Updated from original post on 25 Feb 2011 :
As we struggle with the soaring demand for higher ed, how will we meet it if we fire faculty?
Last month’s news release about the fall in sales by the Univ. Of Phoenix needs to be paired with the severe cuts being made in faculty in our own community colleges as well as the discussion about WGU.
Is WGU’s model of private, online education an answer?
I suggest that the answer to this question may come from Gresham’s law of economics.
“bad money drives out good”
Diplomas are very much like money. Diplomas are certificates that are negotiable for jobs. We need to ask how “negotiable” is the currency being issued by WGU?
One answer, supported by former Governor Mike Lowry and others from the business world , is that the free market creates efficiency. This argument is the basis for Governor Mitch Daniels’ decision to promote Western Governors University of Indiana as a state school.
Free market principles are at the core of the WGU model as explained by in the PhD thesis of its founder, Robert Mendenhall. Even though WGU is “non profit,” the model depends on incentive pay that pegs the salary of its executives to the rate of growth of WGU’s product, that is student enrollment. Moreover, the model claims to decrease the cost of education by achieving economies of scale .. that is educating more students with fewer faculty. The evidence that this is true is that WGU is growing its business even though its cost of educating a student, at $6000 per year, is seemingly less than the cost at either a profit making school or a state school that depends on tax moneys to subsidize tuition.
I am not against a free enterprise model. We have a rising demand and a great decrease in public funds. The danger, however, comes from the law of economics, “bad money drives out good.” If we offer to fill this demand with a bad product, then that product will drive the sources of a good product, in this case education. out of business.
The challenge of WGU is complicated by the fact that their sales, as is true of the for profit online schools, depend on government recognition of the WGU diploma as legal tender for employment. Gresham’s Law,* is better stated by “Bad money drives out good if their exchange rate is set by law.” This explains why WGU is working so hard to be recognized as a Washington State University while insisting that it can do this at no cost to our legislators. Indiana, under a very right wing governor, now recognizes WGU of Indiana as a state university.
The lessons of the twentieth century surely tell us that free markets produce better products than can be produced by Marxist-Leninist societies. I believe this maxim is true even under the most benevolent of commissars. Unfortunately, in the case of the WGU model, the definitions of “better” may not serve the needs of its students. Besides being an online university, WGU touts itself as being “competency” based. In effect this means that all exams at WGU are graded pass-fail. Since WGU’s income depends on its throughput of students, the incentive is to see that as many students as possible pass. It appears, moreover, that WGU mentors, like its President, are paid based on this measure of productivity.
So, is there any assurance of quality in the WGU product? Like its profit making peers, WGU is opposed to Federal regulations that would require it to show that WGU graduates actually meet state standards imposed on traditional schools. If we give WGU the imprimatur of being a “Washington State University” then the legislature will have every incentive to “buy” education form WGU regardless of the quality of that education .
In summary, as I have discussed at length, WGU does not disclose any evidence that the quality, as opposed to the quantity, of its product, meets the standards of our existing state schools. A free market answer would seem to require that the quality of the product, that is the value of the education, be publicly available so buyers, e.g. students or legislators, can exercise the best judgement about what to buy.
read previous post about University of Phoenix tribulations in the free market:
Student enrollment at University of Phoenix parent Apollo Group
nose-dived 42 percent in the three months that ended Dec. 30, and on Monday investors learned that company executives believe it is only the beginning.
The Phoenix-based company expects those figures to fall as much as another 40 percent next quarter, and Apollo could continue to see steep declines for the rest of the year, executives said.