The Profit Prophets in Higher Education

The nation seems to have suddenly awoken to the reality that for-profit academic institutions are a force to be reckoned with. For so long, they have been ignored as inconsequential, second-rate competition, and vilified for their greed and lack of quality. Two events seemed to have changed their image into something far more formidable: the realization that government-sponsored financial aid goes disproportionately (and with a dangerously high default rates) to the for-profit sector, and the excellent exposé on Frontline (College, Inc.) that slammed the aggressive recruiting practices of these schools.

There is much hypocrisy as newspapers, themselves for-profits, and the politicians who previously promoted the development of more storefront enterprises in their own districts, now question the fundamental ability of for-profit universities to deliver higher education—and “not-for-profit” universities now feel the threat of this competition. This is not to say that for-profits haven’t been guilty of excessive behavior, but they operate in a much larger academic ecosystem, which needs to be acknowledged. I offer these five uncomfortable observations.

First is that the for-profits fill the void relinquished by the rest of us. A case in point is the University of Phoenix, which began in the 1970s as a small for-profit program aligned with the Jesuit University of San Francisco, then moved to Phoenix to escape the scrutiny of the California accreditors, and slowly morphed from a bricks-and-mortar enterprise to mostly online in just the last decade. At no point did the University of Phoenix invent anything especially new, discover something that wasn’t otherwise obvious, or unearth a market that wasn’t being systematically neglected by the mainstream educational establishment. I recall asking a senior administrator at an urban flagship state university on the East Coast why Phoenix was able to develop such a successful presence there. She replied that the business school faculty at her university were not interested in teaching part-time adult students and simply surrendered that market to the for-profit.

Second is that the for-profits make the equivalent of hamburgers, and sell them in large quantity to a mass market—nothing exotic, nothing even especially novel or risky. Credit for every academic invention should go to highly acclaimed universities. The for-profits simply took those innovations and turned them into commodities, and high-priced ones at that. While originality, creativity, and academic imagination reside in the nation’s most prominent universities, the will and the way to cast a wide net for students exists in the for-profit world, which produced major marketing machines. The numbers are staggering: The four largest companies/universities have a combined headcount of more than one million students and annual revenues of $11.7 billion. Their stocks, though, are plummeting under the pressures to reform.

Third is the painful reality that the for-profits are not so different from the rest of us. All major colleges and universities engage in glitzy self-promotion, student recruiting, and assistance with procuring federal financial aid. We try, however, not to cross the line into misrepresentation and manipulation. What was portrayed on College, Inc. occurs in the not-for-profits as well, just, one hopes, less aggressively and deviously.

Fourth is the simplistic backlash that anything for-profit is inherently evil and any association between a nonprofit and a for-profit is inevitably corrupting. The more nuanced question is how to divide the labor and determine a legitimate space for the profit motive. For example, few colleges, other than Cornell University, make their own ice cream—this is something easily outsourced. But we do make our own education, which shouldn’t be subcontracted to an outside vendor. There are fundamental skills and defining features of our institutions that simply cannot be compromised or confused by outsourcing. While a partnership of for-profits and nonprofits, in so many domains, is inevitable, where the line is drawn between the two is not.

For-profits are now enormous and here to stay, though perhaps humbled and constrained by the barrage their reckless behavior inspired. We now need a détente rather than a blanket and universal rejection or a see-no-evil approach between mainstream academe and this emerging giant. But the traditional universities and accrediting bodies need to reassert their say over what is educationally credible.

Fifth is the dangerous convergence, in the public’s perception, of distance learning and for-profit corporations. Distance learning is not the exclusive domain of the for-profits, most of which developed first in the conventional classroom offered at convenient sites. And prominent universities should not shy away from online learning for fear of guilt by association. Quality online learning is often lost in the schlock being peddled to the naïve consumer. There are important opportunities, if not a responsibility, to embrace the role that technology can play in providing powerful educational options for adult learners. These shouldn’t be stigmatized because of the mass marketing of online programs by for-profits or the mistaken notion that distance learning and the profit motive are somehow synonymous. I am concerned that important, laudable online initiatives might become collateral damage of the front-page exposés on for-profit mischief.

And now a sixth observation, perhaps more of a prediction: We ain’t seen nothing yet. While legislators wring their hands on how to get the genie back in the bottle, the for-profits are moving quietly and imperialistically throughout the world where the fine distinctions between for-profit and nonprofit are less clear. At some point, U.S. institutions will wake up to an even more glaring case of neglect—and find the for-profits have gobbled up the global marketplace with their version of U.S. higher education.


Jay A. Halfond is dean of Metropolitan College and Extended Education at Boston University.


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