The Rise of the University of Phoenix and For-Profit Education—and Why It Will Fail Us All

Ana Marie Cox

The Rise of the Corporate University

The 1960s stand as the last decade when big questions were raised about the modern university. Students who were starting to congeal into the New Left protested the university’s collusion with government and defense corporations as the Vietnam War raged on. Intellectuals like Paul Goodman defended the free-speech movement (FSM) at the University of California- Berkeley, arguing for a renewal of the medieval conception of the university as a “community of scholars” capable of governing itself and resisting outside forces. As a key leader of and spokesperson for the FSM, Mario Savio famously strode onto the top of a policeman’s car to give a ringing protest speech against the “multiversity.” As Savio saw it, the vision of the university most fervently advocated by Clark Kerr, the president of California’s entire university system, represented “the greatest problem of our nation— depersonalized, unresponsive bureaucracy.” Its enormous size, its conformity, its tendency to churn out students like products on a factory line—all these features of the modern university symbolized how America was “becoming ever more the utopia of sterilized, automated contentment.”1

Savio’s speech captured the sensibility behind so much of the New Left’s earlier protest against the university. The complaint centered on conformity and boredom, attempting to renew an existential vision of politics as resistance and rebellion. The business world that awaited students after leaving the university was dull and complacent. As Savio explained, “The university is well-structured, well tooled, to turn out people with all the sharp edges worn off.”2 Students were learning the routines of the “organization man”—the term William Whyte had used during the 1950s to describe corporate employees who worked for the large, faceless, bureaucratic corporations that came to dominate the American economy. Kerr himself, as one historian points out, was a “man of liberal, mildly social democratic views” who had wanted to make the university serve society.3 He was no reactionary but rather a prominent labor economist and a liberal. Nonetheless, as New Left activists saw it, he had made his pact with the large bureaucratic structures in the American economy. Savio, in attacking Kerr, helped codify for the baby boom generation the problem of the “multiversity” and the nature of corporate work—bureaucratic, boring, stifling, dull.

Much has changed since that time, not the least the nature of corporate life. The organization man is now a thing of the past. Business isn’t interested in stability or long-term careers.4 Flexibility, mobility, empowerment, dynamic change—these are the terms that management theorists speak of today. It is with good reason that Daniel Pink opens his book, Free Agent Nation, with a section titled “Bye, Bye, Organization Guy.” At the high end of the corporate world, people speak of consultancies; at the low end, of temping. What both have in common is an end to stability. The man in the gray flannel suit training it home at 5 P.M. every day has been replaced by the superhip consultant chatting on her cell phone while stuck in traffic at 8 P.M. The world of the baby boomers has disappeared, replaced by the world of Generation X—perhaps better termed the “contingent labor generation.”

Universities have changed with this world. They no longer collude with big business; they have become increasingly identical to business. The wall between the two has grown thin. Universities have always been a party to job training—from the turn-of-the century demand for managerial professionals to the desire for safe “organization men” in Savio’s time and the Internet wizards of our own time. But now corporations want to run the show themselves, or at least have more direct say in the matter. As Ana Marie Cox explains in chapter 1, many want “just-in-time knowledge”—that is, the skills necessary for the job at hand, rather than basic underlying skills. Take the example of Digipen Institute of Technology. Licensed by the state of Washington to grant a baccalaureate of science in “Real Time Interactive Simulation,” this new higher education institution is run by Nintendo Corporation. A journalist points out, “Students take no humanities or social science courses whatsoever.”5 That’s because those things are superfluous for the needs of the Nintendo Corporation. What’s necessary is what’s good for the bottom line—that is, education for the immediate tasks at hand.

What is new about today’s university is not only that it serves the corporation—for it always has done that—but that it emulates it. This is the most essential feature of the new university that the authors discuss here. Universities now see the potential for profit; they import managerial techniques from corporations; they use new technologies by which administrators assume more control over professors’ labor; they “temp” their workforce. Perhaps the only thing that the university hasn’t done that the corporation has is move all over the globe. After all, many universities are rooted in a specific city or town. Needless to say, via new computer technologies, they have scrambled across the globe in search of new students, all the while driven by the search for more profits.

What the authors in this section make clear is just how deeply these developments have already reshaped the contemporary university. The first stories heard about Phoenix University made it sound quirky and odd: a university without any campus that traded on the stock market. What Ana Marie Cox shows here is just how advanced the for-profit sector in higher education has become, as witnessed in massive growth and a mimic pattern among nonprofit universities. David Noble points out just how quickly numerous universities have taken up the questionable practice of distance education. Denise Tanguay shows that even at universities with faculty unions, merit pay and other corporate work schemes have skyrocketed. And Benjamin Johnson shows that most attempts to measure the amount of teaching done by underpaid graduate students, adjuncts, and postdocs have vastly underestimated the extent and effects of such teaching.

What shapes these authors’ understanding of the problems they discuss is firsthand experience—Cox from her years as a journalist, Noble in his struggles against distance learning at numerous universities, Tanguay in her work for the American Association of University Professors (AAUP), and Johnson in his work to organize Yale graduate students. Though they are dispassionate—in the best sense of that term—they are also committed to working on the issues they document and discuss.

Like the New Left before them, the authors here also want to initiate a debate about the broader purposes of higher education. They aren’t content simply to document the rise of corporate practices but want to ask a bigger question: What exactly is the purpose of education? Underlying their essays is a major assumption about education in today’s society: It should be democratic in the deepest and richest sense of that term. In this day and age, that makes them conservative to large extent (which might sound slightly odd, since all of them support unionization). For instance, they all imply that education should be wedded to a classical view of citizenship—that is, the cultivation of a well-rounded individual not only capable of the private pursuit of well-being but also capable of “culture” (thinking critically and appreciating works of imagination) and such skills of democracy as debating and contributing to public decision making. None of them cites him, but there seems almost a harkening back to Thomas Jefferson’s ideal of democratic education. What worries these authors is that by adopting corporate practices and looking only at the short term, we will shed the democratic promise of education: to educate citizens for the responsibilities of selfgovernment.

By showing how the democratic ideal of education is threatened, these authors make clear the need for spheres of life that are not subservient to market pressures. Education must be allowed to flourish without the bottom line entering into each and every decision. The relationship between students and teachers—the give-and-take of dialogue and learning—cannot be commodified without losing something. By making this clear, the authors in this section push the debate about the future of higher education a step forward.

STEAL THIS UNIVERSITY: THE RISE OF THE CORPORATE UNIVERSITY AND THE ACADEMIC LABOR MOVEMENT

Edited by Benjamin Johnson, Patrick Kavanagh, and Kevin Mattson

CHAPTER 1

None of Your Business

The Rise of the University of Phoenix and For-Profit Education—and Why It Will Fail Us All

Ana Marie Cox

Most discussions of for-profit higher education rely on the simple shock value of presenting education as a business to get readers’ attention. Calling students “customers,” not bothering with the humanities, skipping the physical accoutrements that make college the ivy-walled American dream—these are the characteristics editorial writers and reporters focus on when they want to throw harsh light onto the dark specter of higher education as a growth industry. Lost in that showman’s spotlight, however, is an even scarier fact: the specter is getting closer. In the past twenty years, more than 500 new for-profit colleges and universities have opened their doors—at the four- year level, for-profits have increased their numbers from 18 to 192.1 A quarter of the $750 billion spent each year on higher education stems from private, proprietary investment.2 Analysts predict this segment will grow by about 20 percent a year, until it finally displaces nonprofit education—or what for-profit educators call the “last remaining government monopoly in the world.”3 Today, forty for-profit education ventures trade publicly, up from one decade ago. We’ve moved beyond the moment when the idea of selling stock in a university was a laughable exception to the rule.

No other company epitomizes this exponential growth like the University of Phoenix and its parent company, the Apollo Group. Perhaps one of the most dramatic success stories of the ’90s “long boom,” and certainly one of the only success stories not interrupted by the dot.bomb implosion, Phoenix recently outpaced New York University to become the largest private university in the country. From its start in 1975 as a small, single-campus operation offering only a degree in business, Phoenix now grants bachelor’s, master’s, and even doctorates in such high-demand fields as nursing, teaching, and managing of information systems. It has grown to enroll more than one hundred thousand students on 116 campuses and “learning centers” in twenty-two states and around the world; an additional thirtyseven thousand students participate in its online component, touted as a highly efficient “computerized educational delivery system.”4 John Sperling, the founder of the University of Phoenix, told the Financial Times that his school was “the Cadillac of higher education.”5 At the same time, Peter Sperling, son of John, told the Independent, “McDonald’s has not aspired to be Maxim’s, but you know you’re going to get a good, healthy meal.”6 One could quibble with the aptness of the specific analogies, but the general metaphor is dead- on: Phoenix has done more than almost any other education enterprise to shift the meaning of college from that of a process one goes through to a product one buys.

In Higher Ed, Inc., former DeVry Institute administrator Steve Ruch lays out the recipe for the success of his own leading institution as well as Phoenix and most other for-profits:

Imagine a regionally accredited university with a tightly focused mission of preparing students for the world of work. Imagine that this institution offers undergraduate and graduate degree programs only in fields for which there is high marketplace demand. In fields for which there is little or no market demand, by either stud ents or employers, degree programs are not offered. Imagine also that this university runs year-round, fully utilizing its facilities during the day, evening, and weekends throughout the whole year. The fulltime faculty do not have tenure, and 90 percent of them are fully deployed to teach. The energy of this institution…is focused primarily on the success and satisfaction of its students.7

One might also imagine that this institution doesn’t have a library, insurance plans, dormitories, student groups, or liberal arts majors as is the case with most for-profits. To this efficient mix, Phoenix adds some specific innovations. The company owns no property whatsoever (its classes—scheduled mostly in the evening—are often held in the empty rooms of nearby traditional schools).

Phoenix avoids the traditional high default rate on student loans that has traditionally plagued many proprietary institutions by enrolling only working students 23 or older, most of whose employers gen erally subsidize the tuition. Phoenix ensures employers’ continued support by allowing companies to tailor these students’ curricula to their needs. And in order to optimize its access to government money, Phoenix has until recently identified online students as residential students in applications for federal student aid. The school has also structured schedules so that up to half of any given course’s class time may proceed without an instructor present.

These last two techniques aren’t legal (Phoenix was fined more than $6 million by the Department of Education in 1999 and ordered to return the aid it received through false reports), but all of them have been very lucrative.8 The Apollo Group’s gross annual earnings have almost doubled in just the past three years, climbing from $384 million in 1998 to $769 million in 2001.9 Even in the current, rather dim economic environment, industry insiders have pegged Phoenix and the Apollo Group as the “fastestgrowing, high-quality companies in the sector.”10 This kind of momentum demonstrates that we can no longer wonder “what if” for-profits steal students from traditional schools. The question today is “What now?”

Phoenix Ascending

John Sperling is a former professor at the University of California at San Jose and a graduate of Reed College (a leading liberal arts college) and Cambridge University. Sperling’s academic background, full of the kind of stuffiness and name-brand cachet associated with traditional educators, does not suggest the man he has become. The man who would go to the helm of the largest university in the country without a tenure system, much less any form of collective bargaining, was once a union organizer, president of his local American Federation of Teachers (AFT) branch and a member of its national board. Sperling has written hymns of praise about his graduate student days at the University of the California at Berkeley, where “we honed our academic skills by expounding and arguing theory, fact, and fiction—it was a moveable intellectual feast.”11 At the same time, he has created an approach to education centered exclusively on the development of “employability,” tailoring his courses to the demands of companies who pay for their workforce’s schooling. And the man who developed the prototype of Phoenix using hundreds of thousands of dollars in federal research grants is now one of the most vocal proponents for holding nonprofit colleges “accountable” for meeting specific “educational outcomes” and accuses traditional institutions of wasting taxpayer dollars.

Since founding the University of Phoenix, Sperling has put much of his considerable personal fortune (which now stands at more than $1 billion) toward pet projects that range from the mildly amusing to the outright heretical. For years, Sperling has been the primary investor in Seafire International, a company he founded to develop saltwater agriculture. In the late 1990s, Sperling teamed up with fellow multimillionaire George Soros in a campaign to legalize marijuana, a project that continues to this day. An interest in “life extension” prompted the formation of the Kronos Group, a New Age medical center dedicated to “Clinical Age Management.” Sperling’s most infamous investment outside Phoenix, however, is his single- handed support of Genetics Savings and Clone, a company that will allow individuals to “bank” their own (or anyone else’s) genetic material for later use, and Texas A&M University’s pet-cloning project. Sperling told Fortune that his cloning support stemmed originally from his interest in preserving his dog, Missy.12

In his autobiography, Sperling explains away such reversals and escapades: he’s not a hypocrite; he’s a rebel. As Thomas Frank has pointed out, businessmen of the past few decades have used such disassembling as a powerful weapon in their battle for public approval: “The real object of the ‘revolutionary’ management theory…[is] not efficiency or excellence or even empowerment, but a far more abstract goal: the political and social legitimacy of the corporation.”13 Talk of rebellion by billionaires requires the belief that business for profit is some underground affair, and not the default way of life for most of the world. If anything, Sperling’s role in turning the production of knowledge into the production of profit is less that of a lone rebel in hostile territory than that of a general leading a conquering army toward the last enclave of stubborn holdouts against the new regime.

And just as the enthusiasts of the “long boom” investment charade used the language of dissent to disguise—or rehabilitate—greed and self-promotion, Sperling’s rebel stance conceals a more conventional explanation for his roundabout journey from traditional scholar and union activist to corporate CEO. Upon examination, Sperling’s seemingly inexplicable shift from AFT officer to union buster stems more from petty revenge than from freethinking: He admits that being “voted out of the presidency of a faculty union…cured me of my socialist sentiments in favor of nonprofits.”14 Sperling’s rejection of the liberal arts and his decision to root out of his enterprise anything remotely resembling his glorious Berkeley days could be a rebellion against traditional academe, but it also happens to be the very foundation of Phoenix’s massive growth. The institution’s relentless focus on employability makes Phoenix classes appealing to the corporations that subsidize their employees’ classes and streamlines Phoenix’s operation. If you don’t teach liberal arts, you don’t need a library. If you don’t care about the learning that takes place outside of classrooms, you don’t need student unions or student publications. Forty years after finishing his “moveable feast,” Sperling is happy to serve fast food: “This is a corporation, not a social entity,” Sperling told one interviewer. “Coming here is not a rite of passage. We are not trying to develop their value systems or go in for that ‘expand their minds’ bullshit.”15

His hammering on “accountability” after Phoenix’s infant years of suckling at the federal teat is more rhetoric than reality. Though supporters of for-profits often point to their “market-enforced” efficiency, few for-profit institutions could afford to exist without Title IV monies. In 1999–2000, proprietary institutions made up a whopping 35.4 percent of all institutions participating in the Federal Pell Grant Program, and received about $945 million in Pell monies.16 Phoenix and other proprietary schools have spent millions in the past few years in lobbying both Congress and legislatures to keep those floodgates open, primarily by manipulating the accreditation procedures that determine an institution’s eligibility for federal loan programs. Phoenix is particularly motivated to loosen loan regulations: the Education Department audit of the $339 million in loans and $9 million in Pell Grants distributed by Phoenix in the mid-’90s found that the school did not provide enough instructional time to qualify for much of the money it had received in federal loans and grants. In addition, the university illegally included cost of living when calculating need for students in correspondence courses. In total, the department estimated that the university disbursed about $54 million more than what students were entitled to receive. (In its response, Phoenix officials asserted that their practices were “good for [the university’s] students, for American business, for America’s educational system, and for the global economy.”)17

Historically, proprietary institutions have met with resistance from what they call “the higher education establishment” regarding accreditation. Thus, Phoenix focuses its energy (and finances) on political influence as well as economic growth, with no apologies from Sperling: “Yes, we use money to get their attention—our American system of campaign finance gives us no other alternative.”18 Thanks to this, Sperling claims, the Apollo Group and Phoenix are “better known on the Hill than all but the state universities and the nationally-known private institutions.”19 According to the Center for Responsive Politics, in the 2000 election cycle alone the Apollo Group made campaign contributions of more than $178,000 (a top contributor, just behind the University of California, Harvard, Stanford, and Princeton). In addition, the Career Colleges Association (a largely for-profit higher education political action committee) donated more than $123,000, and other for-profit higher education political action committee (PACs) forked over around $190,000. Another comparison: Combined, the Apollo Group and Career College Association PACs last year contributed more than twice as much ($161,000) as the largest nonprofit donor, the American Association of University Women, which gave its entire $66,000 to the marginally less deregulation-happy Democrats.20 Compared with the multimillion- dollar bundles brought in by defense contractors and drug companies, the for-profit education sector is wading in the kiddie pool of political payoff, but it’s getting a bargain.

In March, the Senate confirmed Sally Stroup, the Apollo Group’s top lobbyist and a former congressional advisor on federal loan programs, as the chief higher education policymaker in the Department of Education. Stroup advised the chair of the Post-Secondary Education Committee from 1993 to 2001 and was instrumental in helping to draft the 1998 reauthorization of the Higher Education Act. The 1998 reauthorization reversed many of the harsher restrictions on for-profit schools (making it easier for them to appeal penalization on loan defaults), eliminated some of the more grueling aspects of the accreditation process (making surprise visits optional, and no longer requiring inspectors to visit every branch of a campus), redefined “institutions of higher education” to include for-profit schools rather than defining them as a separate category, and created a special proprietary schools liaison with the Education Department, a privilege previously reserved for historically black universities and community colleges.21

Secretary of Education Ronald Paige made a less high-profile but more influential appointment in 2001 when he gave Laura Palmer Noone, the president of the University of Phoenix, a place on the National Advisory Committee on Institutional Quality and Integrity. This committee makes recommendations to the secretary regarding changes in regional and national accreditation policies and standards, including those regulations that determine an institution’s eligibility for Title IV programs. The Higher Education Act is due for its next review and reauthorization in 2003.

Given his success in manipulating the system to his advantage, Sperling’s rebel stance is in fact the squarest behavior imaginable, fitting quite comfortably into the paneled club-room atmosphere of big business. Still, as amusing as his contradictions are, John Sperling would be of no interest at all if his tactics and bloviations had no effect or if Phoenix were just a roadside oddity. But it’s not. The success of Phoenix has transformed the maverick oddball into an influential model. Nonprofits are increasingly looking to for-profits for clues as to how to run their own institutions.

The Creeping For-Profit Ethos:

From Phoenix to the World

Clearly, nonprofits aren’t trying to become profitable, but administrators at traditional institutions have now turned to the corporate model as a solution to the age-old and tax-status-independent problems of budgets and cash flow. Things have changed since the University of Chicago dropped its football team or an administration approached wealthy alumni for a generous donation. The difference is twofold: when it comes to making cuts, athletics are less likely to be on the chopping block than departments and programs. In 1998, for example, the Board of Higher Education in Massachusetts suggested “establishing a program productivity review that requires campuses to eliminate, or provide a compelling reason for retaining, academic programs that have fewer than a minimum threshold of graduates per year for a period of three years.” As the authors of the report explained, “This will reduce expenditures.”22 The group also “urged a reduction in ‘public service’ projects that have little to do with students or teaching”—a sweeping definition that could mean anything from limiting student volunteer efforts to reducing community studies not financed by outside donors.23 (It should be noted that these sorts of programs are intended to develop young people’s civic sensibilities over their predilection toward self-interest.) And when it comes to bringing more revenue in, administrators are willing to sell more than just the name of a gymnasium—they’ll trade a college’s resources and reputation. In 1997, the University of Wisconsin began a joint, for-profit venture with the software firm Lotus to sell Wisconsin degrees worldwide.24 The always inventive Massachusetts Board of Higher Education touted its “collaborations with business and industry,” noting that “[a]ll campuses have developed alliances with local and regional business and industry to provide employee training and development opportunities, as well as research support.” 25 A harbinger of this coziness emerged in the late 1980s, when the University of Rochester caved to the demands of a major donor, Eastman Kodak Co., to rescind its acceptance of a graduate student employed by Fuji Photo Film, Inc., a major competitor of Kodak.26

Other specific instances of nonprofits appropriating for-profit techniques abound. Take, for instance, Ohio State University’s “selective investment” program, in which departments compete for million-dollar “prizes” by way of U.S. News and World Report rankings.27 More commonly, schools simply demand that teachers offer “blockbuster” or “heavy draw” courses like those related to professional sports or other “entertaining” subjects. Such moves resemble the financial discipline that governs Phoenix’s policy of developing courses only for which there is high demand. Numerous universities have started using their control over course content to license and then sell courseware to for-profit online entities. This sort of arrangement is a familiar pattern at Phoenix, where tightly structured, centrally developed lesson plans allow Phoenix’s administration to dictate how a professor spends time, right down to fifteen-minute intervals, and where copyrights keep hostage what knowledge those plans may hold. What’s more, streamlined courses are easier to shop out to low-paid adjunct professors.

There are dozens of more familiar ways that nonprofits have come to resemble for-profits, including the hiring of private companies to manage such capital-intensive areas as cafeteria service, campus housing, and college bookstores. At least the University of Phoenix has specific, logical reasons for pursuing such schemes: They centralize course development to take advantage of mass production. They direct funds to popular programs because no one goes to Phoenix to learn linguistics or art history, anyway. And collaborating with corporations makes sense because corporations are, for all intents and purposes, their real customers. Why have nonprofits picked up these habits? Why, for instance, did the Colorado higher education system decide in 1999 that “instead of the university deciding what ought to be taught, professors and chancellors will listen to what the chief executive officers say,” and require “every college in the state” to compile “a list of technology courses it offers”? These will be “given to company executives, who will tell the educators where they fall short.”28 Why has Tulane University president Scott S. Cowen spent the last few years hammering away at shared governance, lamenting that it “stand[s] in the way of quick, effective decision-making”?29

To be sure, part of the motivation to be more like for-profits is simply about the bottom line: adjuncts are cheaper, and centralized courses—and not having to pay professors to develop them—are cheaper, too. The sad news is that many students seem to want it that way. Indeed, research such as the annual freshman survey conducted by the Higher Education Research Institute at the University of California at Los Angeles provides sobering evidence that whether or not students actually attend for-profit institutions, they seem to share the same values. In response to the 2001 survey, students ranked their “life goals”: more than 75 percent said “being very well-off financially” was “very important.” Toward the bottom of the list: “influencing the political structure” (16 percent) and “writing original works” (13 percent).30 Everywhere young people turn in today’s culture, they get the message that money is the true measure of a life. Russell Jacoby, in Dogmatic Wisdom, cites a classic example: Students who apply for credit cards with “humanities” listed as their area of interest are turned down; when they reapply with “finance” as their interest, they get the card.31 What they do with the card suggests that it is not the making of money that concerns them, but the spending of it: UCLA’s survey revealed that 21.4 percent had overspent their budgets and 16.7 percent had what they termed “excessive credit card debt”—this at a time when the average credit debt of American college students is $2,748.32 “Financially rewarding” or “career oriented” do not sound like hallmarks of a good education to a traditional academic’s ear. But today’s students operate from the profit motive, and it makes sense for their schools to do so as well. DeVry’s Ruch explains, “The more traditional, abstract notion of learning for its own sake and the idea of cultivating knowledge that appears to lack utilitarian value does not resonate with a growing number of today’s students and their families.”33 Never mind that few college freshmen are equipped to decide what may or may not lack utilitarian value; for-profits simply give students what the students think they need. As Sperling has said, “Academia simply doesn’t understand this. They call it McEducation. What we do is every bit as much education as the Greek system that served as the model for the modern university. Greek educators prepared people for life. We prepare people for a life of work.”34

And in the terrible symmetry of the market, the loop is completed: what the students want, well, for-profits will do almost anything to maintain the illusion that that’s what they’re providing. We all know how well the consumer approach has maintained high-quality standards in, say, financial markets. In a sense, for-profit institutions like the University of Phoenix are the Enrons of higher education: built on a bubble of good feeling, sustained by a siphoning off of public goods and monies. It is possible to move too quickly in response to demand, and therefore teach badly but “efficiently.” Proprietary institutions call this “pleasing the customer” and, next to the flipped-collar nonchalance of the for-profit rebel, it’s the most common explanation put forward by their fans for the success of places like Phoenix. Catering to the practical needs of students undoubtedly appeals to the working adults that make up the overwhelming majority of Phoenix students, and it’s unlikely that it actively harms their education: You can learn as well at 8 P.M. as at 9 A.M. The assumed sensibilities of the sacred customer justify the more ideological decisions of for-profits as well. As DeVry’s Ruch sees it, he is simply empowering students: “It is ultimately the students who set the standard for what is appropriate and acceptable in terms of freedom of expression.” Why? “This philosophy is grounded in the standard customer-service orientation of any successful for-profit venture.”35 Phoenix in particular takes pride in dismissing professors who score poorly on student evaluations. As Phoenix administrators see it, pleasing students should determine the “eligibility [emphasis added] of faculty members to provide instruction.”36 For-profits rush new courses to market, eliminate old ones, employ part-time professionals as teachers, and accept credit for “life experiences,” including divorce—all for the sake of the customer.37

The “Costs” of For-Profit Education

These policies probably do please customers. Whether or not they add up to an education worth the investment is another matter. (Professors, for example, often report that their own sense of pedagogic mission gets steadily diluted as crowd-pleasing curricula create subordinate pressures to “get in the sandbox” with their eager-to-be-entertained charges, padding syllabi with movies, rock criticism, and various dogmatic interpretations of pop- cult transgression.) To define academic success as what the student is happy with risks not so much a low-quality education (though that is a possibility) but rather a narrow education, one focused on the here and now, “applicable skills,” and conventional wisdom. But treating the student as a consumer necessarily turns education into a product—something consumable with benefits that are immediate and gratifying: a soda, a movie, a pornographic website. Defenders of the for-profit faith say that giving students what they want ensures a good education, but what they actually mean is that students “get what they came for, and the institution is assured continued growth, ongoing market demand, and profitability.”38 Imagine running a government this way. It would lack revenues because citizen-consumers will have demanded an end to all taxation. (A not-toodistant possibility, really.) This kind of thinking is reminiscent of the student council candidate whose platform consisted of “longer lunch periods” and “a better prom.” And just as a longer lunch period won’t get students any closer to understanding algebra, so offering high-demand degrees doesn’t get students closer to actually understanding and participating in their world.

One of the hardest lessons to learn is knowledge isn’t necessarily what you want to know—in the sense that, well, we’d be happier not knowing about Rwandan genocide or the Dresden firebombing or the Nixon administration. Education as a product means, essentially, teaching only what students want to hear, whether that’s how to program in C++ or that everything is just fine, don’t worry your pretty little head, nothing needs to change. A degree in Microsoft network administration may get you a job, but when we talk of the “utility” of an education, it must mean something beyond that: it must mean gaining hard-won understanding; it must mean the ability to question the world around you. It must mean hearing things you don’t agree with and knowing things that upset you.

Yet nonprofits have already accepted at least the language of customer satisfaction. In addition to the rampant grade inflation that is a hallmark of for- and nonprofits alike, nonprofits pay attention to the desires of students when they trumpet graduate salaries and point to students’ “return on educational investment.”39 Once fluent in this dialect, it can only become easier for traditional schools to accept for-profits’ logic of education-ascommodity and to fully embrace the techniques they’ve taken tentative steps toward. Freemarketers would welcome this and all the “enforced efficiency” that would follow, but in this race to the bottom, existing for-profits will always win. Yes, they do have a head start—but they’re also cheating.

Why Not-For-Profits Will Fail, or the Underbelly of Market Logic

Of course, they’re cheating the customer—both in a moral and a fiduciary sense that might alarm even today’s business-savvy student. For-profits’ proponents often point to their respect for their student/consumers as a benefit that nonprofits are not in a position to offer. Professors at traditional schools, they say, “fear…the loss of traditional authority, as well as the growing demand for greater accountability in their work as teachers” that would come with a customer focus. All this talk of customer service, however, is belied by one simple fact: The customer is being ripped off.

On the for-profit side, administrators say their students choose the stripped- down, sped-up, frill-free education they offer because students don’t want to pay for the cafeterias, dorm rooms, and sports teams that drive up the cost of tuition at other schools. But those students aren’t saving their own money; they’re allowing proprietary schools to charge them for amenities the schools aren’t providing. Traditional education is expensive, and in part that’s because of the frills, student groups and insurance coverage and the like, but students at traditional schools are rarely charged for those frills. As educational economist Gordon C.Winston has shown, a combination of scholarships, grants, and simple discounting allows the average nonprofit to subsidize students to the tune of about $8,800 a year. That is, an education that costs (on average) $12,500 to produce is being sold to students for $3,700. Breaking the nonprofit group into private and public institutions doesn’t dilute the subsidy much, though the end price to the student differs.40

Phoenix, on the other hand, offers no such discount—neither do most other for-profits—because charging at least as much as the education costs to produce is what makes them who they are: Price-cost=profit. Traditional institutions operate at a loss: public universities sell a $10,150 education for $1,230; private schools sell a $15,310 education for $6,640.41 By contrast, the University of Phoenix generates a net return of $101 per student annually.42 And when one considers that the cost of a Phoenix education— $8,000—is about the same as tuition at a private institution with comparable programs, it all becomes clear: Students get much less than they pay for, and that’s not even considering the quality of education they get.43

Overcharging like this works because of the intimate relationships proprietary schools (especially Phoenix) enjoy with their clients, the employers of their students. These partnerships are so intertwined that the institutions basically become the exclusive providers of job training. In fact, Phoenix has created several business partnerships in which employees can take classes at a corporate training center and then apply those toward a University of Phoenix degree. Some nonprofit institutions have made similar deals, but not with the enthusiasm of Phoenix, which will accept corporate training as credit for up to 15 percent of a student’s degree.44 John Sears, Apollo’s vice president, argues that such a deal is a natural fit for employers concerned with getting the quickest education possible for their students. In such a situation, he told one reporter, “Which model makes more sense: the traditional four-year university, which is essentially a model of inefficiency? Or a virtual education machine like the University of Phoenix, which brings a total quality management discipline to academic cost control?”45

Such cooperation with employers raises some obvious concerns. For one: Is job training really education? The president and chief executive officer of the Apollo Group, Jorge Klor de Alva, says simply that “the lines between education and training are blurring.” But it would seem that one distinction remains clear: Mere training—especially training that’s designed so that you can, as de Alva says, “take what you learn and apply it to work immediately”— is poor preparation for the inevitable moment when the technology improves, methods change, and your training becomes out of date.46

By providing just-in-time education that’s designed to exact specification of what employers need right now, Phoenix has put the finishing touches on its model of education-as-consumer-product. Phoenix has built planned obsolescence into knowledge, and made an education as disposable as paper plates and Ikea furniture. This works brilliantly as a business plan. What are you going to do when your training becomes out of date? Well, go out and buy some more, of course. If you don’t, your employer can simply buy a new worker, with more cutting-edge content.

This market logic also works to discipline students as they pursue their training—all to the detriment of free speech and thought. Already, Sperling justifies the absence of liberal arts courses at Phoenix by saying the employers who subsidize students “won’t support Greeks and Romans.”47 There are surely other subjects that employers would rather keep their staff from studying: Would ExxonMobil want its people studying the effect of greenhouse gases? Would IBM want a programmer to learn about his company’s ties to the Nazis?

Considering these rather problematic possibilities, it’s unlikely that nonprofits will take the exact same steps as for-profits, but it’s worth exploring what might happen if they did. Could a nonprofit become as cost-effective as the University of Phoenix, wiping out residential features, libraries, and such? It seems impossible at a large state school, but what about a small private commuter college? Or a community college? These two types of institutions are Phoenix’s real competitors and are schools that stand to lose the most students when Phoenix or a company like it moves into town. They also have the fewest campus amenities to begin with. But should they go the cost- cutting route, they’d be faced with a problem that proprietary schools always escape: once you cut student services, who provides them? This is the secret of for-profit education. While Phoenix relies upon the federal government much more than its leaders would ever admit, it also gets a free ride on the backs of nonprofit institutions.

A huge chunk of the University of Phoenix’s savings, for instance, comes out of its insistence that a “virtual library”—a collection of nine thousand or so electronic journals—is a reasonable substitute for the real thing. The head of Phoenix’s “learning research center” has said that books are “far less critical than they were 30 years ago when I was in college.”48 Of course, books are just as central as they’ve ever been, but they’re also about as expensive. Last year, Harvard spent $22 million on its library of 14 million volumes; at the low end, tiny McMaster Divinity College spent $854,000 on its 1.8 million volume library. The average university research library contains 3.6 million volumes and costs about $1.9 million a year.49 When the University of Phoenix negotiated its way into New Jersey—where strict accreditation standards had stalled it—the school overcame the state’s provision that all institutions of higher education have a library of at least fifty thousand volumes by purchasing access to New Jersey City University’s 245,000 volume library in exchange for five computers and shared access to a suite of business databases—a deal worth about $25,000 to the public university.50

Places such as Phoenix can get away with eliminating libraries in most cases because their students can use public ones, sometimes the libraries of the very institutions that have lost students to for-profits. Jacqueline Raphel and Shelia Tobias have reported that “Phoenix frequently piggybacks on the ‘competition.’” According to Raphel and Tobias, students from Phoenix’s Santa Teresa campus in New Mexico, located immediately across the border from the University of Texas at El Paso, use the public school’s library resources to such an extent that “reference librarians sometimes have to ask the Phoenix students to step aside so that the UTEP students’ needs can be accommodated.”51

This leeching off public resources extends the for-profit labor model, as well. Phoenix’s practice of hiring only part-time professors who are actively working in the field they teach allows it to take advantage of human capital investment made elsewhere: at the universities that support full-time teachers who train the next generation of scholars. This generous transfer-credit policy allows it to do the same with students—essentially inflating its graduation and enrollment statistics without actually having to educate every student. Traditional schools remain caught in an unyielding conundrum: There has to be a first place where people learn—where, for example, students can get the M.A. that’s the only requirement to teach at Phoenix. A traditional college literally can’t afford to save money the way Phoenix does.

What the Future Holds

This longer range view shows that pursuing corporate models could be the end of higher education as we know it rather than, as some insist, the next step forward. However, even the oldest universities sometimes don’t look much past tomorrow, and at its present pace, the for-profit approach seems destined to triumph. It may not be that the University of Phoenix is, as Sperling has said, in commissar-like fashion, “moving inexorably eastward,” but the sleight-of-hand policy changes that inch nonprofits evercloser to a corporate form may mean that most traditional schools become for-profit in everything but tax status.

The myth of social mobility notwithstanding, American higher education has always been poised to split in two: on the one hand, expensive, elite private schools for those who can afford them (and the handful of gentrifying “public ivies” like Michigan and Berkeley); on the other, resource-strapped, poorly funded public institutions for everyone else. The rise of the for- profit has merely exacerbated this divide, precisely because in the for- profit future, only the richest private universities may thrive. The social capital afforded by an Ivy League diploma is worth protecting (why dilute the brand with branch campuses of Yale™?), and selling at a premium. The humanities will become (some might argue they’ll simply continue to be) an affluent affectation, like $600 Prada bike messenger bags. The less well off schools will be forced to compete against the elites, and will either run themselves into the ground doing so, or will adopt all the for-profit tactics that they can, perhaps even chucking libraries, dorms, departments (what’s the percentage in a classics department?). Another strategy would take them to for-profit status by half measures: they’ll charge more for “low-demand” courses, offer discounts to students who give up their library privileges, create an airline-esque class system in which “first class” students get more comfortable chairs and better computers in exchange for a premium tuition. And then who knows? If an institution acts like a corporation, it becomes a corporation.

Those who wish to see higher education maintain its relative freedom and accessibility can’t rely on the incongruity of education being treated as a consumer product to make their case, or use traditional institutions’ moral superiority to attract students. With continuing education becoming something of a political jackpot (like helping children or the elderly, who could possibly be against continuing education?), for-profit lobbyists are positioned to push their clients as the ideal providers of continuing education, and therefore the likely recipients of whatever federal or state aid is available. And with state aid will come more acceptance of proprietary institutions. Greater acceptance, in turn, will accelerate the continued erosion of regional and national accreditation standards.

As mentioned above, for-profit lobbyists are already busy negotiating changes to the regional and national accreditation systems, making it easier for them to compete with traditional schools. Lobbyists go state by state to check the power of state legislatures over regional accrediting bodies. Regional accrediting standards are often flexible, but state laws can toughen—or weaken—them. That is, especially if unions and organizations like the American Association of University Professors exert pressure on them. Even against counterpressure, the for-profit logic is bulldozing ahead.

One proposal would guarantee accreditation to any school that is able to prove that a certain percentage of its graduates had obtained jobs. Clearly, proprietary schools, with their close corporate relationships, would be the institutions to benefit from this. Another change would allow for-profits to hire less-qualified and thus cheaper instructors. Traditional institutions must have a minimum number of professors with Ph.D.’s in order to grant degrees in any particular field. For-profit lobbyists would like to reduce this minimum number for their clients.

For-profits would also love to dip their fingers into the pot of state loans and grants that until now local legislatures have been reluctant to give them. Proprietary administrators argue, as the executive vice president of ITT Technical Institutes has said, “If we’re good enough to pass state standards, to meet the bar where states raised it, then our students should have fair standing to access taxpayer dollars to finance their education.”52 Critics point out that this would essentially amount to corporate welfare. As with federal grants and loans, the students who receive such scholarships would simply be the conduits for the money going from taxpayers to institutional profits.

There are changes that are more seriously afoot at the national level, where the Education Department creates guidelines for all regional accreditation and sets up the requirement for federal loan eligibility. For- profits would like to eliminate a federal loan eligibility requirement that students receive at least twelve hours of in-class instruction a week to be considered full time. They also want to abolish a federal law that prohibits colleges from providing bonuses or other incentive payments to admissions officers or financial-aid administrators for enrolling students. According to the Chronicle of Higher Education, lobbyists for for-profits say “the law does not allow employees to be financially rewarded for exceptional performance.” That is sort of the point, though, as the regulation was created in response to recruiters from diploma mills, who earned such bonuses by enrolling clearly unqualified students out of unemployment centers. The students, who generally flunked out, were simply a means by which proprietary schools received federal loans. But the most important of the for-profit initiatives is the push to revise Education Department rules stipulating that at least 10 percent of a forprofit’s income must come from sources other than federal aid. Once this restriction is lifted, the proprietary schools are in a position to siphon off a much larger portion of the aid available to all schools—another blow to the viability of resource-poor colleges. Phoenix and its cohorts are in essence pushing for the deregulation of higher education, and it could have the same disastrous results that followed the deregulation of savings and loans, telecom businesses, and airlines. The best response, then, is to push to maintain and strengthen higher education regulation at the local, state, and federal levels. Ideally, one could put an end to federal and state student aid for students at for-profits, perhaps legislate a definition of what a college degree is, including a minimum number of credits in various disciplines. One could argue that such a policy is akin to the national standardized tests that are being proposed at the K-12 level. Still, imagine how outraged the happily consumerist students who responded to the UCLA survey would be if they were suddenly held accountable for their educations. Then again, realism enters the picture: these young people don’t vote. (The UCLA study also found this class to have the least interest in politics in years.)53 Imagine, as well, the response of capitalist- friendly courts to a restraint-of-trade challenge that for-profits would inevitably bring in response to any harsh regulations actually enacted. So what looks on paper to be the most promising path to curbing for-profits’ growth is also the steepest one. In any event, legislation will not stanch what is essentially a seismic cultural shift. To counter the predominance of for-profit education, nonprofit schools need to assert the autonomy of their mission—while also introducing important changes in their own institutional culture.

Traditional universities could stop competing with for-profits by trying to be like them and instead look at why proprietary schools appeal to students. Understanding this appeal doesn’t mandate mimicking the for- profit mantra of pursuing customer satisfaction at every level. Schools could compete with the practical advantages of for-profits: year-round campuses, schedules convenient to nontraditional students (who are, statistically speaking, actually very traditional). There are ways to moderately accelerate programs without losing their spirit.

More radically, faculty at traditional schools could make a preemptive strike at tenure. Already decreasing at an alarming rate, the number of tenured positions is heading toward zero—not because tenure as an institution is being abolished, but because it’s eroding. Universities replace tenure- track jobs with full-time adjuncts, and tenured professors continue to see academic freedom as a reward rather than as a right. For faculties to take the initiative and actively seek a replacement for tenure through collective bargaining would benefit professors at traditional schools by strengthening their power to maintain the standards of liberal education. A contract that protected academic freedom could also extend that right to adjuncts, librarians, teaching assistants, and faculty at for-profit schools, for whom tenure has rarely existed. The power of an entire academic community would be something to reckon with. The bond that would be formed between teachers at for-profits and nonprofits could strengthen both their positions at their respective institutions, and break down the stereotypes (of being elitist and condescending, of being poorly educated and unqualified) that currently keep them apart.

Still, a realist might ask, what about the students who just want jobs? What about the students’ parents, who think academics exist in ivory towers and come down only to indoctrinate their children into communism, feminism, and same-sex romance? What about the policymakers who look at universities and see nothing but the red ink flowing out of them? These are obstacles that can be addressed only by deep cultural shifts. We need changes in our political culture that articulate wider civic needs over shortterm benefits. For instance, what about a wider discussion about universal military service—the sort that would draft all young people, no matter their income or connections, and that would induce a much more realistic debate about the use of armed forces abroad? What about requiring, as some of the original advocates for AmeriCorps proposed, mandatory community service as a means of educating young people for the responsibilities of active citizenship? We need to have political discussions in this country that challenge us to become something more than just self-interested individuals. In this case, we need a higher education policy that emphasizes the need for wellrounded, thoughtful citizens.