Defending the Community College Equity Agenda

4. Increasing Competition and Growth of the For-Profits

c h a p t e r f o u r Increasing Competition and Growth of the For-Profits t h o m a s b a i l e y Throughout the 1990s and into the early years of the twenty-first century, the growth of for-profit education providers was one of the most closely watched trends in higher education (Burd, 1998; Strosnider, 1998; Selingo, 1999; Blumenstyk, 2000). Influential analysts foresaw a much more competitive higher education landscape in which the traditional established institutions were threatened by burgeoning new educational providers and new forms of educational technologies. Frank Newman, former president of the Education Commission of the States argued, ‘‘Competition is forcing a hard reexamination of the purpose and e√ectiveness of every activity—from how well and often faculty interact with students, to whether expenditures on student life actually create a learning community, to the issue of costs and wise use of resources ’’ (Newman, 2001, p. 9). The for-profit sector was not the only source of new competition in higher education . Growing competition for research funding and the fierce battles for U.S. News and World Report rankings were indications of competition among the public and traditional not-for-profit private institutions. New technologies were also expected to play a pivotal role. Nevertheless, the highly publicized growth of some for-profit institutions was an integral part of the discussions of the new educational environment and indeed generated growing anxiety among both private not-for-profit and public colleges and universities. For-profit institutions comprised a growing and robust sector of higher education. Many for-profit corporations maintained impressive profit margins and stock valuations despite the three-year-long stock market slump starting in 2000. A Public Agenda report, Meeting the Competition, argued that higher education o≈cials ‘‘have a strong sense of mounting pressures from for-profit and virtual institutions, new technologies, and the expansion of competition from existing institutions’’ (Immerwahr, 2002, p. 3). Public Agenda’s informants also ex- 88 Thomas Bailey pressed anxiety ‘‘about the convergence of two factors: limited public revenues and a growing number of new competitors, especially the for-profits. The main concern was that new competitors would ‘cherry pick’ the most profitable programs, leaving important but less-profitable programs and functions ‘naked and alone’ ’’ (p. 3). Community colleges appeared to be particularly vulnerable to this competition. Many for-profit institutions focused on the technical fields that had been mainstays of community college enrollments. The for-profits also appealed to older, nontraditional , working students, another crucial market for community colleges. Some prominent community college representatives voiced this concern. For example, Tony Zeiss (1998), the president of Piedmont Community College, in Charlotte, North Carolina, and former president of the American Association of Community Colleges, asked, ‘‘Will our students become theirs?’’ He warned with some urgency that proprietary colleges ‘‘already have the jump’’ on meeting the needs and expectations of a broad cross-section of community college students. Some analysts, though, feared that competing head on with the for-profits may have negative social consequences. Community colleges and other public or not-forpro fit institutions may successfully respond to the emerging environment, but at the expense of the broader public purposes of education (Newman, Couturier, and Scurry, 2004). At the end of the 1990s and beginning of the new century, a new set of concerns have influenced the thinking about the role of the for-profits in higher education. As pointed out in the first chapter, many states have had to confront growing student enrollments with dwindling resources for higher education. The growth in enrollments results from several factors including the baby boom echo, continued high levels of immigration, and a growing consensus about the economic value of some postsecondary education. Resource constraints have resulted from increased taxpayer resistance, the politically supported growth of other claims on state resources including Medicaid, corrections, and K–12 education, and the recession of the early years of the decade. State encouragement for private higher education may o√er some advantages to states as they search for solutions to this fiscal vice. William Zumeta (2004) has argued that the expansion of private capacity accompanied by state financial aid, which is designed to encourage access for low-income students, may be a lower cost alternative to the expansion of the public sector itself. The for-profits may o√er...