Changing Higher Education

Another sad story about outcomes assessment

Kevin Carey has written a number of very compelling articles relating to the use of outcomes measures in higher education(see Educational value added, Sept.1, 2006) .  One of his more recent was an op-ed, Blocking Public Comparisons Obstructs Knowledge, Too, in the Chronicle of Higher Education.   His “case study” for this article is the State University of New York at Buffalo, which apparently is suffering mightily from the economic downturn.  The President, John B. Simpson is turning to the legislature for both increased aid, and the ability to raise tuition.  However, as Carey points out:

Yet even as the SUNY system lurches toward financial crisis, it has squandered a golden opportunity to make its case to the taxpayers and their elected representatives, to demonstrate success in doing what the majority of those people care most about: helping students learn. By refusing to provide public, comparable measures of student-learning results, New York's great public-university system has sown the seeds of long-term marginalization. In that, too, it has plenty of company nationwide.

The situation facing President Simpson is particularly difficult because in 2003 the SUNY Trustees passed a resolution calling on the SUNY system to come up with uniform “before-after”measures of student attainment of general education goals. In other words, value added measures in the core area of general education.

What Carey describes as happening after that is not surprising -nor is it the type of response that is limited to the SUNY system:     

But in the year following the resolution, SUNY leadership was subjected to intense pressure from New York's Faculty Senate and other interest groups opposed to the plan. As a result, SUNY put in place a watered-down scheme in 2004. Value-added estimates of learning growth were no longer required. Instead of common systemwide measures, every university would choose its own standards, tests, and sampling procedures, making institutional comparisons difficult. They would also be made impossible because campus-specific data would be "used for confidential in-house discussions." The results, it was stressed, should never be used to "punish, publicly compare or embarrass faculty, courses, programs, departments, or institutions either individually or collectively.

Unfortunately, as Carey points out, even the resulting hodgepodge of measures contained some embarrassing results for specific programs, so additional efforts were required to water down the program.  He reports that a system task force studying implementation of the assessment program stated:

Institutions responded very strongly against the requirement that institutions must report to System Administration the percentage of students who 'exceed, meet, approach, or fail to meet standards

Can for-profit education save the free press?

The Washington Post Company has just released its 2008 earnings report.  The Washington Post and Newsweek, like most other print media, are having financial difficulties under the two pronged attack of the digital revolution and the severe downturn in the economy.  The two had an operating loss of about $212 M in 2008, compared to an operating income of about $190M in 2007 .  The television broadcasting division also saw decreasing operating income (-13%), but still had a substantial positive contribution of  $123M to the company’s bottom line. On the traditional communications business side of the leger, the big winner was the cable television division, which achieved an operating income of $162M, or a 31% increase above 2007.

The most profitable and fastest growing division of the Washington Post Company was its division that has little to do with communication in the traditional sense - Kaplan.  Kaplan’s operating income was $206M, up 38% from 2007.  Education almost covered the loses of the company’s flagship print divisions!  

Unfortunately, the print divisions are losing ground faster than the education division can grow, so this rough balance is unlikely to persist unless the print divisions can make a major turn-around.  Thus, the answer to the question of the title of this post is probably “no”, at least insofar as the question relates to the Washington Post Company. However, the Kaplan division is obviously going to be a major component of the Company’s attempts to find a solution to its problems. 

The other information that can be gleaned from this is that at least one company in the for-profit education field is growing rapidly in these difficult times. Maybe every corporation should have a for-profit education arm?

A major contribution to our understanding of for-profit higher education

As I went over the not-done parts of my “to do” list from 2008, I found that I had never gotten around to a post about an excellent book on for-profit higher education written by two of my USC colleagues, Bill Tierney and Gib Hentschke.  So although it is a year late - I want to comment on what is now not -so-new, but still excellent New Players, Different Game: Understanding the Rise of For-Profit Colleges and Universities, by William G. Tierney and Guilbert C. Hentschke.

Few issues in higher education produce more heat than the role of for-profit higher education.  Extreme positions abound, generally based on statements of high principle that are only marginally related to real conditions.  Rational discussions based on reality and facts are hard to find.   In this charged atmosphere, Tierney and Hentschke (T&H) have done an excellent job of providing an even-handed, broadly ranging discussion of for-profit higher education that is based on real data involving both for-profit and non-profit worlds of higher education
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T&H begin by boldly stating on page 1 that “for-profit institutions represent a new, fundamentally distinct type of postsecondary education.” They then spend the next 200 pages comparing and contrasting the for-profit colleges and universities (FPCUs) with traditional non-profit colleges and universities (TCUs).  They look at customers, organization and governance, aspirations and missions, outcomes, etc. They describe strengths and weaknesses of each system with respect to a variety of  viewpoints and policy perspectives.  Importantly, throughout the book, T&H remind us that there is not “a” model either for FPCUs or for TCUs.  Rather, each system is notable for its considerable diversity in most of the parameters that they consider.

Along the way, they invoke Clayton Christensen’s powerful theory of disruptive technologies  to consider ongoing change within the TCUs as compared to the innovations being produced by the FPCUs.  In this context, T&H pose the theme for their work: “The question, then, is not simply whether for-profits are at work inventing and implementing disruptive technologies, but how these technologies will be manipulated and used in advancing a postsecondary education.” 

In order to answer this question, T&H consider the changing environment for higher education generally, and ways in which some of these changes have favored the for-profit sector. They provide solid data on growth in the for-profit sector - types of students, types of programs, degrees and certificates, revenues, etc.  They also look closely at differences in governance and finance between the two sectors, and how these differences drive many of the external aspects of the sectors. Important questions of  public policy relating to differing possible outcomes of higher education are raised and discussed at some length. 

The final chapter reinforces the five themes that have run through the book and that the authors believe will frame postsecondary education in the coming decades: the changing environment for higher education generally; innovation in higher education; issues of delivery and content; increasing amalgamation of cultures due to blurring borders between the FPCU and TCU sectors; and increasing differentiation between individual institutions.

Overall, this is an outstanding and, in many ways pathbreaking, contribution to our understanding of the ongoing evolution of postsecondary education in the United States.  I recommend it to all who are interested in more fully understanding the for-profit higher education sector.

Laureate keeps on building a global brand

Doug Becker, the CEO and Chairman of Laureate, has done a masterful job of inventing a truly global university.  He and his excellent team have built a very visible, positive global brand for Laureate, one that depends on more than their many campuses spread around the world.  He has understood the importance to his brand of working with international public agencies such as the World Bank, and having a visible presence at international meetings on higher education.  

This photo captures perfectly one of Becker's more recent steps in global brand building.  At the December 3, 2008 the Clinton Global Initiative Asia Meeting, Becker announced an international scholarship initiative for deserving teachers around the world to enable them to get an advanced degree in  education, business, or information technology. Laureate will award 1,000 scholarships in this program, which is named in honor of Richard W. Riley, former U.S. Secretary of Education during the Clinton Administration.  The scholarships will be to attend institutions in the Laureate International Universities network.  Because the network has universities in 20 countries, this program likely will both be widely visible internationally, and have local impact in areas where the awardees teach. Of course, because the network is so large and well developed, the marginal cost to Laureate of these scholarships will be small. Other competitors -all smaller- would have difficulty in getting such a beneficial impact/cost from a similar brand-building effort.  Another example showing that size matters, and Becker and his team are working hard to capture first-mover advantage in the field of global higher education .

New global higher education activities by the Apollo and Carlyle Groups

 

A little over a year ago, I noted that the Apollo Group (parent of the University of Phoenix) was partnering with the global investment firm Carlyle Group to form a joint education venture called Apollo Global.  At the time of the post, it was not at all clear what the strategy of Apollo Global would follow, although some analysts had suggested that it might be similar to that of Laureate.  So it clearly is time for an update on Apollo Global, and in the process, on the educational ventures of the Carlyle Group

On Feb 28, 2008, Apollo announced that Apollo Global had made its first move by agreeing to purchase a university in Chile:

Universidad de Artes, Ciencias y Comunicacion ("UNIACC"), an accredited, private arts and communications university in Chile, as well as its related entities. This includes the Instituto Superior de Artes y Ciencias de la Comunicacion, S.A. ("IACC"), the first online autonomous professional institute in the country which was founded in 1981.UNIACC, founded in 1989 and based in Santiago, Chile, has over 3,000 students and three campuses.....
UNIACC is one of the leading arts and communications universities in Latin America and is renowned for its high-profile faculty and state-of-the-art technology. Accredited by the Chilean Council of Higher Education, UNIACC offers 18 bachelor's and two master's programs. In 2004, UNIACC became the first university in Chile to teach a fully online undergraduate program, and today offers six fully online and one blended program, mainly serving the needs of working adults.

Earlier, in September 2005, The Carlyle Group bought a majority participation in a private university in Mexico, Universidad Latinoamericana, S.C. (ULA).  The Carlyle website indicates that in November 2006, it purchased the remainder of ULA. Finally, in August, 2008, Carlyle moved some of its ULA holdings "from one pocket to the other", when it sold 65% of ULA to Apollo Global (which it owns in part), retaining a 35% holding directly.  This then gave Apollo Global a majority stake in a Mexican university, ULA:

Founded in 1975, ULA is renowned for its dentistry, medicine and communications programs accredited by the Ministry of Public Education (Secretaría de Educación Publica, SEP) in Mexico. ULA carries authorization from the National Autonomous University of Mexico (Universidad Nacional Autónoma de México, UNAM) for its high school and undergraduate psychology and law programs. With four campuses throughout Mexico, including two in Mexico City, one in Tlalnepantla de Baz, and a fourth in the city of Cuernavaca, ULA offers 27 degree programs and has more than 4,000 students.

Thus over the past year,  Apollo Global has established a presence in both Chile and Mexico, and has done so following Laureate’s approach of purchasing existing institutions.  Of course, Laureate already has a very large presence in both Chile and Mexico - and around the world.  It will be interesting to see what Apollo Global does in the future to differentiate its strategy from that of Laureate - and to provide more substantive competition to Laureate globally.  Will Apollo Global make some use of the enormously successful model developed by its sibling the University of Phoenix as it moves forward?

Meanwhile, The Carlyle Group has made a new investment in global higher education. On November 27, 2008, it  announced a $50M (US) investment in Hao Yue Education Group, a prominent Chinese provider of private higher-education.:

Hao Yue was founded in 1997 by Mr. Zhou Jiting and his team. Since then, its flagship school has grown to more than 30,000 students with two campuses in Beijing and more than 200 hectares of campus area. It is now one of China’s largest private universities based on student enrollment, campus area and registered capital. There are more than 1,500 full time teachers among the nearly 30 secondary colleges and schools under the school, offering more than 130 majors....
The business model of Hao Yue’s university puts career training and development at the core of its service proposition, offering a career-oriented curriculum that equips its students with strong practical skills and puts them in touch with a wide employer network. It emphasizes internships for students to gain proper pre-employment training. During the last few years, Hao Yue’s university graduates have enjoyed a high employment rate of approximately 80%.

The announcement acknowledges the “global market turmoil”, but describes China’s education sector as “resilient”. It is nice to know that a group with money is still bullish on higher education!

The US is once again attracting large numbers of international students!! Right?

The Institute of International Education (IIE) recently released  its annual Open Doors report on the number of international students in the US.  The press release for the report is headlined

INTERNATIONAL STUDENTS ON U.S. CAMPUSES AT ALL-TIME HIGH

Total foreign student numbers up 7%; New enrollments up 10%

That sound like good news! We are finally coming back from the post 9/11 drop off in international students. US higher education has once again regained its allure!

Or has it?

Included in these numbers are a couple of interesting categories.   The first is enrollment in  “non-degree programs”, primarily intensive English.  The second is “Optional Practical Training” (OPT). This enables undergraduate and graduate students with an F-1 student visa to work for periods up to one year in temporary employment directly related to their major fields of study.  The one-year period has recently been extended for students in the STEM areas, and provisions have been loosened for cases in which an employer has requested a H-1B visa for the student. 

When we look at the numbers, we find that the total number of international undergraduates is up this year by a relatively modest 4.6%, the total number of international graduates, by similarly modest 4.8%.  The real growth is in the non-degree students, 20.1%, and OPT, a whopping 36.3%.  We should, of course, be delighted for a variety of reasons to see these latter two categories grow.  However, they do not relate to the comparative attractiveness of our core higher education offerings.  And growth in OPT, because the rules are rapidly changing, is difficult to evaluate. 

Similarly, if we look at the vaunted new enrollment growth  (where OPT is not considered) number of 10%, we find a similar breakdown.  That is,  UG first year international undergrads are up 7.0%, grads, 7.9%, and non-degree students, 27.7%.

However, the real question is, “how are we doing compared to everyone else?”  I don’t find any up-to-date global data to compare to the US IIE results for 2008.  The most recent OECD report, Education at a Glance 2008, contains data on transnational education only up through 2006.  That report shows that for the period 2000-2006, the number of students enrolled in higher education outside of their country of origin grew on the average at 7.5% per year (Table C3.6).  During that period, the US share of all transnational students fell from 25.1% to 20% (Table C3.7). 

The  foreign student numbers reported in Open Doors that should be compared to the OECD data (UG, G, and non-degree) show a growth of only 4.8%. However, if growth in transnational students has continued at the 7.5% rate, then the IIE numbers would suggest that our share of the transnational market has continued to decline. 

So the good news would seem to be that we are getting more international students than we did a few years ago - and the bad news would seem to be that the increases are probably not keeping up with global growth in transnational students.

An Asian "Bologna Process" moves forward

The ten  countries of the Association of Southeast Asian Nations (ASEAN) have begun to discuss  the creation of an Bologna -type process in their region.   The Southeast Asian Ministers of Education Organization (SEAMEO) organized a meeting in Thailand in early November, 2008, to begin to consider the challenges and opportunities that could be provided by a harmonization of higher education in Southeast Asia. 

Prof. Dr. Supachai Yavaprabhas, the Director of SEAMEO RIHED, the organization’s Center for Higher Education and Development, had spoken earlier at a UNESCO regional conference about harmonization in the ASEAN region.  In his speech, he outlined the history of higher education cooperation in the region, and described some of the aspirations behind this cooperation.  They are quite parallel to those that can be found in the  Bologna accords: to promote higher education quality, and to build ASEAN identity through free movement of scholars around the region.  In 2007, the leadership of the region agreed that the focus should be on five areas:

a) ASEAN Quality Framework and Curriculum Development;
b) Student Mobility;
c) Leadership;
d) E-learning and Mobile learning; and
e) ASEAN Research Clusters

Dr Yavaprabhas also discussed the very uneven levels of quality assurance mechanisms currently in place in the various ASEAN nations.

The November meeting was based on preliminary reports on prospects for harmonization prepared by representatives from Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. The meeting itself has been described in the Australian and University World News.

Clearly, creating the desired “higher education common space” in the ASEAN region will be very difficult.  The countries vary considerably in the level and organization of their systems of higher education, and most are developing nations with relatively limited resources.  Nevertheless, the potential payoff could be enormous, and would greatly increase the ability of the region to compete effectively in the knowledge-based world of globalization . 

ASEAN has set 2015 as the target year for the creation of this higher education common space.  Just as Bologna has found that its original targets were too optimistic, ASEAN will certainly find that this target cannot be realistically attained.  However, there will be major benefits to the region from every successful step taken along the path to a functioning regional higher education common space.

The Bologna Process- a significant step in the modularization of higher education

Modularization is critical to the success of industrial globalization because it enables global maximization of the production process by utilizing “best” producers of different modules. There are certainly components of cross -border higher education that can be described as modular (see Why has globalization had such a small effect on higher education - and when will that change? Dec 3, 2007 and Modularity in university higher education: Education, Aug.7, 2006).  Nevertheless, the reality is that higher education at this time is not really thought of in modular terms, and that limits the impact of globalization in higher education.   All of this may be about to change, however, because the Bologna Process is all about finding ways to define educational modules and create quality control mechanisms for those modules.  It provides a fascinating look at ways in which educational modules are different from, and similar to, the modules that have enabled globalization in industry, and suggests that educational modularization ultimately may  result in a remarkable shift of power from the institutions to the students. If it succeeds, the Bologna Process may show the way to rapid increases in globalization of higher education.

Disruptive innovation and the market state lead to a collision between for-profit and non-profit medical education

There are those in non-profit higher education  who think that for-profit higher education moves in a different sphere, and can safely be ignored.  A news article today showed that that assumption is increasingly less correct, and showed a form of competition that certainly looks like it arises from a mixture of Clayton Christensen’s disruptive innovation and Philip Bobbitt’s market state.

But let’s begin earlier in the week with another, seemingly unrelated news article.  At the end of July, DeVry Inc. announced the purchase of U.S. Education Corporation, which owns Apollo College (not related to the parent of U. of Phoenix), and Western Career College.  Both of these entities are in the health care area, preparing students

“ for careers in healthcare through certificate and associate degree programs in such rapidly growing fields as nursing, ultrasound and radiography technology, surgical technology, veterinary technology, pharmacy technology, dental hygiene, and medical and dental assisting.”

There are over 8700 students at the two institutions. 

According to DeVry, this purchase fills a strategic need:

“The high quality programs and experienced management teams at USEC, Apollo College and Western Career College provide us the perfect opportunity to further expand our program offerings in the high demand healthcare industry"

That is, DeVry sees a good future in the healthcare industry, and is ramping up its offerings and strengths in that area.

Among the healthcare industry holdings of DeVry is Ross University, a medical school and veterinary medical school on the Caribbean isle of Dominica.  The medical school has about 6,500 graduates, and boasts of the opportunities offered its students:

“We are also proud to offer more clinical rotation spots in the United States than any medical school in the world, with over 5,000 opportunities available at more than 70 institutions nationwide.”

Which finally brings us to today’s news.  The New York Times reports that New York City’s Health and Hospitals Corporation, which runs the city’s 11 hospitals, has signed a 10 year $100M agreement to provide clinical rotations for students of a for-profit medical school in the Carribean.  The for-profit school in the news this time is St. George’s University School of Medicine on Grenada (remember our invasion of Grenada to protect medical students? The same.).  And the contract has a very interesting clause, according to the New York Times:

“The contract also bans the hospitals from providing clerkships to other Caribbean medical schools — a critical provision to St. George’s, which has faced heightened competition in recent years, particularly from Ross University on the island of Dominica, part of DeVry Inc., a publicly traded educational company, since 2003.”

Thus the growth in strength in the healthcare area of DeVry has increased pressure on one of its for-profit competitors, St. George’s, and the resulting competition has spilled into the world of the non-profit competitors

Laureate Education moves into the United States - a new direction?

 This week, the for-profit  leader in global higher education Laureate Education announced that it “has acquired NewSchool of Architecture and Design, based in San Diego, California, and has finalized its acquisition of Kendall College, based in Chicago, Illinois.”   Up to now, Laureate’s focus has been entirely on offshore institutions, and it has a physical presence in 18 countries - but not the US.  Do these new US acquisitions mark a shift in Laureate strategy?

I think the answer to this question is - no. I believe these acquisitions simply reflect another step in the roll-out of the existing strategy.  In a previous post, Interesting activity at the for-profit/non-profit interface: Laureate, I noted that Laureate had begun to seek US. accreditation for several of its off-shore institutions.  In the press release announcing the accreditation of Laureate’s Glion Institute of Higher Education and Les Roches Hotel Management School (both Swiss)  by The New England Association of Schools and Colleges Commission on Institutions of Higher Education, Laureate CEO Doug Becker noted that such “accreditation represents one of the highest standards for the assessment of universities”.  Thus Laureate is using internationally recognized US accreditation to support its strategy of branding itself as a high quality, medium cost higher education provider.  I think they strengthened this part of their strategy by adding  to their portfolio two existing, accredited institutions in the US.  Of course, the two institutions also need to fit into the existing network of universities in a way consistent with what we have seen of Laureate strategy, and we can hypothesize how these new purchases might be viewed in this context.

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

Can the stock market understand for-profit higher education?

The recent New York Times article concerning difficulties at the University of Phoenix and the earlier January 28, 2007 announcement that Laureate Education, Inc. was going to be taken private (for $3.8B)seem to share an important question for for-profit higher education: Is it possible to build a long-term viable, for-profit institution of higher education that is subject to the quarterly profit-growth demands of the stock market?

Simply making a good profit is insufficient for the market, which connects its rewards to steady, and significant, profit growth.  One can easily hypothesize that some of the problems of the University of Phoenix described in the NYT article arose because of efforts to sustain profit growth beyond some limits possible or acceptable in higher education. After all, higher education operates under some significant legal and ethical constraints, and producing consistent quality in such a human-intensive endeavor is not so readily scalable as some other enterprises.   

Laureate Education, on the other hand, is essentially inventing a new approach to globalization of higher education. One can imagine that there will times when creating academic sustainability of this new global educational enterprise will require more reinvestment and less profit than the growth-focused market can understand. In fact, Becker has stated," We have not taken dividends out of any of our universities around the world. They are free to build their excess revenues and to re-invest those funds in facilities or programs that benefit our students and grow our business."(p. 42)  It is certain that academic sustainability is not the same as financial sustainability, although the two are clearly tightly linked in the case of for-profit higher education. Could this be one of the drivers behind the Laureate decision to move out of the of the market with its very short time horizon?

Breaking ranks at the top on tuition

From the Los Angeles Times Jan 22, 2007 edition

Princeton won't increase tuition
From Times Wire Reports
January 22, 2007

Aided by one of the nation's largest endowments, Princeton University decided to hold tuition steady, something it hasn't done in four decades.

Trustees chose to keep tuition at $33,000 for the 2007-08 school year by dipping into its endowment of about $13 billion.

My recent posts Price and Costs in Higher Education: price and the political economic system and Price and Costs in Higher Education: price discuss some of the larger background pertinent to this announcement.  Before concluding that this will set off a wave of similar announcements, however, one needs to note that Princeton has the largest endowment per student of any of the major universities, and thus is most able to make such a decision with the least impact on its programs.

The Creative University in a Flat World

“Tom Friedman, in his bestseller The World is Flat: a brief history of the 21st century describes a world in which decreasing trade barriers and rapid advances in technology, especially communication technology, have led to a revolutionary globalization of industry. In this new world, corporations create global supply chains for services and manufacturing by searching out the best providers wherever they may be. Companies in China, India, Brazil and Indonesia are now able to compete on a level playing field with American companies for spots in those global supply chains. The world has been flattened.

However, numerous studies show that the global playing field is not, in reality, completely flat. There are geographic areas where particular types of activities can be carried out with unusual efficiency and creativity. These are areas that John Hagel and John Seely Brown called local ecosystems that can amplify capability-building opportunities, that Susanne Berger calls clusters, and Richard Florida calls learning regions or creative centers. Special characteristics of these regions enable them to become centers of creative activity of one type or another. As a consequence, companies located in one of these areas still have a competitive advantage over similar companies not located in such a cluster elsewhere.

For many of these special local ecosystems- but not all - a university provides a center for creativity that plays an important role in producing the special characteristics of the region. Thus the ability of the university to encourage and support creativity is key to its role in such an ecosystem."

This is the beginning of a talk I recently gave at a USC Templeton Lecture entitled The Creative University in a Flat World.  The subject of the talk was creativity generally,  and the special role that universities that encourage creativity can play in a flattening world.   

Assessing graduate education -with inputs again

Richard Vedder’s blog, the Center for College Affordability and Productivity, is always interesting, and often provocative. In a recent post, he pointed out an article that I had somehow missed in the Chronicle of Higher Education about a new company called Academic Analytics that has a new approach to ranking graduate programs.  Rather than depending heavily on reputations, as do so many rankings, Academic Analytics uses a variety of productivity measures. The measures used, and the weightings they are given in arriving at a final score, are field dependent to better reflect the ways in which different fields operate. The outcomes are interesting, to be sure, and differ in surprising ways from some of the more traditional rankings.

Price and Cost in Higher Education: price and the political-economic system

In a previous post (Price and cost in Higher Education: Price, Jan.  2007) I looked at some data on tuition price increases over time, and the resulting debt load that many students have taken on. In this post, I want to talk, once again, about the ongoing global transition from  nation-states to a market-states (see Welcome to the Market-State,Feb. 20, 2006).   In this instance, I will focus on how that transition might relate to price in higher education.

Bobbitt describes the governing contract of the nation state as: the government (the State) commits to improving the lives of its citizens (the Nation), and in return, the citizens agree to sacrifice to support the state.   In the market state, the government only seeks to maximize the opportunity - rather than the welfare - of its citizens, and individuals then thrive or fail based on their ability to grasp the opportunities offered by the global marketplace.  As a corollary, since the market state is offering less of a guarantee of success to the citizens than does the nation state, the citizens in the former are less prepared to sacrifice on behalf of the state.  One consequence of this change is that there are increasing demands that tax loads decrease, with the result that the state has less revenue in a market state environment.

In the nation state, highly educated people across a broad spectrum of fields are considered to provide intellectual capital of great value to the state (see Metrics of Academic Excellence in the 21st century, Feb. 27, 2006).  However, in a market state, the state focuses its attention on creating educated people in more narrowly defined fields that are deemed to be of importance in order to meed some perceived need of the state.  Higher education overall is considered to be of primary value to the individual, rather than to the collective.  A recent Chronicle of Higher Education survey captures the changing societal view of this public good/private good perspective. The survey showed that 2/3 of adult Americans now believe that families and students should pay the largest share of the costs of higher education.  Similar surveys in the 1960s showed that most Americans believed the converse, that the federal government should pay the largest share of the costs of higher education.  Thus the transition to a market state lowers the responsibility of government to take the lead in paying for higher education.

However, there is a counter trend contained in the market state that gives the state a very large stake in higher education.  As the knowledge economy continues to expand, access to higher education becomes central to the principle of maximized opportunity that undergirds the market state contract.  However, as we saw in Price and cost in Higher Education: Price, increasing price is decreasing access to higher education.  As a consequence, the state needs to find ways to counter the effects of increasing higher education price in order to maintain legitimacy.  As a further constraint, it must do so without significantly increasing its costs of supporting what has increasingly become a private benefit.  And in any case, because of its lowered tax collections, the state is greatly constrained in the financial incentives that it could apply to increasing access even should that be desirable. 

More on private higher education globally

I commented recently on "A Tectonic Shift in Global Higher Education", by John Daniel, Asha Kanwar, and Stamenka Uvalic-Trumbic, which describes the inroads that for-profit higher education is making around the world.  I thought I should see what Daniel C. Levy and his excellent  Program for Research on Private Higher Education might have to say on the matter, and discovered that he has a recent working paper entitled An Introductory Global Overview: The Private Fit to Salient Higher Education Tendencies.  This paper concentrates on the non-profit side of private higher ed, but he notes “most of the findings we have identified as characteristics of private higher education are even more striking for the for-profit institutions.”.  I also note that Levy has a number of databases looking at private higher education available on his website.

I will not try to describe all of his findings from this report, but rather suggest that you go to his paper. Instead, I will comment on a few of his findings that I found most interesting and provocative.

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. 

More on International Students in the US

The ACE has just issued an excellent,  hard-hitting brief entitled Students on the Move: the Future of International Students in the United States . The conclusion of the brief says it all:

"The United States continues to receive the largest number of international students. However, recent trends indicate that this position is significantly challenged and may not be sustainable if current trends continue. Although potential demand is high, a redistribution of international students among host countries is underway. This change may be due to perceptions that the United States is unwelcoming, vigorous competition from other countries, and successful national strategies from competitor countries to recruit international students. As the student marketplace becomes increasingly globalized and competition intensifies, it may be difficult for some institutions to begin recruiting international students, if they have not done so already, and for others to substantially increase their numbers,particularly if there is no coordinated support at the national or regional level.

U.S. well-being is increasingly dependent on innovation and competitiveness in the global knowledgebased economy. International students and scholars have historically provided a source of new talent for innovation in the United States. Although the demand for education abroad is increasing, so is the global competition for the “best and brightest.” Declines in the number of international students, especially in the science and engineering fields so critical for innovation, will affect the ability of higher education, business, and government to engage in research and development. Additionally, international students represent an important means for strengthening U.S. cultural diplomacy around the world."

Spellings and transparency

Now that the Spellings Report is out, and the Secretary has announced a plan of action, the pundits and bloggers have made their opinions known (see, e.g. Lombardi’s column in Inside Higher Education and the subsequent comments, or Seery’s column in the Huffington Post and subsequent comments). The comments generally range from slightly neutral to quite negative. They run from discussions regarding the difficulty of measuring the important outputs of higher education, to claims that this report is simply part of a larger Bushian conspiracy against progressive thought.  Along the way are numerous statements that only academics have a right to judge the academy, and that government should stay out of it.

My take is a bit different from those of many commentators, as readers of this blog will recognize.  I believe that the concerns raised by the Report regarding the future global dominance of American higher education are very real, and supported by considerable data (see e.g.Measuring Up 2006:The national report card on higher education , or Education at a Glance 2006).   I believe that comments by various faculty (see blogs mentioned above) that learning in college is the responsibility of the student, not the faculty, are simply wrong, and that there is real joint responsibility for good outcomes. In general, we in the academy have not kept up our end of that joint responsibility because we have ignored research that shows how we could change our teaching to improve learning outcomes significantly. As a result, many of our students are not learning what they need for success in a knowledge economy. (see previous related posts How people learn May 1, 2006, A D- in science education April 14, 2006, How are we doing teaching cognitive skills? July 4, 2006)

A preliminary report from the Commission on the Future of Higher Education

The Commission for the Future of Higher Education has just released a draft report, which was apparently prepared by staff, not the Commission members.  Thus we can expect that the Commission will wade in and carry our a significant rewriting.  So, rather than respond to the draft (other than to say that I find some of the things in it to be right on target, and others to be just silly), I will describe a few things I would like to see in the final report.

First, a discussion of the changes they see in the world, and why those changes put our higher education system at risk. There are surely many things wrong with our system of higher education (and those of all of our competitors, for that matter), and we are unlikely to have the enthusiasm or resources to fix them all.  What threats do they believe their solutions are protecting us against? At present, we cannot judge the utility of their solutions, since we do not know the problems for which they are solutions

Second, what should we be teaching students in today’s world? If we want to do outcomes testing of learning, we had better be real sure we are testing for the desired outcomes, because the test will become the driver. Reports show that offshoring is creeping up the educational-attainment ladder.  The key issue seems to me to be, what do today’s students need to learn so that they have a good chance of being successful in the increasingly globalized competition for jobs?