A New Kind of Competition

Last week the University of Phoenix, the biggest private for-profit university in the nation, released its first "Academic Annual Report," which compares the scores of Phoenix seniors to Phoenix freshmen on the Measure of Academic Proficiency and Progress (MAPP) test, which is administered by ETS, the same folks who administer the SAT, AP, and GRE. Phoenix says their freshmen enter with lower scores than typical college students but leave at about the same level, evidence (they contend) that a Phoenix education is sound.

Now, one can dispute the methodology here, and point to the fact that MAPP can only capture a sliver of what colleges aspire to teach their students in the best of circumstance, and these would be fair points to make. But they also really miss the forest for the trees. Of far greater import is that here we have an individual university actually voluntarily providing public evidence of how much its students learn while they're in college. This rarely happens. And the fact that a for-profit university is leading the charge is wholly unsurprising.

The public and non-profit university sector has traditionally held an iron grip on an incredibly good market to have in the information age: credentialing higher learning. Elite institutions in particular are essentially selling branded intellectual property; just as corporations like Microsoft and Eli Lilly have made vast fortunes in this business, so too has it worked out exceedingly well for the likes of Stanford and Duke. Given significant financial and regulatory barriers to entry, along with burgeoning demand driven by demographics, public policy, and changing economic conditions, traditional colleges have been able to stay relatively inefficient and complacent in the way they provide educational services while transferring education-generated revenues internally to pay for other things like faculty scholarship, sports teams, etc.

For-profits like Phoenix have historically built their businesses by going after the parts of the market that traditional colleges were either unable or unwilling to serve: adult students, part-timers, occupational training, etc. But it was only a matter of time before they started to turn toward the huge profit center that is the traditional four-year college student. That they've made inroads here despite competing on un-level financial playing field (lacking the direct and indirect tax-related public subsidies non-profits enjoy) just goes to show how much financial slack is built into the cost of educating a traditional undergraduate.

So it stands to reason that for-profits would be much more aggressive in marketing their learning results, in competing for students on educational terms, rather than via brochures featuring five demographically balanced students sitting in a circle on a leaf-strewn academic quad. In the end, education is all the for-profits have to sell. Some traditional colleges and universities see the handwriting on the wall and have pushed to create new venues for self-reporting data, e.g. the Voluntary System of Accountability sponsored by public and land-grant institutions. The Phoenix report just emphasizes that the clock is ticking: either traditional colleges and universities will determine how institutional success in teaching students will be measured and defined, or somebody else will.