New Players, Different Game: Understanding the Rise of For-Profit Colleges and Universities (review)

This slim volume provides the reader with an excellent overview of the newly prominent set of for-profit institutions providing postsecondary education and training. While for-profit colleges have been in existence for more than a century, they have recently achieved a scale and scope that far outpaces the "Mom and Pop" proprietary institutions of earlier decades.

The University of Phoenix, for example, bills itself as the nation's largest private university with more than 250,000 students enrolled in hundreds of campuses in 40 states. Over a dozen for-profit colleges have issued shares on the public stock exchanges, and many award not just short-course certificates, but bachelor's, master's, and even doctoral degrees. Several of the larger companies have gained regional accreditation, the gold standard for traditional colleges and universities. In short, these large organizations have become significant players in the world previously limited to public and private non-profit institutions, and it behooves those who care about higher education to become more knowledgeable about these relatively new entrants. The current volume does an excellent job of mapping out that terrain.

The opening chapter uses as a theoretical frame the ideas advanced by Clayton Christensen in The Innovator's Dilemma, a widely read volume published by Harvard Graduate Business School Press in 1997. The authors note that for most of its history, traditional higher education has evolved through "sustaining" innovation s, while the for-profits enter the scene as potentially "disruptive" innovators. The questions, then, are: (a) To what extent do for-profits pose a serious competitive threat to existing colleges and universities? and (b) To what extent will their growth force changes in the traditional sector? While not offering detailed answers to either question, the authors provide relevant information and analysis for the reader to reach his or her personal conclusions.

Subsequent chapters examine changes in the economy that have produced a ready market for the specific courses of study offered by for-profits. There is less discussion than one might have wished on why the traditional institutions left so much space available for the for-profits to fill. Community colleges, university divisions of continuing education, regional public and private universities—all apparently had an opportunity to meet the needs of the students who are now enrolling in for-profit colleges and universities, but most failed to seize it. Conventional wisdom holds that the for-profits focus laser-like on students as consumers, packaging courses at times (often evenings) and places (convenient locations with plenty of parking) that meet the needs of busy adults, for whom education is a part-time, career-oriented endeavor.

An unambiguous focus on career training is another hallmark of these new colleges. Traditional colleges and universities generally have a broader set of goals and purposes and, hence, have not given exclusive attention to career preparation. Whatever the full explanation, entrepreneurs clearly saw an opportunity, attracted investors, and moved into the space left open by traditional institutions.

The remaining chapters take the reader through a comparative examination of how for-profits and traditional colleges and universities are alike and different in finance, governance, faculty roles, student demographics, and organizational culture. In each of these areas, Tierney and Hentschke do an excellent job of culling from existing sources of data, including websites, NCES statistics, and personal correspondence with administrators in specific institutions. The authors note that, while traditional colleges and universities draw revenue from multiple sources, for-profits depend almost exclusively on student tuition, much of it provided by federal Title IV funds and by employers.

The governance discussion makes it clear that for-profits have a very limited place for sharing governance with faculty; this stance is consistent with their identity as business organizations focused on maximizing profits. The discussion of faculty is valuable, in that for-profits often rely on...