Changing Higher Education

One wonders why they protest so much??

In Another ranking of higher education - with a radical twist, I reported that OECD was thinking of doing international comparisons of national outcome measures for higher education.  I suggested that this focus on outcomes rather than inputs might lead to an interesting and enlightening set of information. 

It is not surprising that the American Council on Education is working to derail this effort since that organization has been very active in efforts to stop outcomes testing in the US.  Once again, David Ward (Pres. of ACE) argues that there are too many variables - funding methods, mission, etc. Further, he raises the possibility that the national rankings will be used to rank individual institutions, and that funding agencies might misuse this data.   Clearly, ACE is simply continuing to trot out its usual “we are too complicated to be held accountable” arguments, in this case bolstered by a threat of yet another ranking system for institutions of higher education. 

It is not obvious that the OECD effort would produce data that could be used to create another ranking system, given the way that previous OECD data has been reported.  However, since there are a  number of such ranking systems already in existence that focus on input measures, the fact that Ward focuses his displeasure on this particular possibility would seem to indicate that he thinks rankings based on outputs are even more misleading than rankings based on inputs. I would have argued the opposite. 

There are some obvious weaknesses in the system that OECD has outlined.  However, I think American higher education would be greatly strengthened if its leaders stopped focusing on preventing accountability measures, and worked instead to make sure the right measures exist and are adopted. 

Interesting activity at the for-profit/non-profit interface: Laureate

In my most recent post, I looked at some interesting relationships between Kaplan and several traditional non-profit institutions of higher education.  In this post, I want to look at some of the relationships that Laureate is developing as it continues to evolve its globalization strategy.

Laureate Education, like Kaplan, has a branch accredited by the North Central Association - Walden University.  Walden (which incorporated the old National Technological University) is an exclusively on-line provider and so can be accessed around the world.  Walden is just one component of Laureate’s online stable which also includes Laureate online education, BV, OnlineLearning.net, and Canter.  However, the main thrust of Laureate’s strategy is bricks and mortar in the global arena.  It  has created its global network of institutions of higher education primarily by buying existing accredited private colleges and universities.  This network currently has nearly 250,000 students world-wide.  Laureate has begun to seek US accreditation for several of its offshore schools, and, for example, its Glion Institute of Higher Education and Les Roches Swiss Hotel Association of Hotel Management have both been accredited by the New England Association of Schools and Colleges.

Recently, Laureate has begun to expand into regions that either do not permit for-profit higher education, or that require local ownership.  This has led the company to create other types of arrangements than they have used in the past. One example is the November 2006 arrangement with Istanbul Bilgi University, a prominent non-profit Turkish university.  Turkey does not allow for-profit higher education, so a typical purchase agreement was not possible. In this case, Laureate, in partnership with parties in Turkey,  has provided 50% of the funding for a company that will provide technology, financial management, student and human resource services to Bilgi.  As part of this arrangement, Bilgi joins the Laureate University Network, which opens up opportunities for Bilgi students for study abroad and exchange programs at campuses of other members of the Network.  Additional goals of this partnership are reported to be expansion of Bilgi in Turkey, and creation of new campuses in other countries of the Middle East and Russia.  Thus, Laureate and Bilgi have found a cooperative arrangement that plays to the strengths or special advantages of each.  As a consequence, Laureate will gain a platform for entry into the Middle East, and  Bilgi will benefit from Laureate’s expertise in management and gain access to capital markets that will enable it to expand aggressively. One has to imagine that Laureate's experience in entering new markets will play a major role in Bilgi's expansion plans.  Could well be a win-win situation.

Interesting activity at the for-profit/non-profit interface: Kaplan

Conventional wisdom might suggest that for-profit and non-profit higher education institutions have nothing in common, and should stay clear of each other.  However,  there are some quite interesting areas where the two are beginning to work together, leveraging on each other’s strengths.  In fact, the arrangements look suspiciously like outsourcing of modules in the education chain.  Although there are many for-profits collaborating with the non-profits, I will focus on two of the largest for-profit higher education corporations, Kaplan and Laureate.   This post will look at Kaplan, and a subsequent post will consider a very different set of partnerships beginning to be developed by Laureate. 

For-profit Kaplan has its own North-Central-accredited undergraduate and graduate programs in both campus and online modes.  However, in addition, it runs numerous programs in partnership with traditional non-profit institutions of higher education.   One group of these programs is designed for international students whose preparation would not normally gain them admission into the partner institutions, or who feel that they need a transition period of cultural acclimation before entering the partner institutions.  Partnerships of this type are primarily with United Kingdom institutions: Nottingham Trent International College, Sheffield International College, Liverpool International College and Glasgow International College.  Each of these programs is housed on the campus of the partner institution. In each case, Kaplan provides international students with a one-year (two-year in some cases) course that focuses on building key academic skills and appropriate background work, as well as intensive English language instruction as needed.   Upon graduation from this partnership program, the student is guaranteed entry into the regular undergraduate or graduate programs of the partner institution.  For those going into regular undergraduate programs, entry is at either the first- or second-year level, depending on the specifics of the program.

The breakdown of the price-productivity-cost model of private research universities

I have learned a lot recently  participating in a project on Global Higher Education led by Paul Jansen and Debby Bielak of McKinsey &Co.  The project is sponsored by the Forum for the Future of Higher Education. Paul and Debby have collected a group of university CFO’s, a college president, and an old provost (me) together to apply a McKinsey sector-wide analysis to higher education. It is fascinating to see what such an analysis tells us about our world.

The team recently made a presentation entitled Higher Education Trends and Risks: Implications for Leading Institutions and Sector Performance  at the annual Aspen Symposium of the Forum.  My assignment was to talk about trends and risks for private research universities - in 15 minutes.  I approached this impossible task by first apologizing to the audience for the egregious simplifications that I would have to make in order to describe the situation in 15 minutes, and then introduced my simple one-parameter model to describe the problems facing the research university.  Since this model met with some approval at the Symposium, I thought it might be worth repeating here.

I began by describing what I called our Mission Box. Excellence - as defined by us in a very self-referential way - has become the visible driver of our mission.  Our mission, in a very general way, focuses on traditional undergraduate education, graduate and professional education, and research.  Focusing on excellence means that if it is worth doing (i.e. one of our mission foci), it is worth doing better.  Doing it better costs more money, so at some point the customer can’t, or won’t pay for it, so we lose money.  As a consequence, over time, losing money has become our very visible surrogate for excellence (my one parameter model). (Clayton Christensen, who also spoke at the symposium, has pointed out the often catastrophic outcomes of making your product better than the customer wants or needs. See also Disruptive Technologies:when great universities fail? March 3, 2006)

An unusual new initiative in outcome measures and transparency

 The President's Forum, a consortium led by Excelsior College of adult-serving higher education institutions, announced on October 22 a new initiative on transparency and accountability.  This new initiative, called Transparency by Design,  provides a comprehensive action plan aimed at elevating the quality of higher education available to adults. A central component of this plan will be to provide program-specific outcomes data that will help students to make informed decisions about their education investment:

Transparency by Design institutions, which currently number 10 colleges and universities, plan to issue annual Transparency By Design Reports in the first quarter of each year, starting in 2009. These reports will include comprehensive data for each course of study, including student demographics, completion rates, costs, student engagement and knowledge and skills learned. Most important, Transparency By Design Reports will include outcomes at the program specialization level, allowing prospective students to assess how well a program will prepare them for their professional pursuits.

This initiative is obviously one of many recent efforts to create higher education outcomes measures that can be useful to prospective students.  What is most interesting about this initiative, however, is that the consortium members are a mix of non-profit and for-profit adult- focused higher education institutions.  On the for profit-side are such well known names as Kaplan and Capella Universities, while on the non-profit side one finds the relatively new Western Governors University and the older and well regarded Fielding Graduate University.

This partnership of the for- and non-profit sectors to provide comparative outcomes data strikes me as a landmark event with considerable importance for the evolution of higher education.  From my perspective, the sooner we get beyond considering education to be of high or low quality simply based on its profit status, and move to looking at real outcomes, the better off we shall all be.

Inventing the global university: the competition among the for-profits increases

Up until now, Laureate Education has been pretty much the only institution working to build a truly global university.  Most recently, Laureate was taken private by a group of heavy hitters (including the endowment funds of Stanford and Harvard) so that it could take an even more aggressive approach to creating the first really global higher education entity (see Doug Becker moves to China, July 26, 2007).   However, Apollo Group, which previously has had a relatively  unsuccessful venture into globalization, has now taken on a substantial partner itself with the goal of stepping up the competition with Laureate. 

Apollo has partnered  with the Carlyle Group to form a $1B joint venture called Apollo Global to invest in education services outside the US.  Details are scarce at the moment, but it appears likely that the focus of this new enterprise will be on China, India, and Latin America.  Brooke B. Coburn, Managing Director and Co-head of Carlyle Venture Partners III, L.P., said in a Carlyle press release, “Global demand for higher education is strong.  Apollo Group’s operational expertise coupled with Carlyle’s global network make this a powerful partnership.” Some financial analysts are suggesting that the approach taken by this new partnership will be similar to that taken by Laureate - buying existing schools in the target regions.   It will be very interesting to learn more about the strategy of this new player - and to watch the response of Laureate.

The evolving globalization of higher education

We are becoming accustomed to daily news reports that one US institution of higher education or another is starting a campus or a program somewhere abroad.  We also see a number of other countries (e.g. Australia, England) that have numerous institutions of higher education that are very active in setting up shop in foreign countries, primarily in Asia or Africa.   However,  The Hankyoreh, a South Korean newspaper, recently published an article reminding one that globalization does not work in just one direction.

Seoul National University (SNU) announced on Thursday that it has plans to build a branch learning center in Los Angeles or San Francisco, in the western United States, where there are large numbers of Koreans. The facility will be a place where overseas Koreans and students can take Korean studies courses or where SNU students can go and work as interns or to take classes from professors in the region.

Doug Becker moves to China

I have long believed that real innovation in higher education will not come in the US, but from some area such as China or India where there are enormous higher education needs, and greatly constrained resources compared to those needs.  It is there that the very expensive US model of higher education will run prove most ineffective.  Apparently Doug Becker, Chairman and CEO of Laureate Education, is of the same opinion. He has just announced that he and his family are moving from Baltimore ( the home of Laureate) to Hong Kong so that he can establish a new Asia headquarters there.  Doug and his team have been incredibly innovative in the way they have built Laureate thus far, and I am sure they intend to bring that innovative spirit to Asia with them.   

In his announcement of his move to Laureate employees, Doug also noted that the investors behind the recent private equity buyout of Laureate included Paul Allen, George Soros, and the endowment of Harvard University (see also Can the stock market understand for-profit higher education? Feb.23, 2007).  Harvard must be hedging its bets on the future of higher education!

Changing US output in science and technology

The NSF just released two interesting reports. Changing US Output of Scientific Articles:1988-2003 is a detailed analysis of publications in refereed journals over that time period.  The companion publication, Changing Research and Publication Environment in American Research Universities, is based on interviews with scientists in 9 leading US research universities.

The first report extends and quantifies the well known result that the American share of international research publications has been dropping over time as other countries build their scientific and engineering capabilities.  More importantly, it also shows the very surprising result that the absolute number of US scientific publications in peer reviewed journals has plateaued or dropped since the early 1990s. The second report seeks to understand that flattening  of US research output.

At last, the Democratic alternative to the McKeon tuition cap proposal

“I think higher education doesn’t win elections, but no candidate wants to be accused of ignoring the issue of college access.  It is important to have something in your list of policies that is relatively catchy, simple and credible.”
Robert Shireman, president of the Institute for College Access and Success, as quoted in insidehighereducation.com

I described in an earlier post (Price and Cost in Higher Education: price and the political-economic system, Jan 11, 2007)some of the political forces that make higher education access an increasingly important priority of government. I also noted that this powerful trend had to be accommodate within the reality that shrinking federal resources preclude additional government outlays to increase access. My earlier post described some of the approaches being proposed to accomplish both of these ends.   One of these approaches, championed by Republican Rep. “Buck” McKeon, called for penalties for colleges whose tuition increases exceeded the CPI increase by some amount- caps on tuition increases, in effect.   

Now that the Democrats have taken over the Congress, I have been awaiting the Democratic alternatives for solving this problem.  It is now beginning to take shape. The Chronicle of Higher Education headline captures this bold new Democratic thinking:

Congress Looks to Expand Tuition Tax Credits, May Tax Higher Education to Cover Costs