Earlier this summer, we predicted that the governmental and media scrutiny that for-profit institutions have faced for much of the year would be relatively short-lived. We wrote that the for-profits exercised significant political influence and it was doubtful that Gainful Employment would be implemented as initially proposed if at all. We also predicted that the largest for-profits had the market power, expertise, and resources to “reinvent” themselves just as other large corporations have done throughout contemporary American history.
Well, light is beginning to appear at the end of the tunnel for these schools, although, it is happening much faster than we ever expected.
Last week, in the wake of receiving over 90,000 comments, the United States Department of Education (DOE), decided to postpone issuing final rules on Gainful Employment. This will delay enactment by at least a year and that is assuming the political environment in November will sustain continued effort at all by the Department. If the DOE does enact new rules on the issue, we will be very surprised if they are not much tamer than the proposed regulations that have been introduced.
Now that media scrutiny on for-profit schools has started to subside and the public’s attention is beginning to focus on the November elections and challenges of our public K-12 education system, the University of Phoenix has led the way in the effort to “reinvent” for-profit education. Some of its efforts have been subtle and others fairly bold.
The nation’s largest for-profit school and second largest university system, has been including significantly more testimonials of successful student outcomes in its advertising. These messages have been present in Phoenix advertising for a while, however, they seem much more present as of late. Ads are also trying to deliver the message that Phoenix is similar to a traditional university with individual schools. By way of example, ads touting Phoenix education degree programs now prominently include “College of Education” or “School of Business” for Phoenix’ MBA program.
In our view, the most significant move in the “reinvention” process came this week with University of Phoenix’ sponsorship of NBC’s Education Nation initiative. Not only is Phoenix’ name being prominently promoted by NBC but the school’s ads are actively promoting how Phoenix and its programs are playing an active role in improving student achievement.
No matter how one feels about the University of Phoenix or for-profit institutions, it is easy to acknowledge that these ads make viewers “feel good” and create a perception that the University of Phoenix is at the “forefront of education.” If we were one of the 30 Million adult learners who make up the non-traditional marketplace, we would see these ads and probably be tempted to strongly consider Phoenix. Even if we had heard the University of Phoenix was a for-profit, we would probably view the school as one of the “good” guys, simply based on messaging.
This is just one for-profit. In the coming weeks and months, we suspect we will see similar types of “reinvention” initiatives from many other for-profit schools especially the very large players. There are opportunities here for both for-profits and non-profits.
While the potential troubles for for-profits are far from over and certain changes are on the way no matter what occurs with Gainful Employment, there is a window of opportunity here for the for-profits. Rebranding and reinvention (hopefully more than just superficial) can strengthen their position and the public perception. For-profits can ride the coattails of Phoenix’ initiatives and position themselves in similar ways. For those for-profit schools that are niche providers, there is a great opportunity to not only take advantage of the subsiding negative attention and begin getting unique, positive messaging out to prospective markets/students.
Non-profit institutions perhaps still have the best opportunity in our view. We have heard a collective sigh of relief from many non-profits over the past several months. Many think that all the media and governmental scrutiny have permanently damaged the for-profits beyond repair and that there is no need to view for-profits as competitors any longer. Rightfully or not, many non-profit leaders feel vindicated – that all the scrutiny has “proven the point.” This is the farthest thing from the truth. In our view, for-profits will be stronger than ever in the next year or two. As the scrutiny concludes and many for-profits work on recasting themselves, there is a unique opportunity for many for non-profits to innovate and expand their presence, however, the clock is ticking to get ahead. The bear may be hibernating now but once the bear wakes up, it will be refreshed and ready to fight.