consumers, getting their first two years of general education courses out of the way at low-cost community colleges rather than pricier state schools and liberal arts colleges?

That by doing so, these would-be competitive admissions students are taking up a large number of slots at community colleges that would otherwise be filled by less academically gifted or less economically affluent students?

That private nonprofit schools, meanwhile, are maintaining their competitive admissions edge by providing more merit-based tuition discounts rather than need-based tuition discounts? That by doing so, these schools become less and less of an option for those less fortunate?

And that, as the number of well-paying blue collar jobs shrinks in response to the changing nature of the economy, the American middle class must either contract, or the skills needed to gain and retain a well-paying job must somehow expand?

I hope we can find consensus around those points. Most people can at least agree on the connection between college education and well-paying jobs, and the need to up-skill the American workforce in order to defend a society in which the benefits of middle class living are widely shared and enjoyed. Most can also agree that higher education access is shrinking in response to a variety of external pressures, including state budget cuts to higher education and a more consumer-savvy insistence on tuition dollar value.

Now we reach the question where many people disagree. Do less well academically prepared, less affluent individuals deserve an opportunity to receive a higher education? And, if so, should they attend institutions best situated to respond to their particular academic, social and emotional needs, or should they be forced to accept whatever public school option may be available -- regardless of the institution’s track record in retaining and graduating students?

These are the questions at the heart of the current debate surrounding private sector colleges and universities (PSCUs). These institutions cost the student more to attend than a public school does, but, through generous subsidies, taxpayers pay the bulk of education costs at community colleges, not students. As a result, the absolute cost of postsecondary attendance is actually less at the private sector alternative. The Institute for Higher Education Policy recently issued a report about low-income adults in postsecondary education, noting -- as many in higher education have long been aware -- that a significant percentage of low income and minority students attend PSCUs and community colleges. From the perspective of our critics, PSCUs “target” these students while community colleges “serve” them.

Both types of institutions operate in what is largely an open admissions environment (although my own institution does not). Both serve the adult student, who is often financially independent. Both strive to provide students with an education that facilitates career-focused employment (although community colleges wear many other postsecondary hats as well). Both use advertising as well as word of mouth referrals to attract students. But many PSCU students have already attended a community college and opted out for various reasons, including the long waits to enter the most popular programs, large class sizes and inflexible schedules. These problems are all made worse by state budget cuts to higher education.

PSCU students do pay more out of their own pockets than do community college students, but PSCU students see the cost justified by what they receive in return. This value expresses itself in greater individual attention and support … in having confidence in academic skills restored where they may be flagging … in gaining new motivation to succeed and seeing that motivation reinforced through success itself ... and in making the connection between classroom learning and employable skills real and direct.

Two-year PSCU institutions graduate students at three times the rate of community colleges. Placement rates are the bottom line on career-focused education, however, and while community colleges offer lower-cost career programs without outcome metrics, PSCUs must match their career education offerings with real placement of students in relevant jobs. Again, PSCU students see this outcomes-based approach as a difference worth paying for.

In this broader context, the irony of PSCUs being accused of “targeting” students becomes clear. Apparently where some see targeting of low income and minority students unable to make informed decisions about their futures, we see tailoring of postsecondary education to suit a nontraditional student population -- and a better fit all around.

Arthur Keiser
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Arthur Keiser is chairman of the Association of Private Sector Colleges and Universities and chancellor of Keiser University.

The For-Profit Option

As faculty jobs evaporate elsewhere, hiring is strong in a non-traditional sector. David Clinefelter discusses the qualities that are important to those doing the hiring.

Don't Blame the Market

Like ancient Rome in its waning days, American higher education is corrupted by excess. According to a now infamous 2003 New York Times article, for instance, Ohio State University boasts a massive facility its peers call the "Taj Mahal," which features kayaking, canoeing, a ropes course and massages. Washington State University possesses the largest Jacuzzi on the West Coast, a tub that can accommodate up to 53 people. And that just scratches the surface. One reads regularly about tens of millions spent to install new football stadium skyboxes; about gourmet cafeteria cuisine; and even about student rioting to celebrate athletic success.

Examine for-profit colleges, however, and one observes quite the opposite. There are no water parks, skyboxes or Jacuzzis. Typical is a campus of DeVry University, as described by the Berkeley professor David Kirp in Shakespeare, Einstein, and the Bottom Line: The "campus off Highway 88 in Fremont, California ... looks like one of the high-tech companies in the area. It's low-slung and functional, built with an eye to use, not aesthetics. With its long corridors of classrooms and labs ... it could be a community college, though without the gym or student center."

"Market forces" are often blamed for indulgences at traditional universities, as they are in the recent Futures Project report "Correcting Course," and for exploitation of students at for-profit colleges. But how can the market produce such contrasting corruptions: excessive opulence in presumably well-intentioned nonprofit universities, and dirty dealings at essentially amenity-free for-profit institutions? Moreover, how can for-profit schools' opponents continue to smear for-profit institutions as threats to students, as Rep. Maxine Waters (D-CA) did in recent Congressional testimony, while traditional colleges are typically portrayed as ivy-walled treasures dedicated only to seeking truth?

To a large extent, the answer, at least to the second question, is a failure to understand the practical difference between "for-profit" and "nonprofit."

First, look at nonprofit institutions. "Universities share one characteristic with compulsive gamblers and exiled royalty," writes the former Harvard University president Derek Bok in Universities in the Marketplace, "there is never enough money to satisfy their desires." Bok's point is unmistakable: Universities always work to maximize their revenue. Why? Because, like most of us, they always have things they'd do if only they had more money. William F. Massy, a former Stanford vice president, calls it a drive for "value fulfillment" in his book Honoring the Trust, further explaining that "because value fulfillment is open ended, no respectable university will run out of worthwhile things to do." 

That makes sense. The term "value fulfillment," however, suggests that universities use additional money only for altruistic ends, while the reality is that nonprofit universities can be driven as much by greed as anyone else. For instance, as the Ohio University economist Richard Vedder explains in Going Broke by Degree: Why College Costs Too Much, university presidents often indulgently use new revenue "to fund large salary increases, add staff members ... build more luxurious facilities, and expand research projects."

For-profit institutions also try to maximize their revenue. But in addition to maximizing revenue, for-profit schools want to minimize their expenses. That's why they don't have any football stadiums or massage therapists. Simply, maximum revenue and minimum expenses yield maximum profit.

That does not mean, as their critics suggest, that they will necessarily exploit their students. The only way for-profit schools can maximize their revenue, after all, is by bringing in as many students as possible. They can't, therefore, reduce expenses to any point below which they can provide the education students are willing to pay for. Kirp's discussion of DeVry helps confirm this. "Instruction is more intense than in most community colleges and regional universities ... and it is often better as well." Moreover, "graduates do get hired ... DeVry's proudest boast has been that within six months of graduation, 95 percent of graduates are working, and not behind the McDonald's counter but at jobs with a future."

Are for-profit schools perfect? Hardly. As their critics regularly point out, for-profit education's past is checkered by scams and frauds. And it still has troublemakers. In January, "60 Minutes" aired an expose on questionable practices at Career Education Corporation, which runs 82 for-profit campuses. But general hostility to for-profit education, its past, and the ongoing scrutiny it receives as a result force for-profit schools to police themselves.

As Nicholas J. Glakas, president of the Career College Association, told members of the U.S. House Committee on Education and the Workforce last week, his association's members are "committed to and focused on compliance" with the law. "We have to be because of our past." He also explained, though, that accusations against for-profit schools are often sensationalized, noting that the "60 Minutes" piece focused on only "three students out of 100,000" at "2 of 82 branch campuses" of just "one publicly traded company."

So when scams occur in for-profit schools, or traditional colleges purchase ever-grander amenities, has the market failed? No, because a truly free market hasn't even been allowed to exist. 

According to the College Board, almost 60 percent of students in both nonprofit and for-profit colleges receive financial aid, primarily from the federal government. In addition, according to the U.S. Department of Education, more than a third of public universities' revenue comes from state governments rather than consumers. Supply and demand have been crippled. Because a large percentage of their funds come from state governments, public schools aren't bound by students' demands. Moreover, most students use other people's money -- in the form of taxpayer-funded grants and loans -- when deciding what they are willing to pay for at any school. 

The solution to the problem is to let the market work, and with the federal Higher Education Act due to be reauthorized this year, a window of opportunity is starting to open.  

Ideally, the federal government should cease providing grants and subsidized loans to students, and states should no longer furnish block appropriations for their colleges. Such solutions, though, are likely politically impossible.
What would be politically feasible, however, would be for states to do something like what Colorado will begin doing next fall.  Rather than sending funds directly to its colleges and universities, the state will send money to students, who can either take it to the state school of their choice, or use half of it at one of three approved private schools.

The federal government, for its part, should phase out all grant and loan programs for wealthy and middle-class students. For the poor, it could offer loans that students wouldn't have to start paying back until after they graduate and begin earning a college graduate's salary, making them ultimately responsible for paying for their own education, but allowing them to do so when they've begun to reap its benefits.
Making all consumers pay their own way through college would infuse effective demand into college financing. Suddenly, the frills of traditional higher education, or taking a chance on potentially shady for-profit schools, would look a lot less enticing. The market would finally get to work.

Neal McCluskey
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Neal McCluskey is an education policy analyst at the Cato Institute's Center for Educational Freedom.

Why States Shouldn't Accredit

In my work as Oregon’s college evaluator, I am often asked why state approval is not "as good as accreditation" or "equivalent to accreditation."

We may be about to find out, to our sorrow: One version of the Higher Education Act reauthorization legislation moving through Congress quietly allows states to become federally recognized accreditors. A senior official in the U.S. Department of Education has confirmed that one part of the legislation would eliminate an existing provision that says state agencies can be recognized as federally approved accreditors only if they were recognized by the education secretary before October 1, 1991. Only one, the New York State Board of Regents, met the grandfather provision. By striking the grandfather provision, any state agency would be eligible to seek recognition.

If such a provision becomes law, we will see exactly why some states refuse to recognize degrees issued under the authority of other states: It is quite possible to be state-approved and a low-quality degree provider.Which states allow poor institutions to be approved to issue degrees?

Here are the Seven Sorry Sisters: Alabama (split authority for assessing and recognizing degrees), Hawaii (poor standards, excellent enforcement of what little there is), Idaho (poor standards, split authority), Mississippi (poor standards, political interference), Missouri (poor standards, political interference), New Mexico (grandfathered some mystery degree suppliers) and of course the now infamous Wyoming (poor standards, political indifference or active support of poor schools).

Wyoming considers degree mills and other bottom-feeders to be a source of economic development. You’d think that oil prices would relieve their need to support degree mills. Even the Japanese television network NHK sent a crew to Wyoming to warn Japanese citizens about the cluster of supposed colleges there: Does the state care so little for foreign trade it does not care that 10 percent of the households in Japan saw that program? You’d think that Vice President Dick Cheney and U.S. Senator Mike Enzi, who now chairs the committee responsible for education, would care more about the appalling reputation of their home state. Where is Alan Simpson when we need him?  

In the world of college evaluation, these seven state names ring out like George Carlin’s “Seven Words You Can’t Say On Television,” and those of us responsible for safeguarding the quality of degrees in other states often apply some of those words to so-called “colleges” approved to operate in these states -- so-called “colleges” like Breyer State University in Alabama and Idaho (which “State” does this for-profit represent, anyway?).

There are some dishonorable mentions, too, such as California, where the standards are not bad but enforcement has been lax and the process awash in well-heeled lobbyists.  The new director of California’s approval agency, Barbara Ward, seems much tougher than recent placeholders -- trust someone trained as a nurse to carry a big needle and be prepared to use it.

The obverse of this coin is that in some states, regulatory standards are higher than the standards of national accreditors, as Oregon discovered when we came across an accredited college with two senior officials sporting fake degrees.  The national accreditors, the Accrediting Commission of Career Schools and Colleges of Technology and the Accrediting Bureau of Health Education Schools, had not noticed this until we mentioned it to them. What exactly do they review, if they completely ignore people’s qualifications?

The notion that membership in an accrediting association is voluntary is, of course, one of the polite fictions that higher education officials sometimes say out loud when they are too far from most listeners to inspire a round of laughter. In fact, losing accreditation is not far removed from a death sentence for almost any college, because without accreditation, students are not eligible for federal financial aid, and without such aid, most of them can’t go to school – at least to that school.  

For this reason, if Congress ever decoupled aid eligibility from accreditation by one of the existing accreditors -- for example, by allowing state governments to become accreditors -- the “national” accreditors of schools would dry up and blow away by dawn the next day: They serve no purpose except as trade associations and milking machines for federal aid dollars.

The Libertarian View of Degrees

One view of the purpose and function of college degrees suggests that the government need not concern itself with whether a degree is issued by an accredited college or even a real college. This might be considered the classic libertarian view: that employers, clients and other people should come to their own conclusions, based on their own research, regarding whether a credential called a “degree” by the entity that issued (or printed) it is appropriate for a particular job or need.  This view is universally propounded by the owners of degree mills, who become wealthy by selling degrees to people who think they can get away with using them this way.

The libertarian view is tempting, but presupposes a capacity and inclination to evaluate that most employers have always lacked and always will, while of course an average private citizen is even more removed from that ability and inclination.   Who will actually do the research that the hypothetical perfect employer should do?

Consider the complexities of the U.S. accreditation system, the proliferation of fake accreditors complete with names nearly identical to real ones (there were at least two fake DETCs, imitating the real Distance Education Training Council, in 2005), phone numbers, carefully falsified lists of approved schools, Web sites showing buildings far from where the owners had ever been and other accoutrements.

To the morass of bogus accreditors in the U.S., add the world. Hundreds of jurisdictions, mostly not English-speaking, issuing a bewildering array of credentials under regimens not quite like American postsecondary education. Add a layer of corruption in some states and countries, a genial indifference in others, a nearly universal lack of enforcement capacity and you have a recipe for academic goulash that even governments are hard-pressed to render into proper compartments.  In the past 10 days my office has worked with national officials in England, Sweden, The Netherlands, Canada and Australia to sort out suspicious degree validations. Very few businesses and almost no private citizens are capable of doing this without an exhausting allocation of time and resources. It does not and will not happen.

Should state governments accredit colleges?

State governments, not accreditors or the federal government, are the best potential guarantors of degree program quality at all but the major research universities, but only if they take their duty seriously, set and maintain high standards and keep politicians from yanking on the strings of approval as happens routinely in some states. Today, fewer than a dozen states have truly solid standards, most are mediocre and several, including the Seven Sorry Sisters, are quite poor.

If Congress is serious about allowing states to become accreditors, there must be a reason.  I can think of at least two reasons. First, such an action would kill off many existing accreditors without having their work added to the U.S. Department of Education (which no one in their right mind, Democrat, Republican or Martian, wants to enlarge). This would count as devolutionary federalism (acceptable to both parties under the right conditions).

The second reason is the one that is never spoken aloud. There will be enormous, irresistible pressure on many state governments to accredit small religious schools that could never get accredited even by specialized religious accreditors today. The potential bounty in financial aid dollars for all of those church-basement colleges is incalculable.

Remember that another provision of the same proposed statute would prohibit even regionally accredited universities from screening out transfer course work based on the nature of the accreditor.  Follow the bread crumbs and the net result will be a huge bubble of low-end courses being hosed through the academic pipeline, with the current Congressional leadership cranking the nozzle.

The possibility of such an outcome should provide impetus to the discussions that have gone on for many years regarding the need for some uniformity (presumably at a level higher than that of the Seven Sorry Sister states) in standards for state approval of colleges. We need a “model code” for state college approvals, something that leading states can agree to (with interstate recognition of degrees) and that states with poor standards can aspire to.

The universe of 50 state laws, some excellent and some abysmal, allows poor schools to venue-shop and then claim that their state approval makes them good schools when they are little better than diploma mills. We must do better.

Should states accredit colleges? Only if they can do it well. Today’s record is mixed, and Congress should not give states the power to accredit (or allow the Department of Education to give states the power) until they have proven that their own houses are in order. That day has not yet come.

Alan L. Contreras
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Alan L. Contreras has been administrator of the Oregon Office of Degree Authorization, a unit of the Oregon Student Assistance Commission, since 1999. His views do not necessarily represent those of the commission.

Rejecting College

My nephew always wanted to design things, and as a teenager he seemed to be on the fast track to a good engineering degree. Took a community college calculus course while in high school. Worked for a computer aided design (CAD) company part-time. Got admitted to a top-notch engineering program.

In the middle of his first year, however, he dropped out. Now he’s enrolled in a  technical institute, learning CAD skills and only CAD skills. He’s very happy, apart from the fact that he’s had to move back home.

Where did I, his college-professor aunt, go wrong? Or did I?

What upsets me is that he doesn’t see any inherent value in a liberal education, in a college degree rather than a tech-school certificate. But I also wonder whether mine isn’t a narrow attitude -- after all, the kid wants to do CAD, so why should he have to get a degree? What doors would a bachelor’s degree open for him? He knows what kind of work he likes to do, and he can start earning money at it a lot faster with a certificate in “Drafting/CAD.”

I checked out the Web site for the school he’s chosen. The school’s URL is a .com, not a .edu. It boasts that "Our short term curriculums focus only on courses directly related to your field of study, without any fluff.
These classes are taught by instructors that have professional experience in the industry."

Besides bringing out my usually-held-in-check pedantry (“the plural of curriculum is not curriculums, dammit” and “instructors WHO, not instructors that!”), the Web site rankles because it’s pitching itself directly against the idea of a liberal arts education or “fluff.”

I worry that I’m being a snob. Why shouldn’t he study a job skill instead of spending his time reading books he doesn’t care about? Why not go to class at a place that teaches auto body repair instead of philosophy? I’m sure they’ll get him a job when he graduates, which is more than I do for my students.

My nephew is a working-class kid. Neither of his parents went to college, and most of his friends won’t. Still, I had assumed that because he got good grades in high school and wanted to be an engineer he’d want to get a degree. The problem is, I think, no one ever told him what a degree was. No one ever talked to him about the difference between higher education and job training. No one ever said why he should want to read books he wouldn’t choose on his own or take a class in chemistry or go to a lecture by a political scientist. And now he probably will never do any of those things.

As a professor I have to mourn that choice. Yet as an aunt who wants to see her nephew happy, I have to agree with my brother that the tech school is probably an OK place for my nephew  right now. I don’t mean to imply that he’s doomed. I just worry that he’s severely limited his future choices.

I wonder how it is that higher education is still, in the 21st century, failing to get its message across. Failing to explain the difference between a college degree and a tech-school certificate to the high school student whose parents never went to college. Failing to convince the engineering-school freshman that he should bother to stick around and learn the things that don’t seem immediately applicable to his future career. We have not convinced legislatures that the state has a stake in higher education, that a citizenry trained in critical thinking, writing, and research skills beyond the high-school level is citizenry better able to make informed decisions.

Both my nephew and I want him to be happy in his work. But he sees short-term, where I am trained to see long-term. He wants a job, very soon, in the computer work he has come to like in his part-time job. His model is his father, a union worker who will spend his whole adult life doing the same well paid work with good union benefits. But such jobs are fast becoming extinct in the United States, and the jobs that are replacing them, especially information-industry jobs, are nowhere near as secure.

As the sister who didn’t start building up her retirement fund until 15 years after her younger brother (all those years of college and graduate school), I may have limited credibility here. Nevertheless, I believe that a degree would offer my nephew more options in the long run, more opportunities years down the line, in an age in which most people change careers multiple times in their working lives.

The problem is that I cannot be convincing in a larger culture that does not actively promote the value of higher education. Cushioned in a liberal arts college whose mostly middle- and upper-class students enroll (presumably) because they already understand that there’s value in an education that is not job training, I sometimes forget that a college degree can still be a tough sell. That’s why my nephew’s rejection of college came as such a jolt. But it’s reminded me that American anti-intellectualism can have personal consequences. It’s reminded me that I can’t assume the product I’m selling will advertise itself. If I believe that a better educated citizenry would make for a better state or country or world, then I’d better start writing letters and contacting legislators and talking to kids. Guess I should have started with my nephew.

Paula Krebs
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Paula Krebs is professor of English at Wheaton College, in Massachusetts.

The 20th Century University Is Obsolete

Higher education, like the human species itself, is the product of evolutionary forces that produce structures -- the DNA if you will -- that enable one variant to thrive and cause another to falter.

The life form known as higher education was hatched in a monastic cocoon in the 10th century. From this beginning, higher education institutions took shape as an evolving species, changing form and mission in response to external forces. Familiar milestones on this evolutionary journey include secularization, development of academic disciplines, evolution of administrative structures, growth of the research university, and the concepts of academic freedom and tenure.

With the dawn of the Knowledge Age, the evolution of higher education has drastically accelerated so that the pace of change is now measured in years, not centuries. Higher education today is a global commodity with all the competition and product diversification that entails, including the splitting of the production from the distribution of knowledge. This is much like the movie industry, where a few companies make movies and many companies distribute them in theaters, on television, and on DVDs.

Research I universities that produce new knowledge thrive in this new environment, but they are now dependent upon strong financial links with the economic agendas of companies and countries. They are no longer the sole citadels for the production of new knowledge,  but rather just one node on a global network of corporate and national R&D sites.

The transformation of Higher Education Life Forms on the distribution side of knowledge is even more dramatic, evolving a new species that concentrates simply on distribution of currently available knowledge.

This new species features a small core of knowledge engineers who wrap courses into a degree to be distributed in cookie-cutter institutions and delivered by working professionals, not academics. There is no tenured faculty, no academic processes; the sole focus is on bottom-line economic results. These 21st century institutions are not burdened with esoteric pursuits of knowledge; rather, they focus on professional degrees for adults that have a fairly clear market value for a given career path.

The exemplars of this new species are the for-profit universities, which are cutting their teeth on the weakness of the 20th century universities. Though new at the game, in a few years they will be capable of hunting with lethal success. This new species is market-driven. Its key survival mechanism is the ability to rapidly evolve to new environments and to position in the market. Since they do not carry tenured faculty, they can rapidly jettison disciplines of study that do not penetrate market. Since they do not have academic processes, they can rapidly bring to market programs that can capture market share.

Certainly, not all for-profit providers have the core capabilities to compete long term in the market. Some emerge quickly and as quickly become extinct, but others are proving quite adept at drawing strength from this globally competitive market.

As mass, longevity and a voracious need for large quantities of prey (resources) proved lethal to the dinosaurs in the stark environments created by global darkening, so the universities of the early 20th century may face serious thinning or perhaps even extinction in the new globally competitive environment of higher education. Universities rooted in the early 20th century are intrinsically inefficient in today's environment of market valuation and brand identity. Given the current internal structure of tenure and faculty governance, these universities lack the capability to respond to market forces in a timely fashion -- to close out product lines no longer playing in the market and rapidly bring new and more efficient product to market.

Still, these once elegant life forms persevere, but for reasons having nothing to do with innate capability to embrace change. Instead, at the undergraduate level it is the instinctual and perhaps irrational desire of many parents to see their children prosper in a traditional liberal arts environment, and so their willingness to spend inordinate amounts of money for education. At the graduate level, the "brand name" is the driver. The reputation of leading institutions, established in an era before global market competition, is based on a footing much different from that used today to obtain market position, but it still works to sustain the life form, at least among a few elite universities.

In addition, traditional universities have benefited from some serious slack in the evolutionary rope. The Industrial Age required a few knowledge workers and a lot of folks doing heavy lifting, whereas the Knowledge Age requires vast numbers of educated workers. Almost overnight, this has led to a massive spike in global demand for education, with motivated consumers increasing perhaps 100-fold. What was the privilege of a few has become the expectation of all.

But global supply falls far short of meeting demand. With a population of 295 million, the United States has only 15 million active seats in the higher education classroom; China, with a population of 1.2 billion, has 2 million seats available; Brazil, with a population 170 million, has 2.5 million seats available.

This imbalance between supply and demand has creating a robust market for all providers. Suppliers of higher education simply have to dip their nets in the water to catch students. There is not yet the fight-to-the death competition for market share, and inefficient institutions have received a short reprieve from their evolutionary fate. But at some point, as with all markets, a saturation point will be reached, with supply outstripping demand -- perhaps in 5, perhaps in 15 years. When this inversion occurs, those life forms with the required flexibility to quickly adapt to a fiercely competitive environment will survive and the others will fade from memory.

As there is private health care for those who can afford to pay at any price point, so there will continue some form of higher education that will meet the need and the check book of those wealthy enough to afford it. But for most now driven to higher education to meet the requirements of the Knowledge Age, it is value (the ratio of perceived quality over price) that will be the key determinate of what institution they will choose for their tuition dollar. To further stress the current market, state funding is not keeping up with inflation or enrollment growth, forcing higher education institutions to rely more on tuition and donations. Thus higher education is being pushed to stand on its own financial bottom rather than be a subsidized commodity, once again forcing the value proposition.

So what will be demanded of 20th century universities to survive when market supply reaches or exceeds demand? As in every market, those producers that have driven efficiency into their production system and responsiveness into their market positioning have at least a change at surviving. But the challenge is daunting because the 20th century university is trying to play serious catch up in new markets -- adults, women, diversities, the under privileged -- while using the same mentalities that allowed them to attract the 18 to 25 year old male.

As with IBM, which played in the personal computer market, but really lived in the mainframe business market, there is no fire in the belly of 20th century universities for these new markets. These institutions have not changed the way they go about their business to serve these new markets; and if there has been some change, it has been accompanied by the widespread grumbling of the faculty: Why do we have to teach at night? Why do we have to teach at multiple campuses? Why do we have to provide support services in the evening? Why do we have to teach students who aren't educated the way we were? Why do we have to schedule classes so students can maximize their employment opportunities?

Meanwhile, 20th century universities are running average price increases twice the inflation rate and carrying multiple overheads of unproven value to the buying market. Walk into the library of any university today that has ubiquitous connections to the Internet, and you will find the stacks empty of both faculty and students. Is the traditional library a value add or a costly overhead? As with IBM, 20th century universities believe their brand will sustain price increases. "No frill, just degree" competitors are producing product without the high cost of minimalist full-time faculty workloads, large libraries and multiple staff intensive manual processes. As with the personal computer, will the buying market ultimately see any difference between the products except the name on the plastic and the price on the sticker?

What will be the destiny of the current life form we have called the 20th century university? It consumes far too many resources for what it returns to the environment, and though there are vast resources (markets) available, its structures do not let it tap these resources effectively. Its evolutionary tardiness has provided opportunity for a new species to take hold - the profit driven university. As the evolution of the human race has picked up the pace with each passing millennium, a future life form that has little resemblance to current higher education life forms will emerge much sooner than the usual eons it takes for evolution to create the next iteration of life.

The 20th century university is indeed obsolete and faces extinction.

Rev. John P. Minogue
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Rev. John P. Minogue is senior lecturer at the Center for Higher Education and Organizational Change at Benedictine University and was president of DePaul University from 1993 to 2004.


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