5 Assertions on For-Profit Education

Lots of news lately about the struggles of the for-profit higher ed industry. 

 

Many in our community are suspicious of the for-profit higher ed industry because they are, well because they are for-profit. We think of education more as a right than as a business. We think that the profit motive can distort our fundamental values and practices in higher education. We think that the drive for profits will decrease incentives to offer a rigorous education, devaluing the signaling power of a postsecondary credential while simultaneously failing to offer a worthwhile (marketable) degree to those enrollees (customers) that manage to actually graduate. Is that a fair representation of your concerns about the for-profit education industry? Please add some more.

 

My assertion is that it is a mistake to judge the value of an organization by its tax status. Both for-profit and not-for-profit organizations should be judged on the value that they deliver to their stakeholders. We don’t think that Apple or Google delivers less value because they are for-profit. There are many not-for-profit organizations, including not-for-profit universities, that provide poor value for those that they claim to serve.   

 

 

While I’ve never had a problem with the concept of for-profit education, I’ve long been critical of how for-profit education providers actually run their businesses. I will not go into the problems of the most egregious providers, as it seems as if increased federal scrutiny and changes in the competitive landscape are pushing these horrible companies out of the market. Rather, I think that even the most respected for-profit schools need to shift how they structure their operations, and how they interact with the larger higher ed community.

 

The biggest change that I would like to see from all for-profit higher education is a commitment to transparency. In my experience, for-profit providers are reluctant to open up their operations and to share their educational materials. The fear has been in giving away valuable intellectual property. They have acted more like software companies than colleges, more like businesses than mission driven organizations. This needs to change.

 

 

Critics of the for-profit sector have tended to lump all the for-profit providers together. This is a mistake. There are excellent for-profit EDU companies and bad actors, and everything in-between. To be fair, the reluctance of the for-profit sector to share their methods, technologies and data have made it difficult to understand who we should applaud and who we should condemn. This is why I believe that those for-profit schools that are the most mission driven should figure out how to practice radical openness. The quality for-profit should worry less about competitors taking their intellectual property, and have more confidence that the real challenge in higher ed lies in execution. What would make you think that a for-profit was actually performing a social useful mission? What data and information would you need to see to be able to speak well of a for-profit college?  

 

 

The ongoing tragedy in U.S. postsecondary education is the trend towards public disinvestment. The real root of higher ed difficulties is the erosion of state support. Failing to adequately fund postsecondary education is as shortsighted as it is self-defeating. Blaming for-profit education as a sector for the larger problems in higher education is unproductive. Yes, many bad for-profit schools should close. This correction in the postsecondary for-profit market seems to be occurring, and we should applaud this development.  It would be a bad thing, however, if in our enthusiasm to punish the worst for-profit schools if we tarnished the entire sector. We should be willing to contemplate the possibility that some for-profit institutions are meeting the needs of those that they enroll, and that they are serving these students well. We should have more faith in the decisions of those who choose to enroll at a for-profit institution. The not-for-profits should be willing to look at the reasons that students enroll in a for-profits, and then try to emulate the best part of those business models. We should think that competition drives improvement, and we should welcome all players in our higher ed market.

 

 

If I was a professional investor I would be looking hard at the for-profit higher ed sector. The demand for global demand for postsecondary education is going to grow dramatically in the next fifty years. The best for-profit EDU companies will be well positioned to meet this rapidly escalating global demand for education. The best time to invest is when the sector seems like it is in the most trouble.