For-Profit University Considering Converting to Nonprofit Status

Grand Canyon University (GCU), a for-profit university based in Phoenix with over 35,000 undergraduate and 20,000 graduate students, is considering converting to nonprofit status. Personally, I hope it makes the move even though I have qualms about nonprofits generally.

In my ideal world, there wouldn’t be any for-profits in the fields of health care and education. Yet, as we know, health care is dominated by for-profit enterprises. In fact, many for-profits have taken over nonprofit operations over the past couple of decades. The reason is simple: nonprofits often make lousy managers. Frequently, their operations are highly inefficient, costly and antiquated. Without the financial and operating discipline imposed by competition and the profit motive, there seems to be insufficient incentives for adequate cost control and operational efficiency. But I still don’t like it.

In the world of health care, there are some world-class nonprofit hospitals, including the Mayo Clinic, Geisinger Medical Center and others. It proves nonprofits can excel. We see the same thing in higher education, although as with nonprofit health systems, their success is made possible only by massive taxpayer subsidies.

Interestingly, we haven’t seen the same movement in higher ed as we have in health care. To the contrary, there is a lot of pressure on for-profit colleges, particularly on the part of the Obama Administration. More often than not, the criticism is justified. Too often (but not always), the for-profits demonstrate insufficient concern for learning and their students’ debt levels.

But, of course, it’s only a matter of degree. Many (if not most) nonprofit colleges also demonstrate insufficient concern for student learning and debt, although they (including the so-called private colleges, which should be more appropriately called quasi-public colleges) have the major advantage of being recipients of public subsidies, thereby helping to keep student debt levels down.

As millionaire presidents of nonprofit universities can tell you, and is evident from the lucrative professional sports programs run by major nonprofit universities, there is plenty of profit to be made in the world of nonprofit education. You don’t have to maintain for-profit status to make those who run the institutions rich. (Nonprofit health care systems spin out even more multi-millionaires.)

As I said, in my ideal world all hospitals and schools would be not-for-profit. And they’d all be obsessed with learning and delivering the best possible services and experience to their clientele (patients and students) in an efficient, affordable manner. Perhaps if all the for-profits would convert to nonprofit status, we’d have one less distraction keeping us from the task of reforming many of the nonprofits.

If the for-profits convert, I do hope the nonprofits will pick up the slack in serving the nontraditional student (working adult, veteran, etc.). Many nonprofits only want to serve traditional students. Many have expanded their missions and provide programs designed to serve the nontraditional student, but in many areas these nontraditional students are dependent upon the for-profit sector. Let’s hope that changes.

Best Places To Go To College

The 2014-15 College Destination Index (CDI), developed and recently published by The American Institute for Economic Research (AIER), is a helpful aid in choosing a college. The AIER weighs 12 key elements off campus that contribute to the student experience. As with any ranking, there is a significant subjective element to this index. Most importantly, it doesn’t purport to weigh on-campus factors. But, given what it purports to be, it’s a helpful guide. Continue reading

Colleges Becoming Smarter in Making Admission Decisions

One of the things that surprised me when I moved into higher ed (from the private and public sectors into the role as president of a small college) was the lack of sophistication among most colleges in their admissions processes (vs. pricing, where the best schools had implemented sophisticated modeling). The vast majority made admission decisions almost exclusively on the basis of standardized test scores (SAT or ACTs) and high school grades, drawing distinctions, in close cases, based on strength of high school curriculum and extracurricular activities. I suppose the colleges thought this process served them well. From my perspective, in many cases it didn’t, as evidence by high attrition rates, eroding pricing power and homogenous demographic and socioeconomic profiles of their student bodies.

I was pleased earlier this week to read about the initiative of Rose-Hulman to place greater emphasis on nontraditional factors, that is, something other than imperfect assessments of cognitive ability (such as SAT/ACT scores). Rose’s initiative is reported in this story by the Indy Star entitled Rose-Hulman explores better measures for college admissions. Continue reading

Football Is Far More Important Than Student Learning at Many Universities

Cork Gaines reports (citing this story by Kent Faulk) that University of Alabama football boosters purchased Coach Saban’s residence for $3.1 million and allows him to live there rent free. The boosters want to “keep him happy” lest Saban might be tempted to bolt for a more lucrative opportunity at UT or elsewhere. Apparently the $7 million salary might be inadequate.

In case you think it doesn’t have anything to do with you, think again. The boosters did this via a “nonprofit,” which, of course, is the beneficiary of favorable tax treatment, courtesy of the U.S. taxpayers and the best Congress money can buy. Anyone who pays taxes is indirectly helping to finance most of the college sports programs in this country. Why we find that acceptable is still a mystery to me.

Suffice it to say that hypocrisy is so deep in the world of higher education these days that even hip huggers wouldn’t provide adequate protection.

Shoot High When Choosing a Business School

The Washington Post ran a story titled Where to go to business school if you want the highest salaryI’d put it this way: if you’re headed off to a professional school for an MBA, law or other degree in a highly competitive field, shoot high. Go to a school that attracts the smartest students, has the most rigorous program and the best reputation in the field. Continue reading


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