An Unexpected Threat to For-Profit Universities

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(Authored by John Carroll, Ph.D.)

For-profit colleges and universities have been under siege for nearly a decade. The latest existential threat is not from regulators but from traditional colleges and universities who are embracing online education.

According to IPEDS[1], enrollment in for-profit higher education[2] has fallen from a peak of about 1.7 million in 2010 to 1.1 million in 2015. The 35% decrease is attributable, in part, to increased regulation, more scrutiny from accreditation bodies, and an overall decline in college enrollment. Also, competition from within higher education has become increasingly fierce as traditional private non-profit and public colleges launch successful online degree programs. Two traditional schools who have embraced online education, Southern New Hampshire University and Arizona State University, exemplify how quickly the competitive landscape is changing.

Online enrollments at Southern New Hampshire University (SNHU), a private non-profit residential university in Manchester, NH[3], skyrocketed by nearly 400% from 2012 to 2015[4]. SNHU went from 2,500 students in 2005 to over 80,000 today[5]. Most of SNHU’s students attend online. SNHU’s innovative competency-based approach and relatively low tuition makes them an attractive alternative to for-profit online colleges.

Arizona State University (ASU) has more than 100,000 students with over 30,000 of them online[6]. ASU’s President, Michael Crow, embraced online education as a means to serve more students and generate much needed revenue. Some in the for-profit sector dismissed these emerging threats from traditional schools believing that universities like ASU could not make it work.

Some in the for-profit sector thought traditional colleges and universities had too many institutional barriers preventing them from innovating. Highly skeptical faculty, coupled with bureaucratic inertia, eliminated any possibility of meaningful and timely change. They simply could not compete. For-profits, on the other hand, were considered to be nimble disrupters. They served millions of forgotten students, touted career relevant degree programs, and fought to legitimize online education. Traditional colleges could never catch-up. Or, so they thought.

The phenomenal growth at SNHU and ASU is evidence that the competitive landscape has changed. Ironically, the for-profit sector’s fight to legitimize online education has hastened its own demise. The spectrum of community colleges to tier-one research institutions once rejected online education with little or no consideration. Now, some traditional universities offer complete degree programs online. Declining enrollment at for-profits will accelerate as more and more traditional colleges replicate the Southern New Hampshire and ASU models.

The biggest threat to for-profits is not from other for-profits or regulators, although that still exists, it is from traditional colleges and universities who are embracing online education. We need not worry about for-profits being regulated out of business. Increased competition from traditional universities may do that soon enough.

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[1] Integrated Postsecondary Education Data System, Digest of Education Statistics, 2016. Table 303.70.

[2] I served in academic leadership roles at for-profit university in Austin, TX for 11 years. I continue to serve as an adjunct professor of economics at two for-profits and Austin Community College.

[3] https://www.snhu.edu/about-us.

[4] Ledman, D. (2017) Who’s Up and Who’s Down in Online Enrollment. Insider Higher Ed. May 3, 2017

[5] https://www.snhu.edu/about-us/leadership-an-history.

[6] Ryman, A. (2017). ASU enrollment tops 100,000 for the first time. The Republic September 13, 2017. www.azcentral.com

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