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New Players, Different Game: Understanding the Rise of For-Profit Colleges and Universities

reviewed by Mark E. Engberg - September 03, 2008

coverTitle: New Players, Different Game: Understanding the Rise of For-Profit Colleges and Universities
Author(s): William G. Tierney and Guilbert C. Hentschke
Publisher: Johns Hopkins University Press, Baltimore
ISBN: 0801886570, Pages: 232, Year: 2007
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While for-profit colleges and universities (FPCUs) have existed for decades, and certainly became noteworthy for both their rapid growth and affront on traditional notions of postsecondary education, only a handful of comprehensive works exist that effectively draw out the similarities and differences among FPCUs and traditional colleges and universities (TCUs). Tierney and Hentschke’s recent book, Understanding the Rise of For-Profit Colleges and Universities: New Players, Different Game, is an important addition to the extant literature on FPCUs that provides an in-depth examination of the fundamental characteristics of FPCUs while presenting an impartial analysis of the historical and ongoing philosophical and policy debates that undergird their dramatic rise.

The authors begin their investigation by ruminating as to whether FPCUs represent a dramatic departure from traditional notions of higher education or alternatively, illuminate an inevitable transition in the evolution of the postsecondary education sector. Ultimately, the answer to this question begets a fundamental policy debate concerning the regulatory environment of FPCUs and whether these institutions deserve similar treatment as TCUs, especially around their eligibility for federal funding. Philosophically, the debate focuses on whether a for-profit institution can be simultaneously motivated by profit and still serve the public interest.

While educational reform has certainly characterized the history of TCUs in the twentieth century, the changes have largely worked to sustain an existing academic culture. Alternatively, the innovations presented by FPCUs, including the elimination of tenure, commoditization of curricula, and corporatization of governance, may be more akin to the actualization of disruptive technologies and the advent of an alternative postsecondary culture. Such a culture is predicated on a for-profit business model in which performance and quality are measured by a unique set of benchmarks where economic principles of demand and supply take center stage. Whether one contests these performance indicators as adequate proxies for measuring a public good such as education, the fact remains that the public has long accepted the traditional sector’s reliance on measures of input to deem quality with little understanding of the quality of the learning experience itself.

While the demand for postsecondary education continues to grow, fueled in part by a knowledge-based economy in which socioeconomic status is indisputably linked to educational attainment, shifts in expenditures for higher education from governments to individuals have created a fertile ground for FPCUs to flourish. The meteoric growth of FPCUs is based on a deliberate business model in which programs are developed in areas where employment demand is strong and the reward potential is high. By locating their campuses close to student markets, duplicating programs based on scalability and profitability, and launching unprecedented marketing campaigns, FPCUs have achieved a financial trifecta: enrollment growth, revenue growth, and growth in profitability and earnings.

Given the profit-seeking and corporate nature of FPCUs, it is not surprising that issues surrounding finance and governance represent distinct departures from TCUs. FPCUs, for instance, are comprised of stakeholders who share personally in the distribution of net revenues—many of whom are members of senior management. While the interdependence among finance and governance is a distinguishing feature of most FPCUs, so too is their reliance almost exclusively on tuition revenue coupled with their ability to raise investment capital by selling additional shares on the open market. Although tuition discounting at FPCUs mimics many of the practices at TCUs, and sticker prices are starting to converge among the two entities, perhaps the most notable differences can be found in their approaches to governance. Governing boards of FPCUs, for instance, are much more involved in organizational decision-making whereas faculty involvement in the shared governance process remains a hallmark of TCU governance. Despite these differences, many TCUs are moving in the direction of greater tuition reliance and questioning whether shared governance still works in today’s increasingly competitive higher education marketplace.

While the authors do an impressive job of identifying differences and similarities among FPCUs and TCUs, the final two chapters are perhaps the most stimulating as they raise important philosophical questions that challenge our traditional notions of the postsecondary enterprise. Given the numerous controversies surrounding FPCUs, including recruitment and non-compliance violations and the various cover-up activities used to avoid scrutiny, it is not surprisingly that the public and those reared in TCUs have seriously questioned FPCUs’ commitment to providing public goods and services. While FPCUs have certainly worked in recent years to improve their image, fundamental questions still remain around access to federal funding and transfer articulation agreements. Federal funding requirements, for instance, require that an institution must receive at least ten percent of their revenue outside of federal funds, which some believe creates disincentives for institutions to serve those most in need. Additionally, federal regulations require that a minimum of fifty percent of course offerings be based on face-to-face instruction, which clearly disadvantages FPCUs whose distance-learning courses are often in highest demand. Finally, many TCUs have adopted policies of outright refusal as they relate to transferring in courses from FPCUs, which has spearheaded a movement to establish objective criteria upon which credits are evaluated.

Despite all of these differences, Tierney and Hentschke make the important contention that FPCUs and TCUs will increasingly find themselves interacting with one another as both are going to be affected—albeit in different ways—by common environmental factors. Just as FPCUs must deal with the public perception around issues of fraud and abuse, so too must TCUs deal with the public dissatisfaction over higher prices and mission drift. With access to capital at the heart of future change and growth for all institutions, it is not surprising that FPCUs are constantly engaged in the business of mergers and acquisitions just as TCUs are growing their partnerships and alliances with key constituents. While the challenge for all educational institutions is likely one of definition and distinction, the authors remind us that FPCUs and TCUs represent variations on a common theme more so than two distinct entities.    

One of the difficulties of writing about FPCUs is that they are characterized more by their institutional diversity than similarity. As such, it is difficult to make overarching generalizations as the empirical data is lacking for all but the largest and publicly traded FPCUs. Tierney and Hentschke, however, remain honest about the shortcomings of the data and throughout the book they remain impartial in presenting the various debates surrounding FPCUs. Perhaps one of the few shortcomings of the book is the cursory attention given to the earlier abuses of FPCUs, which would have provided an important backdrop early on in understanding the origins of the many ongoing philosophical debates. This remains, however, a very important contribution to the extant literature on FPCUs and provides an excellent and at times provocative understanding of the major debates, inner-workings, and comparative qualities of FPCUs.

Cite This Article as: Teachers College Record, Date Published: September 03, 2008
https://www.tcrecord.org ID Number: 15358, Date Accessed: 5/27/2022 1:58:05 AM

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About the Author
  • Mark Engberg
    Loyola University Chicago
    E-mail Author
    MARK E. ENGBERG is an Assistant Professor of Higher Education at Loyola University Chicago. Dr. Engberg is an expert in research methodology, evaluation and assessment, and diversity-based research. Dr. Engberg’s current research agenda is focused on college access and opportunity, with particular emphasis on understanding the role of the high school context on college choice, academic achievement, and persistence. Dr. Engberg has also served as an enrollment management consultant for numerous colleges, helping admission and enrollment professionals build relational databases and employ econometric analyses to simulate admission and financial aid strategies that achieve their goals for access and diversity. He received the 2005 AERA Review of Research award for his article, Improving intergroup relations in higher education: A critical examination of the influence of educational interventions on racial bias. He is actively involved in a number of educational associations and has published in numerous journals, including the Review of Educational Research, TC Record, Journal of Higher Education, Research in Higher Education, and the Journal of College Student Development.
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