A Tale of Two Systems of Delivering Higher Education

Issue Brief

Public higher education is undergoing scrutiny for price increases that have been greatly outpacing the rate of inflation for many years, despite sizeable increases in state and federal subsidies. While students protest tuition hikes, many universities are adding lavish benefits, and lifetime employment and limited teaching hours for professors and administrative staff, while cutting back on academic offerings. In just the past year, tuition and fees have increased an average of 14 percent at four-year public universities, to an average of $4,694. Members of Congress looking at reauthorization of the Higher Education Act of 1965 are considering ways they might pressure these public institutions to contain their soaring costs.

Meanwhile, another system of higher education is growing at a phenomenal rate and giving evidence of pleasing its customers. Enrollment at for-profit institutions of higher learning is on track to soar at five times the rate of conventional colleges this year. These institutions are using innovative technology and student-centered approaches to deliver the practical knowledge that students seek to realize their career aspirations. The for-profits make a good return for their stockholders without constantly pleading for taxpayer bailouts or dunning students to support the lifetime employment guarantees, year-long full-pay sabbaticals, and lush health plan benefits of faculty and administrators alike.

As the public becomes more aware of this contrast between systems of delivering higher education, the public and policymakers may draw on the example of the for-profit sector in delivering higher education in the most efficient manner possible. In reauthorizing the Higher Education Act, Congress may want to put the for-profits on an equal basis with conventional institutions, especially considering the great success these entrepreneurial institutions are giving in meeting the needs of historically underserved racial and ethnic minorities. Details follow.

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