What does the future hold for For-Profit Universities?
By Ronald Gdovic, PhD
Despite a recent backlash against private universities and their marketing tactics, for-profit universities continue to take market share from traditional brick-and-mortar institutions. There are a number of reasons that private universities are relevant and shall remain a viable alternative in the higher education marketplace.
It is no secret that the average US household income cannot keep up with staggering tuition increases at traditional universities. Collegedata.com reports that tuition at the average public university jumped 8.3% in 2011 with some colleges posting drastically higher increases above 20%. Meanwhile, family incomes have been falling for the last three years, despite tax benefits and some increases in federal grants; a higher percentage of family income is therefore going toward higher education. The growing disparity between income and the cost of an education is exacerbated by dwindling scholarship opportunities and financial aid overall.
As paying for school shifts from public subsidies to individuals, lower and middle income families are hit particularly hard by these economic realities. Both parents and their children who are able to piece together a financing plan for college usually end up with a confounding amount of debt at graduation. There appears to be no end in sight. "Tuition madness" continues to drive demand for higher education away from traditional four-year and advanced degrees toward for-profit alternatives.
Tuition may not be less expensive in all cases. However, the substantial added cost of room and board, textbooks, on and off-campus expenses, and the plethora of hidden expenses of college away-from-home are saved. Rarely discussed but as significant is the opportunity cost of being out of the workforce for four years or more in addition to the cost of private debt accruing during this period.
In this highly competitive environment, higher education at an accredited private for-profit university is a viable alternative. These companies - who are in the business of education - offer a quality education to new students and mid-career adult learners. For-profit universities recognize that they must offer degrees and courses relevant to students' interests and career in the short term. Few individuals are disillusioned that they will have a lifelong position at a major company waiting for them at graduation. The days of job security with steady income ending in comfortable retirement; with pension and benefits, are long gone. For-profit universities embrace this paradigm shift and are generally more responsive to industry's educational demands than public and not-for-profit colleges.
Private for-profit universities offer the security of a customized curriculum teaching students skills that they will benefit from immediately. It is far easier for private schools to stay relevant to ever-changing educational demands without the burden of institutionalized stagnation prevalent in traditional universities.
The second most important benefit of private universities is flexibility in scheduling. They take a keen interest in providing their students with the tools to receive a quality education on their own schedule. New students can learn at a comfortable pace from home, for example, while they work a full-time job to pay for their education. Students get a jump start on their careers as opposed to sitting out of the workforce at a traditional four-year university. Additionally, courses are typically accelerated and more focused in short intervals. Nine week courses are common. This compact schedule further promotes flexibility to juggle life, education, and career.
In private for-profit universities students are customers. Like any successful business, for-profit education providers must service their customers or perish. Therefore, for-profit schools invest substantial amounts of effort to provide students leading-edge classroom technology and other academic and administrative resources efficiently. Asynchronous classroom discussions, for example, give students the ability to interact with faculty and classmates on their own schedule online. On-demand video tutorials, instant messaging, and social media are just a few emerging technologies in the arsenal of online engagement.
In sum, for-profit universities have stepped in to fill a large gap in alternative education with flexibility and curriculum aligned with students' near-term career goals. Traditional universities will continue to lose market share unless they adapt to modern demands for higher education. Until they do, private for-profit universities will remain attractive alternatives as long as they continue to be responsive to their customers.
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