One would expect a book by the CEO of a for-profit university to mount a vigorous defense of the much-maligned for-profit higher education sector. But what one might not expect is that the same book would do so in a thoughtful, well-researched manner that discusses not just the place of for-profit universities in education, but also offers a compelling narrative on the state of American higher education across the board—from its elite institutions to its community colleges—and addresses the far larger challenges the country’s colleges and universities must tackle for America to maintain—or even regain—its competitive edge.

Yet that’s exactly what Andy Rosen, CEO of Kaplan, Inc., accomplishes in “ Rebooting for the new talent economy,” which whirls through the history of higher education in the United States and into its uncertain future in a refreshingly enjoyable and brief but comprehensive 200 pages.

Framed against the backdrop of America’s need to educate more of its citizens far better, is divided into four broad themes. The first is a discussion of “Harvard Envy” and “Club College,” which explains why colleges strive to become bigger and better along dimensions that often don’t line up with improving student learning and causes greater investment in the “educational haves” as opposed to the “educational have nots.” Next, Rosen explores how community colleges are meant to help the educational have nots but have a broken funding model that limits their reach. Rosen then examines the complementary role the for-profit colleges play and concludes with a discussion of how learning should guide government policy for colleges and universities of all stripes in the future.

At times Rosen is intensely critical of many colleges’ and universities’ excesses and limitations. To illustrate the points, he documents everything from a sadly amusing competition to house the tallest climbing wall in Texas to the fact that as state budgets are tightening and unemployment is rising, many institutions are unable to serve more students—as evidenced by California pairing back its public college enrollment by 165,000 in the 2009-10 school year even as the for-profit sector added capacity.

Despite these critiques, his empathy for the different circumstances and missions of all colleges emerges throughout the volume. His love for colleges—not just those that are for-profit—is evident, which makes the book all the more credible. Of course Rosen isn’t an unbiased observer, but he also isn’t criticizing the existence of climbing walls and opulent dorms in and of themselves, but more so the government’s financing of them at the expense of serving more students.

As he writes, “universities receive huge funding and subsidies from U.S. and state taxpayers… via government grants… [and] via government subsidized financial aid or the tax deductions offered to colleges by their nonprofit status and the charitable donations they receive. These subsidies and grants amount to some $15,540 per student at four-year public institutions. Colleges tend to sequester some forms of spending so alumni donors pay 100 percent of the bill, particularly if the expenditure involves a new football stadium. But money is fungible, and allocation of funds to one project frees up money for another. And the tax system is still subsidizing the donors writing the checks and the universities that are cashing them. The $1 million donation from a generous alum in the highest tax bracket is costing the federal government as much as $350,000 in foregone federal income tax revenue—money the government could have spent on something else or returned to taxpayers (or that might have been donated to another cause).”

It’s not that Rosen argues against government support for higher education—there’s a clear economic case for it, he writes. But it’s considerably less clear that taxpayer funds are well spent on a French restaurant because it happens to be inside a college’s student union or on “Michigan’s quest to defeat Ohio State’s football team.”

Indeed, his argument points to a need to recalibrate the funding mechanisms at work in higher education to reward institutions that give students and taxpayers the best return for their money. Rosen makes the case that for-profit schools are in prime position to deliver on this mission—as well as to innovate in the fields of online learning, for example, but here his absolute statements miss the mark.

Although Rosen is correct that, on average, non-profit colleges have convoluted business models that create lots of perverse incentives—and the business model of many for-profits is far simpler (leading to his correct conclusion that it’s not that the “for-profit way of doing education is not so much better or worse than the non-profit way; it is just a different approach”), it doesn’t have to be this way. There are non-profit institutions that have similar and simple business models that operate for far less money than their peers—like Western Governor’s University, for example.

But broadly speaking, Rosen’s larger point on the role of government is on target.

I have recommended creating a “QV Index” to guide the federal government’s spending to accomplish Rosen’s aim, whereby institutions that performed better on measures of student satisfaction and quality—defined as helping students get to where they want to go and improving their earnings—relative to cost and relative to other institutions, would have access to more government financing than would others.

Rosen argues for the government to do this based on four areas: learning outcomes, access, low costs and innovation. I worry, however, about the government rewarding institutions based on tightly prescriptive ways, such as how students do on learning assessments, given that students attend college for a wide variety of reasons—from the culinary to the academic. My hunch is that the QV Index would go a long way toward incorporating implicitly all four of Rosen’s suggested measures without the heavy intrusion of the government that might accidentally suppress innovation—the very thing Rosen wants to encourage and so poignantly writes about throughout.

But this is for policymakers to debate in the years ahead. What Rosen’s book does in the short term is reset the conversation on higher education. He provides needed perspective and ends on a note of optimism and hope that suggests there’s a bright path ahead, as change comes to education.


  • Michael B. Horn
    Michael B. Horn

    Michael B. Horn is Co-Founder, Distinguished Fellow, and Chairman at the Christensen Institute.