I wanted to move this out of the other thread name for obvious reasons. I am glad you brought this up, it is very true but I am not really in a position to have suggested this. The challenge is how do you regulate the business model without stifling the ability to innovate concerning delivery and curriculum? Honestly I don’t really see the costs here if you stay with mainstream publishers and use open source technology. The real key element, where many school struggle, is getting some great engaged faculty to deliver the program in a way that is unique to the institution. Online faculty have to be more than ‘graders’ and they need to be distinctive to the institution. Remember “for-profit” and “not-for-profit” are tax statuses. I see many legitimate schools with non-profit status using a for-profit predatory model in online education. Likewise, I see several private schools that have a tax status of for-profit doing the right thing with low tuition and quality programs. To your point I think the non-profit business model is the key, not the tax status.
Originally Posted by AdjunctInstructor Once for -profit motives displace socially driven motives ,within education, higher education will become attainable for the elite or the fortunate which can utilize federal loans. I see an insidious trend beginning. TONY: Really? Our history of private enterprise and world leadership in innovation has been driven by profit motives since the founding of our country. Somehow, we seem to put education is a separate compartment because we are used to heavily-subsidized government education. The for-profit education sector is, indeed, driven by what the market will near and the available streams of funding (as is any other market). If demand and funding sources decrease, so will costs, since they (like any other business) will have to innovate and adapt or shut down. Public-sector education (e.g. state universities and community colleges) are just as money conscious as for-profits (I have been an administrator at all three) but they are driven by the available streams of money from state and local allotments. AdjunctInstructor: The fact that DL tuition is overvalued in that tuition should be around 40-50 percent of what traditional tuition is. … America thrives in the laissez-faire. The question is how can the DL “market” find its much needed correction? TONY: As long as there is a growing market for a product, it would seem not to be overvalued. If no one was willing to pay for it, then it would truly be overvalued. AdjunctInstructor: One certainty is the for- profit camp will resist change. TONY: Of course it will resist change that it perceives is detrimental or harmful to its operations (name me an institution or organization that would not). However, resistance to change is exponentially higher in the traditional non-profit and public sector of education.
Capitalism and education Dr. Pena, I respect your position and expertise. However, I seem to differ on some points. I believe that the expansion of the profit education corporations have placed profits as the primary motive for offering education services. I know other industries and the "mom and pop store" down the road seek profit. However, education should be affordable to the masses. Medical care/industry is another area that has been going up and up and now many less fortunate cannot afford medical care. So it is fine that you allude that private education corporations are doing nothing different than any other industry. My contention is that when profit is primary then education suffers. Sure there is demand distance learning education. Even so, DL is overpriced. You wrote "However, resistance to change is exponentially higher in the traditional non-profit and public sector of education." I tend to agree with you. Certainly for profit higher education providers have raised the bar, as far as online education offerings, technology, methods; and unfortunately the cost of education too. My prediction is that once the state university systems finally grasp that online education is the future a correction will take place and then all will benefit. I appreciate your posting.
AdjunctInstructor, One of the great things that I have appreciated during my decade of posting on Degreeinfo is the exchange of ideas with intelligent and thoughtful people, such as yourself, even when there are things upon which we may disagree. I think that our disagreement on this issue may have its roots in a few assumptions, and I would like to see whether this is, in fact the case. When you talk about the profit motive being primary and education suffering as a result, I wonder if it is your assumption that when profit is the primary consideration, it automatically becomes the ONLY consideration and any decision that would not maximize profits is rejected. This seems to be the feeling of a lot of people and I would put forth that, in most cases, it is an inaccurate assumption. Let’s take the Honda Accord as an example. The Accord is known as a good quality vehicle and its annual U.S. sales (over 350,000) attest to its popularity. Honda, as a for-profit, has profit as its primary motive. If the assumption about a for-profit is that profits and shareholders and the only consideration and that customers and quality don’t count, then Honda will ONLY do things to maximize its profits. Honda can do this by hiring unqualified workers who will work for less and by continually lowering the quality of its products in order to reduce the cost of production and maximize profits. All for-profit businesses do this...right? Most products are getting less innovative, and lower in quality, right? We need the government to take over by subsidizing most of the costs of auto manufacturers, which will lower the prices and improve quality, right? We need to turn all for-profit businesses into non-profit businesses, right? Wrong. The Accord and all other autos are, on average, of higher quality and reliability than they have ever been. Anyone can verify this by looking at a couple of decades of Consumer Reports. How can this be, when they are manufactured by for-profits? Because those businesses that want to stay in business know that they often have to make decisions that may negatively impact profits, in order to improve their products, so that people will buy them (and not go somewhere else). Why was there such outrage at the prospect of the government taking over the auto industry? Because they know that government management does NOT produce higher quality and lower prices—it produces more high-priced bureaucracy. I agree that education and healthcare costs have been rising, but those opposed to Obamacare have the same fears about quality, bureaucracy and price if the government takes over the healthcare sector. Unfortunately, my verbosity has gotten the best of me, so I’ll respond to the other issues that you raise in a subsequent post.
In many places, it probably is. Our local state university charges more per unit for their online courses than our local for-profit. The issue here is, of course, that people (including certain educational administrators) believe that offering distance learning can be a cash cow, since it it so much less expensive to deliver than tradition instruction. My answer is that it can be, often is not. An institution that has a very small physical plant (e.g. an single office space for all operations with telecommuting staff), uses an inexpensive LMS (e.g. Moodle) has minimal staff for student services, little or no instructional design and hires exclusively adjunct faculty to teach at a low rate using correspondence methodology and enrolls a large number of students per section, can offer course at a very low rate and still afford to pay everyone and remain in the black. Even if a number of students end up dropping out during the term, if student enrollment can grow significantly without increasing staff or infrastructure, then the profits will be strong. Now, let's look at a DL program at a brick & mortar university, where many of the courses are taught by full-time faculty, uses a full-featured LMS with full-time staff to administer the system, and which hires full-time instructional designers to work with faculty (who are paid extra) to develop online courses. This university employs a sizable and growing full-time staff to administer to the needs and provide services (admissions, financial counseling, registrar, advising, student services, career services) to the university's online-only students (apart from and in addition to the full-time student services staff for face-to-face and hybrid students). Staff size for the online division grows at the same rate as student enrollments. Students have 24/7/365 technical assistance available to them. Student enrollment in undergraduate courses are capped at no more than 25, with graduate courses even lower. Admissions standards for online are higher than those for face-to-face. Of every 100 students at the beginning of the quarter, 92 are still there at the end of the quarter. Both scenarios are occurring at for-profit institutions. Hopefully, it would not be a surprise that the costs for the second institution are different than that of the first. I would agree with someone who would state that tuition and fees at these two institutions should be different. Is DL always cheaper than F2F? If one is doing it right, it will usually be more expensive in the short-run, as infrastructure, technology, technology support, student services, instructional design, faculty support, and student services to meet the needs of online students and faculty are set up and established. Once they are, DL can be more efficient and can provide a cost savings over building more physical plant and space or establishing brick and mortar branch campuses. Unfortunately, too many ignore the start up costs and expect it to be a "fast buck" proposition. We have seen many of these attempts at quick, dirty and cheap DL operations go up in flames. Those who operate under the first scenario above would do well to remember than their ONLY long-term viability will be tied to their willingness to severely undercut the market in price. Those who believe that the first model is the only DL model will be doomed to repeat the disaster of the University of Illinois Global Campus.
They have and have not made as many inroads due to the fact that they are not able to operate at their levels of tuition without an annual gift of public funds, which accounts for a high percentage of their operating costs and a level of bureaucracy that makes rapid innovation all but impossible. These institutions are driven more by the government than by the market (as are any government controlled entity). This is not a put-down of public education (I have been a public educator most of my career), it is just an observation as one who has seen the "back end" (and balance sheets) of both.
You wrote, “They have and have not made as many inroads ... You wrote, “They have and have not made as many inroads due to the fact that they are not able to operate at their levels of tuition without an annual gift of public funds, which accounts for a high percentage of their operating costs and a level of bureaucracy which makes rapid innovation all but impossible. These institutions are driven more by the government than by the market (as are any government controlled entity). This is not a put-down of public education (I have been a public educator most of my career), it is just an observation as one who has seen the "back end" (and balance sheets) of both.” You are correct state supported and regulated higher education have distinct advantage over private for profit entities operating expenses are subsidized by tax dollars and other endowments that allows for lower tuition. Regardless, how monolithic these state schools tend to be, they have the resources and capability to set a trend in tuition cost for DL. The private for profit college/corporation has filled the gap, effectively too, but in the future competition between non-profit state colleges and for profit college/corporation is going to be energetic. There will be a drop in tuition rates. It is also likely that for profit enrollment figures will drop as potential students choose state higher education with established “brand names”. For example, Walden University’s tuition is $750.00 per credit hour and University of California- Berkeley charges $750.00 or $500 and both have similar acceptance criteria, with similar online programs---which will garner more students? This is on the horizon, state schools are being forced to rethink and retool (innovate). Slavin (2002) writes that, “At the dawn of the 21st century, education is finally being dragged, kicking and screaming into the 20th century” (p.16). No matter that Slavin is specifically addressing evidence-based practice--- his observation is a good description of what has been taking place with the state university system and DL. For profit private DL education has been the catalyst for this, or better yet, the demand for DL has been the catalyst for change. One of the questions for profits will need to answer is what do they have as far as strategic planning. Once the nonprofit state supported higher education system finally “grows up” and starts taking chunks out of enrollment numbers? We are at the beginning of a paradigm shift in education, have been for some time. However, it is like a ball game that has a full team (for profit) against an immature team (state non-profit) surely competition is less. I foresee future competition between the “state and the corporation” and this will lower DL tuition. References Slavin, R.E. (2002). Evidence –based policies: Transforming educational practice and research. Educational Researcher, 31(7), 15-17
The whole for-profit/non-profit begs a question. On the K-12 level, private schools (usually driven to earn a profit over their costs, whether non-profit by nature or not) are generally superior to public (aka non-profit) schools. Yet, the reverse is usually true with higher education. Yes, I realize the costs and structure of the programs are somewhat different. But education is still education.
Yes they do, but they also have a very strong historical culture, a very empowered and unionized faculty (who want to be paid more, not less, to develop and teach online courses). Most will have to develop new infrastructure and new mindsets to have success online programs that cater beyond their tradition geographical turf. Many state universities have run successful online programs for quite a while. In higher education, there has been room for several kinds of institutions and this choice is what makes U.S. education superior. It is possible, but it is also just as likely that tuition costs will not be lower at all. When was the last time that your state university dropped its tuition? Probably the for-profit, unless Berkeley makes a radical change in is enrollment exclusivity. Berkeley admits only 1 in 4 undergraduate applicants. There will be tremendous pressure not to "cheapen" the degree by being less selective in its admissions. The biggest potential competition could be the lower "tiered" state universities (which more directly compete for the same pool of students), however, this is also the sector with the least amount of resources to compete. The fastest growing public DL sector has been the community colleges, but their resources are also extremely limited. I agree. Let's see if they are actually able to do it. If so, then the private for-profit education sector will be better able to adapt to a new lower tuition model than the public education sector, as it would require an increase in tax subsidies to fund a tuition decrease and this is obviously not happening anytime in the near future. This is easy to answer. What does any business do when another business starts taking chunks out of its customer base? It adapts, innovates, retools, runs more efficiently or it goes out of business. Public government agencies (including public education) has little or no history of doing this. The private sector does it constantly.
You may be lumping private sector (for-profit) schools with private schools in general. Private non-profit schools are typically more expensive than private for-profit schools. In fact, the recent lists of the 100 most expensive universities include 98 private non-profit, 2 public non-profit and 0 for-profit schools.
