Higher Education research and its applications

I have a young researcher who is developing her research skills to understand the complex environment of higher education in the US. In the last several months she has begun a series of research reports which list some of the interesting facts she has discovered. In last week's update (she does this for the discipline of writing and thinking about numbers and also as a way to build a network of people who work on campuses) she presented data from a National Center for Educational Statistics (NCES). Unfortunately, it raised more questions than it answered. So I asked her a series of secondary questions. She responded in a good way and thought more about the implications. As one of my professors once commented to me - data without analysis is just a bunch of numbers.

NCES found in their report that the independent sector (private,non-profit) institutions enrolled about 19% of total enrollment in the country and that they spent about a third of their revenues on instruction. At the same time there was some data on graduation rates. So I asked for a lot of additional numbers that could give the raw statistics some perspective.

So what did she find out? The for profit sector now enrolls about 7% of the enrollment in higher education in the country. If you look at that the independents have moved from about 21% over the last decade to about 19% now. That means that the for profit institutions seem to be taking enrollments (to the extent this is a zero sum game and it is not) from the publics and the independents in about the same proportions as they held before the numbers were collected.

One of the arguments currently circulating in Washington is that there is no real difference between the publics and the independents and the for profit institutions. But here is where the numbers get interesting. A friend of mine from the San Francisco Bay Area who is also a president of an independent college has suggested that the for profits will eventually eliminate the non-profit sector because they do things better. But look for a minute at the numbers. One of the issues that any entity needs to think about is their dedication to their basic purpose. How much of their resources do they dedicate to their actual business purpose? The publics dedicate about a quarter of their dough to instruction. Non-profit institutions offer almost a third. The for profit sector provides just under 24% to instruction. Those numbers are interesting but not entirely dispositive. First, the non-profits and the publics do a lot of other things - so their percentages are right in proportions even if the raw numbers are not correct. But the for profits have a lot less non-educational activities (for example, for profits do not run dorms). So while the publics and the independents may be a bit higher (although the independents clearly offer a higher proportion of resources to their educational mission) the proprietary sector spends a lot less of its resources on the key educational purpose of the educational enterprise.

Now to the other issue of importance; graduation rates. In many higher education circles the four year graduation rate is considered "unrealistic" - but it remains the gold standard of how colleges do their jobs. NCES shows that almost half of the students in independent colleges graduate in four years. Just under 27% of the students in public institutions graduate in that time - but less than 20% of students in independent colleges graduate in four years. That is a markedly different level of performance beween the publics and the for profit sectors and the independents.

Ultimately, my friend who has argued about the ultimate decline in the non-profit sector to the benefit of the for profit sector - fails to see the mission related dedication that the non-profits offer to prospective students. Does that mean that the non-profit sector is exempt from competition? Of course not. And the publics have some slack form market competition because of their subsidy levels. My friend from the Bay Area argues that because non-profits are so focussed on donors they lose attention to their major clients - i.e. students. But the data suggests that the for profits seem to concentrate less on their clients and more on their stockholders (less money spent on instruction and lower graduation rates). The independents that care about ambience - how they serve their students - will be able to compete because they will be able to offer something valuable that prospective students and their families will recognize. Time will tell whether the numbers bear out the projections presented here.