Does the future of higher education belong to the for-profit sector?

My friend Joe Duffey very kindly called to my attention a very interesting article that I had somehow missed in Change Magazine.   It is  A Tectonic Shift in Global Higher Education, by John Daniel, Asha Kanwar, and Stamenka Uvalic-Trumbic.  Sir John Daniel is a person of wide experience in higher education, having headed Laurentian University and the Open University, and served as assistant director-general for education at NATO.  When he co-authors an article predicting a “Tectonic Shift” in higher education, it deserves some attention.

The authors point out that the number of higher education students worldwide is growing much more rapidly than was predicted, and will probably reach 120 million by 2010.  Not surprisingly, this growth is centered in developing countries.  For example, China passed the US in number of students enrolled in higher ed in 2005, and Malaysia plans to increase enrollments almost three-fold in the next four years.  This anticipated growth will require resources beyond those that developing countries can afford, and they will have to look for new approaches to the provision of higher education.  The authors point out that “developing countries will soon account for the majority of enrollments in higher education worldwide”, and that therefore the approaches adopted by these countries “will effectively define the global profile of higher education in the 21st century.” Daniel et al argue that the most likely provider - and therefore the group that most impacts the evolving global profile of higher education - will turn out to be for-profit higher education. 

(As an aside, my post NAS report on change in the university, Feb. 20, 2006, links to a note that I published in the NAS journal Issues in Science and Technology, which concluded “Finally, much of the educational innovation over the next few decades probably will come from Asia, with its enormous need to provide mass higher education inexpensively, and from the for-profit sector, which sees a huge potential worldwide marketplace.”)

Private for-profit higher education is estimated to be a $350 billion enterprise worldwide.  The authors estimate that over the next few decades, an additional 150 million students might enter higher education - considerably more than today’s totals.  This market and its potential profits should be irresistible to the for-profit sector, and only the for-profit sector will have access to sufficient resources to build the infrastructure, etc necessary to begin to meet the needs.  The authors do not ignore the potential contributions of the cross-border programs of the non-profit higher education world, but give the motivational and resource edge to the for-profit world.  They do note, however, the important point that essentially every cross-border program is for-profit in the receiving country, what ever type of institution provides it.  Non profit universities, whether public or private, are hard put to rationalize running a cross-border program that does not at least pay for itself.   Thus, although the size of the expected profit margins may differ from the for-profit to the non-profit sector, neither can ignore the profit motive in a cross-border program.

However, for the for- profit sector to be successful in making inroads into what is now a non-profit or governmental world, the authors suggest that the sector must adopt some not-quite-so obvious principles.   In particular, the sector must show that it is widening access, thereby contributing to the public good. Clearly, in order to achieve this, the business models must be such that costs are significantly below those currently found in the developed world.  Even with lower costs, however, the authors suggest that the for-profits will have to build need based financial aid into their business models.  The authors also note that cross-border programs (both for-profit and non-profit) will only be successful over the long term if they  take into account the social, cultural, and ethnic environment in the receiving country.

Quality control is a major issue in cross-border education, of course. Governments will have to become much more proactive, and active, in regulating and monitoring higher education.  Although the authors do not discuss it, my guess is that this area will provide as large a tectonic shift as will the shift from non-profit to for-profit. As the number of providers grows exponentially, the approaches to quality control must simplify apace in order to keep up.  The time- and resource- consuming process of accreditation as we know it will be overwhelmed by  the growth in number of institutions. 

Quality control is difficult in higher education because of lack of quantifiable outcomes - or at least, our concern that the currently  quantifiable outcomes are often the least important outcomes of education -  leading to the “soft” procedures we know so well.  This necessity to monitor a rapidly increasing set of providers will, it seems to me, create an unstoppable global movement towards some definitions of educational outcomes that can be used for quality monitoring.  A second-best measure will be judged to be better than no measure at all.   We already see the effects of such a movement in the US, although I have argued that it has different origins at this time ( Spellings and Transparency, Oct.3,2006 . See also Better ranking-but do we need them, Oct. 11, 2006 ).   Under such circumstances, the non-profit higher education community - and probably the developing world - would be well served if we in the non-profit community  focused more of our attention on developing outcome measures that measure growth in areas that we feel are most important in producing a truly educated individual.  It would be nice if the competition were forced to play by our rules!