It’s not that long ago that people like Alan Gilbert (then Vice-Chancellor at Melbourne, and now at Manchester) were presenting the for-profit University of Phoenix as the future of education, and its critics as Luddite equivalents of the 19th century handloom weavers. It was obvious even at the time that U Phoenix was little more than a grandiosely titled trade school, occupying one of the relatively limited educational niches where for-profit firms have traditionally played a role. But even here it seems, there are pretty big problems, with a graduation rate of only 16 per cent for students without previous college experience. However hard you spin it,* this is an unimpressive result.
Admittedly, though, once you accept the defence that Phoenix is not a real university, it’s hard to make such comparisons. It’s in a different business and can’t be compared with community colleges, let alone state universities or high-end (non-profit) private institutions.
By contrast, Edison Schools represents a direct challenge to not-for-profit school education, public and private. It’s generally received a pretty favorable run from commentators on education most of whom are keen to see some kind of change, a group that has included the Rand institute. That’s way its striking to see a Rand study, commissioned by a school district that has given Edison one of its biggest contract, concluding that Edison schools performed no better than the public alternatives, despite receiving extra funding.
There can scarcely have been a more favorable climate in which to develop for-profit education than that of the last decade. The unimpressive performance of Phoenix and Edison, along with the complete failure of other for-profit initiatives and the absence of any significant success stories in the for-profit sector over many centuries and many different countries and institutional environments suggests that the for-profit model is fundamentally defective as a way of providing education.
Why is this so? The obvious reason is that educational institutions must build up reputations over decades, since the consequences of cutting corners take decades to emerge. This makes no sense in terms of profit maximization and individual incentives, so it requires a professional/academic ethos which at least in part, overrides narrow forms of individual rationality. Such an ethos cannot survive in a for-profit firm.
* The University of Phoenix says that only 7 per cent of its students fall into this category, and calculates a rate of 50-60 per cent, but this is not a figure comparable to that for other universities.