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For-Profit Schools: They Get IT


Photo courtesy of Kaplan University

The for-profit sector of higher education has generated some disturbing headlines recently. Widely publicized charges of predatory recruiting practices have prompted new regulations and provided fuel for scorching criticism of the entire business model. But while the spotlight is focused on what for-profits are doing wrong, are we overlooking what they're doing right? Can nonprofit colleges and universities learn something from their beleaguered brethren?

Notwithstanding the recent enrollment dip reported by the larger for-profits (a likely result of bad publicity and congressional scrutiny), this market sector has grown significantly over the past three decades. According to the National Center for Education Statistics (NCES), undergraduate enrollment at private, for-profit four-year institutions increased fiftyfold between 1980 and 2009, from 23,000 students to 1.2 million, and undergraduate enrollment at private, for-profit two-year institutions grew from 100,000 to 400,000. The US Department of Education says for-profit schools now account for about 12 percent of all higher education students.

While many factors have contributed to the extraordinary growth of the for-profit sector, it's clear that technology has played a key role in allowing these schools to pursue a business model built largely around flexibility.

"We are living in an on-demand world, and higher education needs to embrace that," says Charles Flader, executive director for academic technology at for-profit Kaplan University, which serves nearly 54,000 students online and approximately 7,900 on 11 campuses in various states. "Our students are pushing us all the time, demanding that they get the same technology experiences here that they get in other parts of their lives. We spend a lot to make sure they get that."

According to some estimates, for-profit colleges spend more than 10 percent of their operating budgets on technology infrastructure, while not-for-profits spend less than three percent.

"The way we use technology supports a kind of academic agility," notes Ruki Jayaraman, dean of the College of Undergraduate Studies at Argosy University (multiple locations). "We implement technology quickly and effectively, and, perhaps more importantly, we abandon it when it no longer serves us."

Argosy is one of the larger for-profit schools, and one of the more traditionally academic. Formed in 2001 with the merger of the American School of Professional Psychology, the University of Sarasota's (FL) business and education programs, and the Medical Institute of Minnesota, the school now comprises 19 campuses across the country and supports an extensive online program.

Argosy makes extensive use of a learning management system, e-books, an online library, and a wide range of digital assets--all of which support the company's ability to deliver courses to a non-traditional student who can't study for a Psych 101 exam until after the kids are in bed. And the IT infrastructure, which is owned and operated by the parent company, Education Management Corporation, "is huge," says Jayaraman.

"This flexible-delivery modality is essential to us," she adds. "I don't want to speak for all for-profits, but we are quick to deploy any technology that is useful for our students. We are constantly on the move. And we couldn't do it without such a robust infrastructure."

Flexibility is a trait that traditional schools will have to develop if they hope to appeal to a wider market. "The idea that everyone is going to be able to physically attend a traditional, brick-and-mortar institution for two or four years, full-time, doesn't reflect the reality of modern life," says Flader. "Our students have jobs, families, lots of demand on their time."

Could not-for-profit schools achieve such flexibility? Jayaraman, who worked at a traditional school before joining Argosy, believes they can. "The nonprofits could definitely do what we are doing--absolutely," she says. "But some traditional faculty, who have not been exposed to technology, are afraid. You have to get in front of any technology initiative and socialize people into it." At for-profit schools, such socialization is often easier, however, given the fact that tenure is not an issue and many of the faculty are adjuncts who also work in the business world.

Single sign-on is also critical, cautions Jayaraman. If Argosy's students and teachers were unable to access the school's multiple systems via a single authentication action, she says, the system would be unworkable: "It's a highly integrated system."

Structured Flexibility
While traditional colleges and universities will be familiar with the technology used by for-profits, the "structured flexibility" of the for-profit sector might be harder to emulate, says Kathy Kurz, a partner at Scannell & Kurz, a higher ed consulting firm specializing in enrollment management and planning.

"The for-profits have a limited number of majors and a limited number of course offerings for that major, because the faculty is teaching to a curriculum that was probably set at corporate headquarters," explains Kurz. "It's a lockstep curriculum that allows them to deliver a program flexibly, in an unregimented way that's convenient for their students. Ironically, when the not-for-profits try to become more responsive to their customers, which is a good thing, they tend to try it within their old paradigm--lots of faculty flexibility and control--and they often tie themselves in knots."

Kaplan, which offers more than 125 academic programs, is an excellent example of the kind of structured flexibility that Kurz believes traditional colleges struggle to implement. Kaplan spent the last four years developing and implementing a course-level assessment program that now allows the school to update its course offerings on an ongoing basis. Each course has between three and eight course outcomes, which show students exactly what they need to achieve.

"One of the big things we've done as an organization is to help our students clearly identify the learning outcomes they need to have and the course-level framework that helps them to achieve that goal," says Flader. "This methodology allows us to institute what you might call a measurable-improvement loop. We redesigned more than a thousand courses for 62 degree programs. We put that technology foundation in place, so that we can make sure those courses and degree programs stay as good and current as possible. It's become a cornerstone of all our programs."

To keep those course offerings up to date, though, means understanding what your students want in the first place. Indeed, in the high-stakes world of for-profits, a company's ability to respond to market demands can spell the difference between success and failure. "The world has become very competitive," says Flader, "and we're constantly called upon to position and reposition ourselves with the right skills to be successful."

Julie Bryant, associate vice president for retention solutions at Noel-Levitz, an Iowa-based consultancy group, believes that not-for-profits might learn from the way for-profits use student-satisfaction data to drive improvements.

"Traditional not-for-profit institutions do student-satisfaction surveys, but there's a very strong commitment among for-profits to survey their students regularly," says Bryant. "There's a clear understanding among for-profits that they need to be especially responsive, because of the turnover potential in their student population. They really are committed to gathering that data for planning purposes."

Bryant is responsible for the Noel-Levitz Student Satisfaction Inventory, a proprietary instrument designed to measure student satisfaction and priorities. There are versions for career, private, and public schools. A growing number of for-profits are now using tools like the Noel-Levitz survey in collaborative ways across multiple campuses--an approach not readily emulated by not-for-profits.

"A campus in one location might be able to serve students in a particular way, and that model can be applied to another location within the same system," Bryant explains. "It's definitely a benefit for for-profits that stand-alone traditional institutions may not have, because they don't typically work collaboratively with other institutions in their state or region."

Marketing and Recruitment
Student-satisfaction data can be gathered only after a student is enrolled, however. Persuading a student to attend in the first place is a different game--and one where for-profits have definitely taken the lead over their traditional counterparts. According to Kurz, at least some of the growth in the for-profit sector is a direct result of its "incredible responsiveness" throughout the recruitment cycle.

"When a student inquires at a for-profit, they're going to get a response within a couple of hours," she says. "But when some of the not-for-profit schools get a similar inquiry, they might not respond for months. The for-profits know that they can't afford to be that unresponsive--that students are their lifeblood--and they use the available technology to connect fast. Even the not-for-profit schools that do get it--that understand that they need to be more responsive--are not necessarily using the technology as effectively as they could be. It's a surprising mindset that we see all too often. We have not-for-profit clients that are still manually keying in SAT scores!"

Of the approximately 2,000 for-profit colleges operating today, some are niche specialists that offer career-focused training programs in everything from computer-network security to medical billing and computer-aided design. It's from these career-training programs that traditional colleges and universities might take another cue, says Kurz.

"Clearly the for-profits have paid more attention to marketing the outcomes for their students than the not-for-profits, which is not to say that not-for-profits don't have really good results to demonstrate--if they would just gather the data and share it," she notes. "The fact is, a lot of students who go to liberal arts colleges may get onto a career path that has tremendous payback potential down the road. They may not have been trained for a specific job, but they've certainly been trained to think and reason and exercise their creativity. For many employers those are quite desirable capabilities."

Even if traditional schools don't have outcomes data to use in their recruitment efforts, they can still learn from the targeted marketing approach of for-profits, claims John Dysart, president of The Dysart Group, a higher education consulting firm in Charlotte, NC. Most for-profits continuously evaluate their marketing programs, he says, and generic branding is avoided because its usefulness in securing enrollments has proved uncertain. Furthermore, for-profits are not afraid to invest in television, radio, and print advertising to attract adults. (Who hasn't seen the "I am a Phoenix" television commercials?)

But it's through the web and social media that for-profits are most effectively reaching high school seniors, Dysart says. In fact, for-profit colleges are spending huge amounts online to market their programs via social media, search engine marketing, and relationship marketing. As an example, the largest share of the University of Phoenix's $222 million marketing budget for 2007 was spent online, according to Advertising Age.

"[For-profit] schools can be much quicker to utilize technology for communicating with students," notes Dysart. "While traditional schools were still using snail mail, many for-profits introduced e-mail. And while traditional schools have adopted e-mail, for-profits are much more likely to utilize text messaging, QR codes, and social media."

Kaplan's Flader agrees. "We are making more of an effort in non-traditional paths where students might discover us," he says. "We're participating more in things like MIT OpenCourseWare [a web-based publication of MIT course materials]. We're trying to find some additional paths where students who are self-learners are looking for opportunities. I and others have been pretty encouraged by the feedback we're getting from students."

For-Profits and the Student Debt Crisis

Critics have slammed the for-profit sector for abusing federal financial-aid funds and producing students who carry thousands of dollars in debt with little to show for their investment. Education committees in Congress have been looking into charges of waste and fraud by for-profit colleges, whose students represent more than 40 percent of student-loan defaulters and receive nearly $9 billion in federal Pell Grants, according to the Department of Education.

The for-profits argue that their students default at higher rates because they are generally poorer and face more life challenges than the average college student at a traditional college or university.

In June, the Obama administration released details of a controversial rule that would cut federal aid to for-profit colleges whose students graduate with too much debt and essentially worthless degrees. The Association of Private Sector Colleges and Universities, which represents more than 1,650 colleges, promptly filed a lawsuit in the federal District Court in Washington, DC, seeking to block the new "gainful employment" regulations.

In July, a group of 20 small for-profits published a "code of conduct," agreeing to post online the cost of tuition, their graduation rates, and whether students in their academic programs will qualify for licensing in their fields.

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