From For-Profit Colleges To Just “Education Services”

With federal regulators increasingly cracking down on for-profit colleges, the companies may start focusing their operations in another direction. Instead of offering education itself, they may provide “educational services” to traditional colleges.

According to one an article by Goldie Blumenstyk in the Chronicle of Higher Education:

Facing new regulations and slowing enrollment for their degree programs, companies like the Apollo Group, parent of the University of Phoenix, are quietly developing or expanding other educational services that they could sell to nonprofit colleges and corporations, moves that could signal the future direction of the for-profit college industry.

Even smaller players are testing the waters. At the all-online Capella University, technologists have helped create two online courses for the business school at the University of Minnesota and some online-training materials for Medtronic, a big medical-device company that, like Capella Education, has headquarters in Minneapolis. Those kinds of business partnerships haven’t been a big priority for Capella, but a spokesman said the company is looking for more such opportunities.

Colleges already make use of all sorts of for-profit companies in their operations. From paper and textbooks to payrollm colleges farm out all sorts of their functions to for-profit corporations.

As Blumenstyk points out, however, it’s going to be difficult for many colleges to expand into other services. Colleges have been looking to cut costs for various functions for years and many services are already provided by existing companies.

But if the companies that currently operate colleges can instead offer services to existing colleges that are cheaper and better than the providers they current contract with, well, that seems like a pretty good to change. There’s nothing wrong with profit in education if it comes as a result of good service. Still, it’s unlikely the companies that currently operate for-profit colleges can make quite as much profit delivering services. But let’s see how this plays out.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer