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Education for Profit
New Players, Different Game: Understanding the Rise of For-Profit Colleges and Universities
William G. Tierney and Guilbert C. Hentschke. Baltimore: Johns Hopkins University Press, 2007.
Reviewed by Kevin Kinser
Most people who are involved in higher education are by now well aware of the rise of for-profit colleges and universities. These institutions emerged in the 1990s from an easy-to-ignore sector that was largely composed of small, non-degree granting proprietary schools. Led by the University of Phoenix and benefiting from a conveniently overlapping Internet boom, the for-profit sector saw exponential growth. In less than a decade, the number of forprofit colleges doubled and enrollment in such institutions quadrupled. With their new emphasis on granting degrees and their increasing interest in obtaining regional accreditation, for-profit institutions suddenly seemed to be taking aim at traditional colleges and universities. For-profits were everywhere, promoting convenient schedules and quick degrees and promising career advancement.
Early scholarly descriptions typically were wary of the new competition. “Godzilla or Chicken Little?” asked Gordon Winston in the January– February 1999 issue of Change magazine, as he assessed the for-profit pressure and the ability of traditional institutions to resist it. Later discussions focused on how Wall Street money and Washington lobbying were important to the success of forprofit higher education. The small but growing literature began to depict a for-profit higher education sector in which large, multi-campus, degree-granting institutions were increasingly important. It was not a comforting portrayal. The mergers and acquisitions important to this group of institutions, as well as their unrelenting growth imperative, are alien to traditional higher education. For-profits employ a business model that contradicts standard academic practice. They speak of markets and brands, not scholarship and prestige. To many in higher education, it all sounds a bit suspect.
William Tierney and Guilbert Hentschke enter into this discussion and take as their task explaining forprofit higher education to a broad academic audience. They are not as suspicious of the for-profit model as some. But neither are they doe-eyed enthusiasts who see a for-profit cure to the educational ills of traditional higher education. The authors emphasize that their goal is understanding the rise of for-profit higher education. This is a difficult undertaking, one made all the more tricky by the myths and misinformation that populate general descriptions of the sector. But Tierney and Hentschke get specific. They supply the reader with a detailed analysis that nicely weaves between historical explanations of traditional academic conventions and the contemporary market-driven focus of the for-profit university.
The book is a narrative of balance, arguing neither for nor against the nontraditional activities and agendas of the for-profit sector. The authors directly and succinctly address the significant questions relating to the rise of for-profits. They examine the growth of the sector and offer several explanations for how and why the for-profits have expanded their reach as much as they have. The authors correctly note that the financial model for for-profit higher education relies on growth, but they also point out the necessity of investment capital to finance growth: expansion cannot be funded out of operations alone. And it is not just private money that greases the profit wheel. Subsidies from federal student-aid programs represent an important revenue stream, and maintaining this flow is the primary focus of for profit lobbyists. The course catalog, along with the students who graduate and enter the workforce, represent the product of the for-profit institution. The curriculum is structured to be inexpensive and marketable, made profitable through economies of scale.
But ultimately, in the view of Tierney and Hentschke, the distinctions between for-profit and traditional institutions have more to do with governance than money. A top-down approach defines what is taught, how it is taught, to whom it is taught, and who will teach it. There is no dual academic-administrative hierarchy. Decisions are made by governing boards and CEOs, not by department chairs and faculty. This governance structure explains the ability of the for-profit university to react nimbly to new markets and changing conditions. Directions can be given with the expectation they will be followed. People are hired to make decisions or to implement decisions made elsewhere in the organization.
This, of course, challenges the very idea of a traditional university, where the principles of shared governance and academic freedom hold sway. Tierney and Hentschke do a remarkable job, however, of making the differences seem like reasonable responses to alternative institutional demands. They distinguish the goal of making money from organizational success, analyzing the former from a straightforward economic perspective and the latter from the perspective of an education–labor market nexus. To be successful, forprofits must match students’ education to labor market demands. Numerous state regulations and accreditation policies compel for-profit institutions to match students’ skills and interests with programs from which they can graduate and find a job. There are certainly unconventional aspects of how for-profits focus on their graduates’ success in the workforce, but the goal of preparing students for future employment is immediately recognizable to—and likely endorsed by—most academics in traditional higher education. The authors’ balanced analysis eases the reader into the discussion, and provides entrée to the for-profit world for those who balk at more antagonistic portrayals of the sector’s policies and procedures.
Given the neutral analysis of the for-profit sector that characterizes the book as a whole, it was an unfortunate decision to begin with a critique of innovation in higher education. Innovation has occurred in the past and will certainly occur in the future. Tierney and Hentschke suggest, however, that modification rather than revolution has been the norm in American colleges and universities. The for-profit sector presents a contrasting perspective on innovation. Rather than modify existing structures, for-profits are building new ones. The authors make their point using the concepts of “sustaining” versus “disrupting” technologies drawn from Clayton Christensen’s widely read book The Innovator’s Dilemma. A sustaining technology improves upon existing products and services. When successful, it is incorporated into the organization as the new standard. Disrupting technologies, as the name suggests, break open old models and discover original ways of approaching problems. Not constrained by existing structures or standards, disrupting technologies are able to transform the organizational space and—in Christensen’s model—supersede older organizations in the process.
In a nutshell, this is the rather disturbing implication of the book’s title, New Players, Different Game. Tierney and Hentschke present the for-profit model as a disruptive technology that is changing (or perhaps has already changed) the rules of the game. If one is to follow the script laid out in the first chapter, traditional higher education would seem to be going the way of the typewriter. The analysis presented in the rest of the book, however, belies that sentiment. And the authors’ conclusion suggests that they do not really believe it either. They argue for a productive dialogue between sectors, not the “Cold War” that currently exists. For-profit and traditional higher education are variations on a theme, and can learn from each other while maintaining their distinctive missions and brands. From what Tierney and Hentschke tell us in the rest of the book, this seems to hit the right pitch, projecting a harmonious future rather than an epic struggle for survival.
Kevin Kinser is associate professor of educational administration and policy studies at the University at Albany, State University of New York. He studies nontraditional and alternative higher education, particularly the organization and administration of for-profit and virtual universities.
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