Market-Based Higher Education
How Private Enterprise Is Making Its Mark
JUNE 29, 2010 by KEITH WADE
Filed Under : Education, Subsidies, Competition
As experience continues to prove that private industry can do things more cost effectively and with better customer satisfaction than governmental entities, debate has shifted to what functions are appropriately in the government’s realm. Over the past several decades various institutions have arisen to challenge the notion that higher education is among the activities that government can perform better than the private sector.
I should disclose my biases. I am a product of—and a strong believer in—a traditional liberal arts education. I completed my master’s degree at the University of Phoenix (a for-profit university) and am currently working on my doctor of business administration at Argosy University (a for-profit university). Finally, I am an adjunct faculty member at Webster University (a private but not-for-profit university).
It is probably worth noting that the private sector has the odds stacked against it in the arena of higher education. First, public education is highly subsidized by the taxpayers. Second, through many years of this subsidization, public institutions have built huge infrastructures to facilitate their educational delivery and research projects. Third, government jobs — including those in higher education — often pay better and offer better benefits than do those in the private sector. Finally, both because of some “bad apples” and a smear campaign, “nontraditional” is often thought to mean “shady” or “nonaccredited,” as opposed to what it truly means: innovative, new, creative, and market-driven.
Yet through knowing their market; applying the market principle “location, location, location”; emphasizing value-added services; and operating according to a different staffing model, these institutions have indeed been able to compete.
In researching my own doctoral program, I confirmed my suspicion that private institutions (both for-profit and not-for-profit) were indeed more expensive than public institutions. Yet many people opt for the more expensive private version.
At least in my case, this decision was not based on perceived quality. The University of South Florida, the public option reasonably near my home, has worldwide recognition as a quality school. While my research has been casual and completely anecdotal, it has better name recognition than the school I chose.
Rather, my decision was based on the realities of my life: I have a full-time job that pays my mortgage, car payment, grocery bills, and the rest. I cannot be a full-time student, which precludes my going to the less-expensive public university with its weekday classes.
The market abhorring a vacuum, Argosy offers a mix of nonresident tutorial courses and short residency weekend courses. Similarly, both the University of Phoenix and Webster University offer classes that meet but once a week and at night, making them accessible to those who have full-time jobs and family responsibilities.
Because both the campus I teach at and the one I take classes at offer graduate programs geared toward working professionals, many of the trappings of traditional campuses are missing. There are comfy chairs, sturdy tables, high-quality video equipment, fresh coffee, and support staff that works 5 to 10 p.m. Missing, however, are dormitories, sports fields, and other things that contribute to the cost—but not necessarily the quality—of graduate education.
Not only are the facilities geared toward the needs of the customers, the class offerings are as well. The campus I teach at offers four degrees, all at the master’s level. That’s it. Such specialization allows for precise and rapid delivery of the instruction the students want.
Location, Location, Location
I did my graduate work at the Colorado campus of the University of Phoenix and teach at the Lakeland, Florida, campus of Webster University, one of dozens of “satellite campuses” around the world. Unlike the sprawling (and not always conveniently located) campuses of bygone days, today’s private institutions go where the students are, instead of asking the students to come to them.
The latest manifestation of this—Web-based delivery—enables one to take courses with few, if any, visits to the campus. Many private institutions make it possible to complete an entire bachelor’s program online.
I have spent the last several hours using the Argosy library to do research for one of my doctoral courses. I did this in my bathrobe while drinking my morning coffee. While this may not be a pretty scenario, it is indeed convenient. Argosy, like many other institutions, does not maintain a research library at each of its campuses (an exceedingly costly proposition). Rather, like Webster it maintains a massive research library online and accessible to its students 24 hours a day, from anywhere in the world. Unlike at traditional libraries, nothing is ever unavailable. Librarians are there to help online or by toll-free telephone. Webster is delighted to ship via UPS media that do not lend themselves to online delivery.
The campus bookstore is also virtual. Offering competitive prices and next-day delivery, it is also more convenient than the traditional bookstore. An added benefit—perhaps an unintentional one—is that by forcing instructors to list textbooks by ISBN, comparison shopping is especially easy.
As illustrated, the non-government university has a good deal of flexibility. Part of this flexibility lies in its staffing model.
Like the other instructors at my campus, I am a Webster University employee complete with a W-2 form, a boss, performance evaluations, and other trappings of employment. We are, however, part-time employees who do not receive insurance benefits, participate in the retirement plan, or get paid when we are not teaching.
No insurance benefits! Only paid when working! Am I being exploited? Quite the contrary. I am well paid and love what I do. It is a part-time job, and like most it is structured on the presumption that its holder either has traditional benefits (such as health, dental, and retirement) through another employer or does not need them. Unlike the terrific economic burden imposed by full-time employees, this arrangement allows my employer to get a working professional—when needed and as needed—to teach courses within his field of expertise. And it enables me to enjoy teaching, earn a little extra money, and keep the security of my full-time job.
We see yet again that private enterprise can be relied on to give consumers what they want. Notwithstanding that education for profit and alternative education are relative newcomers to the higher-education arena, and notwithstanding that the playing field is highly tilted in favor of state-run education, private enterprise is indeed making its mark.