Trump or No Trump, Can For-Profit Higher Education Reinvent Itself?

The demise of Corinthian Colleges and ITT might be regarded as inevitable churn in a dynamic industry, but it also raises existential questions. The for-profit pitch is that many non-traditional students are better served by teaching-only, career-oriented institutions that emphasize the student as customer. Yet, the problem for the sector is twofold:

1. Large numbers of nonprofit colleges and universities have emulated the for-profit approach, often at a lower price, making the typical for-profit school less distinctive. For-profits peaked at about 12% market share in 2010 and are now in retreat.
2. The formula for commercial success in other industries—standardization, scale, and consolidation—has not played out in higher education. For-profit schools have yet to make a convincing case to students or government.

Too often, for-profit higher education is a means to an end rather than a transformative student experience.

Even if a Trump presidency is predisposed toward for-profits, the value proposition question needs an answer. Simply rolling back regulation misses this bigger challenge. So, where might for-profit higher education go from here?

In recent years, much private capital has funded the alternative credentials movement or the companies that sell to traditional schools, leaving most major for-profit universities and colleges to pursue reinvention at the margins. They’ve made international acquisitions (DeVry), purchased coding bootcamps (Capella, Phoenix), or focused on selling off less attractive assets (Career Education, Kaplan). Grand Canyon’s innovation is to build a traditional campus for younger students to balance out its online business.

The best example of core innovation may be the for-profit embrace of competency-based education with Capella University in the lead. Even this has yet to generate game-changing momentum, in part because nonprofits are already very active in this space.

Strayer University, however, presents an interesting case study on the direction for-profit higher education might take. Strayer, a publicly-traded, single-brand school with over 40,000 students online and on-site, is attempting reinvention on a number of fronts. Yes, Strayer has acquired a bootcamp, and, like many other schools, is trying to tempt corporations with big discounts on its degrees, but the story doesn’t end there.

Two other original Strayer initiatives, the Jack Welch Management Institute and the “Readdress Success” brand campaign, hint at how the for-profit sector might evolve, but also raise some notes of caution.

The Jack Welch Management Institute

Let’s start with the Jack Welch Management Institute (JWMI). JWMI started out at Chancellor University, a now-closed, for-profit university, and became part of Strayer in 2011. The institute is the brainchild of Jack Welch, longtime CEO of General Electric (GE) known for dramatically increasing GE’s market valuation and culling under-performing managers and business units. Welch saw a need for a more hands-on business school, and he only considered a for-profit home for his institute, thinking it essential that JWMI practices what it preaches. While JWMI offers conventional master’s degrees and certificates, it is in other ways a departure among for-profit schools.

Although naming is common among the higher echelons of nonprofit b-schools, normally to honor a major donor, it is rare among for-profits. A name adds cache to a brand, so alignment with one of the best-known contemporary leadership thinkers is a coup. In this case, the JWMI MBA is priced higher than Strayer’s standard program.

Taken at face value, JWMI is doing well. Princeton Review ranked the institute #22 on its list of the best online MBAs, and LinkedIn named it the “most influential education brand” in 2015. Poets & Quants said the institute was one of the top 10 business schools to watch in 2016. JWMI claims it is one of the fast growing business schools in the world, with over 1,400 students.

Jack Welch is said to be involved in all aspects of the institute, a departure from the norm at nonprofits where donors fund big ideas but have little say over the details. Branding aside, what is the substance of Mr. Welch’s contribution? In a video, Mr. Welch talks about teaching students how to build “winning teams” and to learn things on Monday they can apply on Tuesday, and then return to class on Friday to discuss what worked.

These claims allude to a distinct approach to teaching and learning that is often missing among for-profits. While it is a match to the headlines of its guru’s best known books, it can also be tough to distinguish differentiated value from marketing. Students study 100% online, the specifics of which are not articulated, which may suggest the experience actually resembles that at other online schools. The value—to the student—of a for-profit business school, is not spelled out.

JWMI represents an intriguing direction for Strayer and will not be the last branded for-profit business school. Ashford University’s Forbes School of Business is a more recent example. JWMI has the potential to shake up a commoditized b-school market among for-profit and nonprofit schools alike, but must guard against being different in name only.

Strayer “Readdresses Success”

A second novel move by Strayer is the “Readdress Success” initiative, a clever marketing campaign to get the Merriam-Webster dictionary to change its definition of the word “success.” According to Strayer, the dictionary definition of success in terms of money, fame, and recognition is too narrow. It built a website featuring prospective students, various celebrities, and other public figures, reflecting on happiness, satisfaction, and relationships.

Strayer has been quite creative, setting up a giant megaphone on a city street and inviting passersby to shout into it their life’s goal. It has also persuaded people to phone a loved one—live on camera—to thank them for their support.

This approach is subtly different from the typical “get a degree, get a career” for-profit campaign. The effect is more emotional than transactional, and prompts a less cynical reaction. There is no more than an implicit link to the enrollment funnel.

While the best brands embody such intangibles, they also must deliver something tangible. “Readdress Success” is a great complement to the conventional Strayer brand, but the school is still selling degrees. How to clearly and compellingly foster, define, and report student outcomes is still on the horizon for for-profit schools, and higher education generally. Strayer is no exception.

Our Take

Does Strayer have the makings of a winning formula? There is early evidence that fresh approaches like JWMI and “Readdress Success” may be working. The university recently posted its best quarterly results in many years, showing healthy growth in new student numbers—something that continues to elude many of its peers.

For-profit higher education needs a reset if it is to successfully reach beyond conventional branding and carve out a growing niche. In Eduventures’ view, efforts like Strayer’s represent green shoots but are not yet sufficient. Higher education has a surplus of branded business schools and emotionally-charged ad campaigns. For-profit innovation must be more than nonprofit imitation. Deliberate pedagogies and compelling outcomes evidence remain in short supply across higher education as a whole. Strayer should be commended for thinking differently, and its efforts highlight the need among for-profits to think bigger and bolder.

[Editor’s note (12/6/16): APUS was removed from the list of purchased coding bootcamps.]