You are here

Future Shock

Future Shock

Survival of the Fittest: Adaptive Ownership in the 21st Century
University Business, May 2011
Future Shock

Darwin put it this way: "It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change." This simple truth in nature may best describe the evolution of the most nimble higher ed ownership models in the 21st century.

Though the century behind us witnessed scores of proprietary conversions to non-profit status, the decade just past has produced a significant number of non-profit colleges transitioning into for-profits — whether by choice or exigent circumstances. The next generation of proprietary colleges and universities have emerged as a new breed of customer centered, career driven higher learning institutions — placing students and employers first, in the increasingly competitive post-secondary marketplace.

Located in Nashua, New Hampshire, Daniel Webster College provides an instructive case in point. Chartered in 1965 as the New England Aeronautical Institute, DWC evolved into a more traditional, small, tuition dependent, residential campus — an institution which eventually came upon hard times. Over time, Daniel Webster faced irreversible financial challenges, threatened loss of accreditation and inevitable closure — yet another victim of a global economic meltdown. In 2009, ITT Educational Services purchased DWC and invested tens of millions of dollars to cover the College’s debts, residual obligations, deferred maintenance and long overdue campus infrastructure, technology and academic program improvements. Through the for-profit acquisition and capitalization process, DWC was able to preserve its core mission, and importantly, the preponderance of its faculty, staff and programs. As a result of this significant resource investment, the College was eventually successful in recruiting new leadership, culling outdated and under-enrolled programs, and putting in place an adaptive management structure and a more responsive decision making process.

Having witnessed these impressive turnaround success stories, the for-profit conversion process has not been a bed of roses.

Today, Daniel Webster still offers unique, state-of-the-art Aviation industry related programs — and other new, high demand programs such as Sport Management, Homeland Security, Game Design, Simulation and Robotics. Impressively, visitors to the campus can actually see the transformation inside and out. As a consequence of these considerable gains, the College has become vibrant, and impressively, more sustainable for the long term — with lower than normative student default rates.

Consider as well the case of the New England College of Business and Finance, located in Boston, Massachusetts. Facing hard times and increased competition, the College was acquired in 2005 by Whitney International University. Founded in 1909 by the banking industry, the college now offers, under new ownership, associates, bachelors and masters degrees in a variety of business-related programs. Through private, for-profit investment, the College has expanded its market, maintained its regional accreditation and now offers courses online — still serving the banking and finance industry and other business career fields.

Originally formed in 1903 as a Norwegian Lutheran institution, Waldorf College in Forest City, Iowa gained junior college status in 1920. In 1994, the college began granting bachelors degrees — still with an emphasis in liberal arts.

Despite its best efforts to increase enrollments, Waldorf faced daunting economic challenges and was sold to the Mayes Education group, a for-profit education company, in 2010. Today, Waldorf offers innovative, accelerated program options as well as hybrid bachelor degrees in organizational leadership, sport management and justice administration.

Having witnessed these impressive turnaround success stories, the for-profit conversion process has not been a bed of roses. Take the case of Ashford University located in Clinton, Iowa. Once known as Mount Saint Clare College and later Franciscan University of the Prairies, the University was purchased by for-profit Bridgepoint Education in 2005. At that time, Ashford had an estimated enrollment of 300 students. Fast forward to 2011, a mere six years later, and Ashford enrolls a reported 78,000 students and $216 million in profits.

Along with Ashford’s exponential growth came U.S. Department of Education allegations of wrongful admissions staff incentivization and reports of improper retention of federal financial aid funds of withdrawn students. Unfortunately, these concerns have been exacerbated by recent print media reports — claiming that Ashford has significantly decreased per-student instructional expenditures and higher reported student default rates.

And, the Ashford case is not alone. Just consider the parallel allegations and concerns raised by congressional staffers and U.S. Department of Education officials regarding Grand Canyon University in Arizona. Indeed, the list of for-profit conversion targets and reported spiraling student default rates seems to grow nearly every quarter. These latter concerns have also been fueled by sensational television spotlights — like 60 Minutes on CBS and the Price of Admission on CNBC. This kind of video journalism has been cited by some congressional leaders as a cautionary tale of what can happen when institutions put profits ahead of higher education.

Institutions like Daniel Webster, Waldorf, and the New England College of Business and Finance have survived the Darwinian economic downsizing that has forced so many similarly situated colleges to merge or go out of business. Significantly, these institutions have been transformed by their corporate benefactors from endangered species to best of breed higher learning organizations. To quote Darwin, "In the long history of humankind—those who learned to collaborate and improvise most effectively have prevailed."

James Martin and James E. Samels, Future Shock columnists, are authors of Turnaround: Leading Stressed Colleges and Universities to Excellence (Johns Hopkins University Press, 2009). Martin is a professor of English at Mount Ida College (Mass.) and Samels is president and CEO of The Education Alliance.