In the US it is not uncommon for business people to regularly claim that they know how to ‘fix’ education and that if the educational system were run like a business, then it would produce much better outcomes than it currently does. School districts sometimes fall for this line and hire business executives and companies to run systems. In fact, some wealthy business people like Bill Gates use their financial clout to muscle their way into school policy making and get their pet theories implemented (the ‘small schools’ model for one) that have very little research backing.
I have long felt that the goal of an alliance of right-wing religious, libertarian, and capitalist interests is to completely destroy the public education system in the US and thereby divert the vast amounts of money that goes into it into private hands, some of them religious. This is part of the general desire to privatize large public sectors (like Social Security) so that they can make a profit from them.
A good example of the perils of privatizing education is what happened to the University of Phoenix. This for-profit institution experienced rapid growth but has recently fallen on hard times. Ben Miller, Senior Director for Postsecondary Education at the Center for American Progress, says that what caused it to arrive at its current predicament is a warning sign to all for-profit educational institutions.
The basic problem is that when you have a publicly traded for-profit business, shareholders demand growth. In the case of Phoenix, the entrance criteria that it initially had for enrollment (and was the basis for its early success) did not allow for the growth in the number of students that it required to satisfy investors, so it steadily lowered its standards until it fell afoul of federal regulators because of low completion rates.
So in the 1970s Phoenix created a model attuned to this type of learner, complete with flexible schedules and programs paired to workforce demands. But Phoenix would not take just anyone: Enrollees had to be at least 23, work fulltime, have at least two years of employment experience, and have some college credit. It was certainly not selective in the way that status-seeking traditional colleges were, but Phoenix did say no to people who were not set up to succeed in its coursework.
Phoenix found a population waiting to be served. By 1994 it had 31,000 students—the size of most large public colleges. But the university wanted to be bigger, and Wall Street was ready to assist. In 1995, the university’s parent company went public and, before the decade was out, enrollment passed the 100,000 student mark.
There was just one problem: The population suited to Phoenix’s specific model was not big enough to keep meeting the quarterly investor demands for new students. Faced with the choice between maintaining quality but capping growth (and stock prices) or abandoning the core model in pursuit of profit, Phoenix’s age, work and other restrictions went by the wayside. A learning environment calibrated to a very particular set of students was suddenly welcoming anyone with a pulse.
This reminds me of the situation prior to the housing bubble collapse where banks were handing out home mortgages to practically anyone. As a result of this open-enrollment policy, enrollment at Phoenix rocketed to over 460,000, inspiring a whole host of similar companies to enter the market. Many of these students were dropping out but were paying for tuition with federal loans and grants, another example of taxpayer money being siphoned off to private hands. But as the government started cracking down by enacting new regulations and closing loopholes in order to stanch the dropout rate, business at Phoenix suffered.
The descent was not pretty. More than a hundred campuses closed. Enrollment halved and kept dropping. A special learning platform built by top-notch engineers had technical difficulties so significant the company says it hurt retention rates and is being dropped for other commercial options. Phoenix’s peers in the for-profit education market started shrinking too. One went bankrupt; another is exiting the market. Still others might fold.
On Monday, Phoenix’s parent company ended the experiment and announced that it was considering implementing new admissions criteria that would limit the number of underprepared students it enrolls. It is also closing most of those problematic associate degree programs once housed under the Axia brand.
This idea that the private sector can run schools better ignores the fact that other nations have effective government-run school systems.
Education is not a business and those who claim that it is so and try to run it as they would a business will fail.