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Higher Ed, Inc.: The Rise of the For-Profit University

By Richard S. Ruch
Johns Hopkins University Press
208 Pages
ISBN: 0-8018-6678-2

Reviewed by

Stephen Pronchick

California Maritime Academy


For-profit schools have coexisted with non-profit institutions of learning in the United States since the beginnings of the nation. In higher education, these schools have often been viewed as an inferior means of education, sacrificing quality for profit and putting the needs of shareholders above those of the student. Indeed, the very notion of making a profit in higher education can, to some, seem antithetical to the goals of education. As a result of this, for-profit colleges and universities have traditionally made up only a small percentage of institutes of higher education.

Over the past two decades, however, this view has begun to shift, in the minds of students and the general public.While still making up a small percentage of total institutes of higher learning, for-profit colleges and universities have undergone remarkable growth and have demonstrated that they can deliver a product that many students find attractive. Moreover, some of the most successful of these institutions are now achieving academic respectability equivalent to their non-profit counterparts by obtaining accreditation under the same criteria as non-profit schools.

Given this trend, a number of questions must arise in the minds of those in academia. Are these institutions really delivering quality education? Why do some students prefer these schools to more traditional schools? How does the academic culture of for-profit schools compare to that of non-profits? How in the world do such institutes show a profit and still manage to deliver a quality education? Are the two types of institutes in competition, or is there a place for both in the United States? Ruch's book doesn't answer all of these questions but makes several contributions to the discussion.

Ruch points out that the growth of for-profit colleges in the past twenty years can be attributed to the deliberate application of corporate management principles to the education of students. These management principles had never been rigorously applied in education, nor could they have been prior to the 1980s. Thus, this new "education industry" should not be categorized with previous for-profit ventures in education. Those interested in understanding how this trend will affect the future of higher education must approach it with a fresh perspective.

Ruch also provides the reader with some concise, if sparse, data on for-profit growth and performance. The sparseness is not due to the author, but rather to an unfortunate lack of sources at this time. The Department of Education has only tracked for-profit colleges since 1996, previously having included them in the same category as community colleges. In addition, some of the schools are not completely forthcoming about their financial performance.

Ruch also contributes his personal observation about how the academic climates of for-profit and non-profit schools compare. His point of view is one that is still rare: he is a former member of the traditional academic community who has become an advocate of the for-profit camp. His opening sentence--"I must confess that until a few years ago I thought that all proprietary institutions were the scum of the academic earth"--conveys the promise that, while he advocates the merits of the for-profit schools, he also understands the traditional academic prejudice against them and will attempt to be even-handed in his discussion (1). His success in this is uneven. My sense, as I read several of the chapters, was that he has gone from seeing for-profit schools as the "scum of the academic earth" to viewing them as superior successors to outdated, decadent non-profit institutions. The book is thus left somewhere between an unapologetic championing of the for-profit system, and a truly objective discussion of its role in higher education.

In describing the characteristics of the new for-profit schools, Ruch focuses on five successful organizations that offer different outcomes. These are accredited, multicampus organizations that offer bachelor, masters, and, in one case, doctorate programs in the areas of psychology, technology, and art studies. With each organization he presents a brief history, a description of their programs, and their enrollment and student profiles. All of the selected organizations have experienced substantial growth during the 1990s.

A clear distinction between these organizations and traditional non-profit institutions emerges from Ruch's discussion of how these organizations manage to generate profit. There is no remarkable secret to the manner in which these schools are operated; they follow standard methods of modern corporate decision-making. This doesn't mean that student education is necessarily shortchanged. (As Ruch points out, this would be counterproductive.) The organizations respond to the marketplace. They identify degree programs that are in demand and that are not provided adequately by existing institutions. They seek to maintain flexibility, adding and removing classes and programs, depending upon demand. They do not invest heavily in libraries (except when necessary for accreditation). They do not support many extracurricular activities. Faculty are hired to teach, and little release time is given for other activities. Considerable effort is spent in recruiting students, making sure that the programs being offered are of good quality, and placing graduates.

The distinction is further clarified when he describes the difference in culture between for-profits and non-profits. Both blend business and academic cultures, but the business culture permeates to lower administrative levels in the for-profit institutions. This is an interesting section, though I found myself becoming a bit incredulous as he described the differences in the physical environment of the two cultures. After saying that an observer would see relatively little difference in classroom setting, he goes on to describe the environment at a typical for-profit institution:

If anything…struck you about the classroom, it might be that the room itself is tidier than many typical college classrooms. The chairs and tables would be in neat rows, with little or no trash lying around. The grounds, though small, and the parking areas, though large, are clean and well maintained…the lawns will always be mowed, the snow always plowed (or the palm fronds trimmed), and the restrooms always clean. (111)

He continues, in a similar vein, to describe the faculty environment, arguing that the lack of tenure actually improves the quality of the faculty's experience and creates more, not less, academic freedom. His arguments against tenure are fairly valid, but he does not discuss the equally valid arguments in support of tenure, and he goes a bit far when he cites his own faculty as sources for his argument. I couldn't help but picture untenured faculty, with short-term contracts, assuring their boss that they are glad they are not in a tenure system, and that they have never felt so free in an academic environment. This was another, perhaps unintended, insight into the differences between the two cultures.

In the end, Ruch lays out a vision for the future in which the lines between the for-profit and non-profit institution blur, allowing for a diversity in higher education choices that is consistent with the diversity of opinion on the purpose of a college education. Given the emphasis on advancement at non-profit institutions and the development of for-profit outgrowths at some universities, this blurring is already underway.

This is a book that provides a glimpse of the current state of for-profit development in higher education in the United States. It is an area that needs to be revisited periodically, particularly as more data on for-profits become available. In reading this book, one may think that the for-profits are the inevitable future, continuing to grow and supplant the present system. However, it's necessary to remember that the period described (the 1990s) was one of strong economic performance in this country, when the demand for people trained in technology, telecommunications, and design was nearly insatiable. How these organizations will grow during leaner economic times will be interesting, and it will test the very adaptability they see as one of their strengths.

Those in traditional academics should find this description of an alternative academic model interesting, and perhaps disturbing. The book could help to encourage thought about the future direction of higher education by removing some erroneous notions about for-profit education and making clearer the true differences in values and culture between the two.

Posted February 11, 2002

All material appearing in this journal is subject to applicable copyright laws.
Publication in this journal in no way indicates the endorsement of the content by the California State University, the Institute for Teaching and Learning, or the Exchanges Editorial Board.
©2002 by Stephen Pronchick.

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