Financial Structure: A Condition of Accreditation?

Accreditation probation? The risk of losing federal student loans and grants? Losing face as an academic institution of higher learning? All of this now is placed before the University of Phoenix as it deals with a Draft Report it received on February 22, 2013 from the Higher Learning Commission (“HLC”) concerning its comprehensive evaluation process recommending that the school be placed on probation. What activities or wrongdoing should bring such harshness? – academic violations, inferior faculty, inadequate curriculum, any of a thousand other academic measures? No, this punishment was attributable to an alleged deficiency primarily in the area of governance between Apollo Group and University of Phoenix .

Wait a minute – this academic review now turns on how an institution is owned? Finance? You have got to be kidding! Let’s see – the University of Phoenix is wholly owned by Apollo Group, who appoints the members of the University (its wholly owned subsidiary) Board of Directors. This is consistent with every other wholly owned subsidiary in the country. The University has its own Board and makes its own decisions. What does this have to do with Academic Accreditation? This finding was completely unexpected, a surprise in every way. On one hand the report validates the academic experience, the faculty, the degree program and the students. But it criticizes the ownership structure. Is the ownership structure between Apollo and the University unique?

Well, no! If this is a valid deficiency against the University of Phoenix, isn’t it an indictment of every For-Profit educational institution in the country? After all, shareholders expect their company to earn money. And where is it better to teach the lesson of capitalism to the thousands of business students that the University trains every year. No, this is at best an assault on an industry, an industry that is the primary method for most of our citizens to earn a degree. Who else caters to working adults, the ones who time and circumstance kept from attending college earlier? Is it coincidence that this comes at the same time that traditional schools are moving online, to territory previously dominated by the For-profits?

It also clearly a political move. The HLC, under scrutiny by Congress for its loose regulation and hands off attitude over the years, is trying to make a point to Congress and the Department of Education about how tough it is. Instead it only looks to be inept and hopelessly misguided. If we are entering a new time of change and disruption for higher education, how can such incompetence exist in a regulatory authority? It is bad enough to apply the rules after the fact, but it is another to CREATE the rules after the fact.

Don’t the Boards of Devry, Kaplan, Strayer, EDMC and all the rest have obligations to their shareholders as well as to their students? Where in any enabling legislation or statute is the HLC delegated the power to CHANGE CORPORATION LAW? If the University of Phoenix does not serve its students well it will lose in the marketplace, the central determinant of our economy and cultural foundation of a capitalist democratic society.

Of course there are problems in the world of Higher Education. The University of Phoenix, as well as all other universities, are working as hard as they can to resolve those problems for the benefit of students. Why does the HLC insist on becoming part of the problem rather than part of the solution?

Is Higher Education Redefining Itself?

Disruption. Smaller and weaker prevailing. Crisis. This is the theory advocated by Harvard Business School Professor Clayton Christensen, eminent professor and participant in the University of Phoenix Executive Education Series on Innovation. Christensen is the father of the idea of “disruption” as we currently understand it, that smaller, weaker, but more innovative companies break into the low end of a market, then end up completely overtaking previously dominant ones. In a recent interview with “Wired” magazine, Christensen applied his well-known theory to higher education:

“I think higher education is just on the edge of the crevasse. Generally, universities are doing very well financially, so they don’t feel from the data that their world is going to collapse. But I think even five years from now these enterprises are going to be in real trouble.”

To those of who are old hands in the classroom, this is somewhat troubling. His opinion is driven most importantly by the increasing utilization and application of online learning. It is expanding exponentially and available to a broader range of potential students. Christensen is convinced that the field will follow Christensen’s classic examples of disruption.

“Mini mills killed off big steel companies by making low quality, low margin rebar, then working their way up to eat their entire business. The same process is starting to happen in higher education. “

On one hand we have schools aggressively targeting the high end of higher education. Startups like The Minerva Project plan to offer an Ivy-caliber education at less than half the price that those universities charge. Christensen said in the interview that an online accounting course from BYU outstrips anything Harvard Business School can offer.

“Some will survive. Most will evolve hybrid models, in which universities license some courses from an online provider like Coursera but then provide more-specialized courses in person. Hybrids are actually a principle regardless of industry. If you want to use a new technology in a mainstream existing market, it has to be a hybrid.”

So Christensen is convinced that disruption is coming for higher education. To be successful, every university will have to change. Otherwise, they’re going to be overtaken more rapidly than can imagine.

Do you agree? What are the changes that you believe will have the greatest effects on higher education?

For those of us who have taught in Proprietary Schools, the Internet has been a part of our teaching for a long time. So it becomes difficult to view online education as such a disruptive factor. As I reflect on my experience, the Internet has been a nice addition, but hardly “disruptive”. Or has it? I have used the Internet for posting messages, engaging in discussion, for linking to information that exists “out there” or that I have posted. Mostly, I have used Online as an extension of the more conventional approach I have taken in the classroom. Not very disruptive.

But look what is starting to happen! For one thing, a large multitude of major universities have committed to the development and expansion of online learning. And they are approaching it as an entirely new platform, not just an extension of the current, more traditional offerings. The Massive Open Online Courses (“MOOCs)” have exploded on the scene, offering hundreds of courses online at no cost. Although to date none provide actual college credit, it will change quickly, especially as universities offer them under their own curriculum with local faculty discussion groups. What about 250,000 students in a course?

There is a debate raging about the advantages and disadvantages of this approach, but for sure it has opened the door to new thinking on how to offer courses to more students at a more reasonable cost. I’ll discuss these issues in later posts, but it is clear that these new offerings are having a great deal of influence.

I have taken several courses through Coursera, a collective startup of 62 universities offering these courses. I found every one to be very effective, well executed, beautifully illustrated and rigorous in the amount of information included. Yes, it was impersonal, but if you joined in the discussion groups it did feel more collegial.

It is hard to know where this is all going. We’ll see many more of these being offered in the coming year, including early efforts at allowing some to earn college credits. It will be interesting to see more of the leading professors share their craft with thousands of students. It will be interesting to see how it will all affect higher education. And most assuredly, it will be interesting to see how “disruptive” it will all be.

Welcome to the Exchange!

Speaking to you from the Exchange…this is Joe McGirt! Welcome to The Academic Exchange: Reflections on Higher Education, a blog on the varied aspects of Higher Education and the issues that are the primary catalyst in this time of reflection and change. I am a 40 year veteran of classroom instruction in higher education and a 10 year veteran of the crucible called Academic Administration. My training includes undergraduate degrees from the University of North Carolina and Indiana University, an MBA from Harvard Business School and a Juris Doctor from the University of North Carolina. I have had a full and varied career in fields from Management, Law Practice and Entrepreneurism to Academic Administration. I am a lover of teaching and education and the adult students I teach most every night. I hope to create a place where professionals, teachers, students, and people interested in the academic world can discuss their views of every aspect of higher education…curriculum, classroom assessment, retention and persistence, technology, financial aid, student support, classroom management, adaptive learning, MOOCs and many more.

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