Phoenix is accredited by the Higher Learning Commission (HLC) of the North Central Association - the same accrediting body that oversees Ohio State, the University of Chicago, most of the midwest, and my employer. The fact that Phoenix is accredited by the same organization that accredits many of the nation's finest colleges and universities has long been a secret sore spot for a lot of "traditional" academics - they're forced to take Phoenix seriously even though they don't really want to.
To be clear, the article linked above does not say that Phoenix is about to lose their accreditation. But it does raise a very significant question about the business model of for-profit education and its uneasy relationship with higher education in America. The key section of the story is this:
“Specifically, the review team concluded that the University of Phoenix has insufficient autonomy relative to its parent corporation and sole shareholder, Apollo Group, Inc., to assure that its board of directors can manage the institution, assure the university’s integrity, exercise the board’s fiduciary responsibilities and make decisions necessary to achieve the institution’s mission and successful operation,”
The Apollo Group is essentially a holding company for the University of Phoenix; the university produces 90% of Apollo's revenue, so it is to a large extent a shell around the university operation. This is a common model in the business world, and there's nothing wrong with it in business terms. But by this warning the HLC seems to be suggesting that this model of ownership and control may not be structurally compatible with the standards of American higher education.
It's not hard to see why. Faculty at almost all colleges and universities worry about their administrations putting "the bottom line" above academic quality. But being non-profits run by boards of trustees who have no financial stake in the university, and having no shareholders to answer to, the real structural danger of this is low. Despite images of academic administration being "the dark side," most academic administrators were (and remain) faculty members, and they for the most part don't want to pursue revenue and profit at any cost. There is certainly no structural incentive to do so in traditional universities; presidents and provosts who increase the bottom line at the expense of the quality of the institution don't materially benefit from doing so.
On the other hand, an Apollo Group-like structure does have built-in incentives for this sort of behavior. Apollo (NASDAQ: APOL) is a publicly-traded corporation. When corporations that have to issue quarterly financial statements run into trouble, they will naturally turn to their revenue-producing units to, well, produce more revenue and/or cut costs. If they're like most corporations, the CEO and other top-level leadership have a direct and immediate financial stake in the company's fortunes, both through their compensation packages and through their stock holdings. Imagine a university at which the president's pay depended, every three months, on how the university's bottom line was doing.
This is a serious challenge to for-profit models of higher education. As long as Phoenix and its for-profit brethren were growing and exuded an aura of inevitability, people seemed content to leave well enough alone. Now that things aren't going so well (Phoenix and many of its kin are in the midst of a massive retrenchment), people are starting to look a little more closely. And the questions are proving to be uncomfortable.
Wall Street's answer, of course, would be to do away with the accreditation standards and "let the market decide". But American higher education didn't get to be the global gold standard by playing fast and loose. The accreditation system in place, as frustrating and sometimes hide-bound as it can be, has much to do with American dominance in university education. Scrapping it would indeed be killing the goose that lays golden eggs.
It will be interesting to see how this plays out over the next year - whether Phoenix (the standard-bearer in the for-profit world) can figure out how to insulate its academic operations from its for-profit realities. If they can't square that circle, that may spell the end of the whole experiment. Even if they do manage to hang on, I suspect it will be under much more significant constraints than they have faced in recent years.
Another great post, Bill! Excellent analysis.
ReplyDelete