Faculty Organization Chides For-Profit Online Education Companies

The report says private companies make decisions to boost profits, not improve quality for students.

A new report argues private companies venture into online education to make money, not to help students.
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The motivating factor behind private companies venturing into online education is not to expand access to colleges and universities or reduce costs for schools and students, but rather a desire to make money. That's according to a report released by a national group of faculty leaders on Wednesday.

The Campaign for the Future of Higher Education claims in its report, the first in a series of three being released this month examining how private funds influence higher education, that private companies involved in online education make decisions that will benefit their business bottom line, rather than the quality of online courses for students.

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"This is not about students, it's about profit," Eileen Landy, a professor at the State University of New York, Old Westbury, said in a call with reporters Wednesday. "We can't blame businesspeople for taking care of their business. But we in higher education need to take care of ours."

Profit-making in online higher education, the authors say, began long before the recent explosion of massive open online courses, known as MOOCs, which are typically run by private companies that partner with higher education institutions.

The report takes aim at "stand-alone" for-profit institutions, such as the University of Phoenix and Kaplan University, that were the "leaders of the online higher education business world" in the early 2000s.

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"The motivating factors behind the recent insane push to online education has little to do with providing quality education to students," said Lillian Taiz, a professor at California State University, Los Angeles. "Private companies are, and have been for some time, making a killing off of online higher education."

A 2012 report released by Sen. Tom Harkin, D-Iowa, revealed that the majority of revenue at for-profit colleges came from federal financial aid dollars, despite the fact that more than half of students who enrolled in 2008 left without a degree or diploma within four months. Sixty-four percent of students attending online programs left without a degree, the report found, compared to 46 percent of those attending bricks-and-mortar programs on campus from the same school. It also argued that for-profit providers spent more on advertising and recruiting students than on instruction.

Mark Brenner, senior vice president of the Apollo Group, Inc. which runs the University of Phoenix, said following the report that it did not capture "the truth" about the university or its students. He said ensuring that students successfully complete their degree programs is a "top priority" for the university.

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"University of Phoenix has invested hundreds of millions of dollars in our students' learning platform and classroom experience," Brenner said. "In fact, many of the techniques first pioneered by University of Phoenix including online learning, e-textbooks, collaborative learning teams, adaptive learning and expert faculty practitioners are now considered best practices in the higher education community at large."

But in the aftermath of the investigation, enrollment at for-profits dropped and the companies suffered financially. But they soon began forming partnerships with existing universities. The University of Phoenix, for example, announced it would partner with more than 100 community colleges in 2013 to recover from the enrollment drop.

Also of concern, the authors argue, is the recent emergence of for-profit MOOC companies.

"They've got buckets of money and almost as many ideas for ways to make money off students," Landy said.

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Two of the largest MOOC providers, Coursera and Udacity, have received $43 million and $21.5 million of investor money, the report says. But these companies do not acknowledge in their sales pitches the poor completion rates of the courses, and "digital divides" that may create barriers for some students, Landy said.