PUBLIC FOR-PROFIT?

This post will be a bit more free-wheeling. My thoughts have been on the for-profit higher education industry and its merits and demerits. Let’s start with the good.

The Tea Partiers should love University of Phoenix. It represents the supposed maxim that if something can be done privately than why are we doing it publicly? The for-profit model is accelerating and has been one of the few highly-valued stocks on Wall Street during the recession. These institutions privatize higher education and remove the “burden” from the public to subsidize that portion of the education. For every student who chooses to go to the private for-profit just increases the total amount of education without increasing the total cost to society.

Taken from this public benefit viewpoint, our public institutions should embrace the for-profits as partners in educating the population. They provide a valuable service in meeting the needs of students which our public institutions simply don’t have the capacity or ability to meet. They provide competition which increases efficiency and kindles innovations. Surely to meet the goals of increasing our education levels in the state, these for-profits must play a role, especially in adult education. We should all be thanking them for their service.

But, we don’t.

Unfortunately the dots just don’t line up.

First, these for-profit schools are primarily funded through federally guaranteed tuition loans. Making an average profit of 15%, these for-profits saddle associate degree students with law-school-like debt. And then they wonder why they have nearly 30% default rates. These institutions treat students like annuities not a future workforce. The curriculum is centrally developed and administered in a canned formula. Compared to the no-profit and public sector which spends roughly 2% on marketing, these media giants expended nearly a quarter of their budgets branding their image as “college” or “university” and thus attempting to incorporate the public trust by reference to age-old notions of academia. And thus the distrust.

There must be some middle-ground. The future of higher education is not solely based in either model. The state system which first figures out a way to get the two industries cooperating in a mutually beneficial manner will outpace the world in education innovation and development. Both sides must recognize that its model has weakness that the other has conquered. The next decade will see a pivotal mark for higher education. As state budgets continue to marginalize higher education, the public sector will be forced to resemble the private sector. The institutions will become “state supported” and not “state governed.” We might as well begin learning which aspects of the “business” can be incorporated into a public, mission-based model. The sooner we realize this, the better off we will be.