A View from the For-Profit Edge

More than 800 accredited, degree-granting, for-profit colleges and universities exist in the United States today. Although it might seem as though these institutions have appeared overnight, proprietary institutions of higher education are not a new phenomenon. History shows that the world's first scholars were paid itinerants. From this beginning, seminaries evolved to educate clerics, followed by guilds, and then by universities. At the beginning of the 20th century, proprietary institutions played a much-needed role in urban areas. I believe that proprietary schools (of a slightly different nature) have a vital role to play in today's academic arena, as well.

In a recent article published by the Center for Higher Education Policy Analysis of the University of Southern California, William Tierney wrote, "Proprietary and for-profit institutions are not simply here to stay: They are reinventing educational delivery, governance, and decision making." Other observers have said things about these same institutions that are not printable in this publication. Somewhere in between lies the truth. And buried not far beneath is a litany of lessons learned by current-day proprietary institutions.

What lessons does the president of the University of Phoenix, a 28-year-old institution, have to share with her not-for-profit peers? Without wishing to seem presumptuous, there might be quite a few. The University of Phoenix, while still a youngster, has not had the advantage (or, in some cases, the disadvantage) of resting on its laurels. We are a for-profit institution without endowments or large grants. If we don't get it right, the students (and their tuition dollars) leave. We have had to work to make the public aware of who we are, what we offer, and why students should enroll with us. We don't have legacies whose families have attended our institution for generations, nor do we have the commonalities of religion or spirituality to bind us to a particular community.

Given these circumstances, I offer these lessons. Some will be easily applied, others easily rejected. However, each is offered as an observation from a different perspective in higher education.

For-Profit Doesn't Mean Not-for-Quality

The environment facing higher education today could be compared to that of the weekly magazines in the late 1950s. Immensely popular, several magazines found themselves in the unenviable position of having too many customers and too few resources. Each time Look magazine published an issue, production costs-from writing to printing to distribution-cost the publisher more than it could ask the consumer to pay. The result was that many well-established magazines with wonderful reputations cut back to monthly or quarterly distribution or disappeared altogether.

How does this relate to higher education today? The University of Phoenix is a for-profit institution. The mere words can (and I can bear witness to the fact that they actually have) traumatize many traditional academicians, politicians, and even the general public. Surely, we are told, the combination of profits plus students will spell disaster, with academic integrity as the first victim. But the fact is, it is difficult for any institution to operate as a for-loss institution without going the way of Look magazine. No matter how good you are, you must operate in a manner that is not detrimental to either your students or the institution. Profits and quality can be combined successfully, if the process is managed appropriately. This is the mantra for success in the business world. Why should it be any different in higher education?

Know Thy Mission

Most for-profit institutions have narrower missions than more traditional institutions. But it is critical for any institution to live and breathe its mission. The issue is to develop a thoughtful, focused, achievable mission and stay faithful to it. Each decision that affects and directs an institution should be measured against the mission to see if it fits. If it doesn't, reevaluate the decision. A disconnect between mission and institutional practice is a recipe for disaster, from either the academic or the business perspective.

Give Them What They Want, When and Where They Want It

For-profit institutions have the ability to expand the market and deliver education to consumers in a package they can use. Currently, the University of Phoenix is licensed to operate physical campuses in 35 states, two Canadian provinces, and Puerto Rico. Through the Online Campus, our students enroll from all over the United States, as well as a variety of foreign countries. After only 28 years in existence, the University of Phoenix counts more than 277,000 graduates. Recent enrollment reports indicate that more than 201,000 students are currently taking classes in one of three modalities: in classrooms at the local campuses; via the Internet through the Online Campus; or through a combination of both, called FlexNet.

Why do we offer these options? Because our students want convenience of time as well as place. Our students are working adults who have jobs, families, and other commitments, in addition to going to school. Because time is so precious to them, we have worked out a system that we believe delivers high-quality education in a timely manner, at a place and via a delivery method best suited to the learner. In short, we have brought education to the students in a manner that is most convenient to them.

The problem that higher education faces today and that Look magazine faced years ago is not a lack of takers, but a lack of ability to deliver a high-quality product in an efficient and cost-effective manner.

Accountability: It's a Good Thing

If you have been listening to our elected officials, accountability is, a buzz word for higher education-accountability in using public funds, in public disclosure of student performance, and in delivering on the promise of higher education's value. This may well be one of the areas in which for-profit institutions have an advantage over our not-for-profit colleagues.

By the very nature of being the new kids on the block, these institutions fall under greater scrutiny by the U.S. Department of Education, regional and national accrediting agencies, and (if publicly traded) stockholders, the Securities and Exchange Commission, and the public in general. This is a good thing. It keeps us on our toes. It forces change when change is needed. The new kids do not want or need the type of reputation that comes along with academic "posers." Regulations and microscopic examination, while sometimes the source of migraines, are ultimately viewed as positive steps that aid us in our journey toward excellence.

But for-profit institutions are accountable first and foremost to their students. Today's students are informed consumers. They understand their options and make choices based upon research and facts. The options they choose are those that meet their needs-all their needs. Students choosing nontraditional institutions are doing so to increase their knowledge and enhance their standard of living. If for-profit institutions were not meeting these needs, they would dry up for lack of takers. Indeed, many have done so.

Separation of Duties Can Be More Efficient

One of the most efficient ways to manage an institution of higher learning is by separating administrative issues from academic ones. Let those who excel in specific areas do what they do best. It is not wild conjecturing on my part to say that a clear majority of faculty members at most institutions dread the administrative portion of their jobs. By the same token, there are many excellent administrators who would bomb in the classroom. Unbundling responsibilities allows each group to practice its own craft in a manner that-once again-benefits the student as well as the institution.

Students: The Customers Who Aren't Always Right

Customers? Students are consumers of our (intangible) products. In business, that definition translates into customers. This is an oft-misunderstood concept. Customer service in higher education does not mean pandering to students. Nor does it mean that every student who wants an A gets one. It means that those students who earn an A receive that grade. Customer service means that students who have questions, concerns, or issues are given timely, accurate, and courteous responses.

Marketing to the Masses

Yes, the University of Phoenix and other new kids on the block are trying harder. That's why you hear our name so often on television and radio. That's why we have high visibility on the Internet. Marketing is vital if people are to become acquainted with who we are, what we do, and how we can best serve them. If we are trying harder and we're expanding, are we trying to steal your students? Not at all.

Generally, the students who choose for-profit institutions are from a demographic segment different from that of students who are seeking a traditional, residential educational experience. Our students are not rushing sororities and fraternities; they are rushing to keep up with their very full lives, working and earning a degree at the same time. They don't have the time to spend in lines registering for classes, nor can they arrive early to search for a parking space.

By making use of all available media, for-profit institutions have been able to reach a larger audience than traditional colleges and universities. Minorities make up 48 percent of the enrollment at for-profit institutions, compared with 33 percent at traditional universities. Broken down further, private for-profit institutions enroll only 8 percent of all postsecondary students, according to the U.S. Department of Education, but they enroll 16 percent of all African-American students, 14 percent of Hispanic students, and 4 percent of all Native American students.

One Size Doesn't Fit All (or Even Most)

Perhaps the most important lesson learned by the University of Phoenix is that one size does not fit all. Learning styles vary from person to person. Teaching methods, curriculum, and electronic resources must reflect and accommodate these differences.

Student-centered learning is what it is all about. Creating intentional learners who understand how to find information and how to critically analyze and solve problems, and who become lifelong learners, is by far the most important responsibility.

We have learned that outcomes rather than inputs are the true measure of success. The University of Phoenix is an outcomes-based institution. We have devised an outcomes measure that clearly indicates if we have accomplished our mission. We must be able to answer yes to all four of the following questions:

Based on objectives clearly stated and outlined for each class, do the students:

1. Know what they should know?

2. Do what they should be able to do?

3. Have values appropriate to their profession?

4. Have the ability to accomplish their personal and professional goals?

If we can answer yes to each of these, we know we have been true to our mission and our students.

Final Exam

What are the current issues

facing higher education today?

A. More and more people of all ages realize the need for education beyond high school.

B. Higher education is tasked with the job of educating a workforce that will be ready to meet the demands of a global, knowledge-based society.

C. We are facing an onslaught of college-age students-more than ever before in history, as the baby-boom echo generation reaches college age.

D. State and federal funding, as well as private grants, are drying up, causing tuition to increase and budgets to be cut.

The correct answer? All of the above. Given these conditions, a number of lessons learned in building the University of Phoenix might be useful to a larger audience. I can sum up our experience with two key points:

Fidelity to the mission is your institutional key. We no longer live in an environment in which colleges and universities can be all things to all people. In fact, this approach is often at odds with success.

Quality and fiscal responsibility are not antithetical. There is no nobility in losing money while providing higher education. In fact, we have learned that every academic decision we make is also a business decision and vice versa. Financial success has come with the delivery of a consistently high-quality education experience.

For-profit institutions do have a role to play in the future of higher education. We have a few new ideas, and we have also learned from the hundreds of years of experience of our not-for-profit brethren. We have learned from both your successes and your missteps. Is there something in return to be learned from the for-profits?

Note:

1 Tierney, W.G. (2003, Fall). The compass. The Navigator: Directions and Trends in Higher Education, 3(1), 2.

LAURA PALMER NOONE is president of the University of Phoenix.

Copyright American Council on Education Spring 2004
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