I think the University of Phoenix is a remarkable institution that tapped into an area of demand that was not being met. Katherine Mangu-Ward argues that much of the admonishment for it from American academia is because it is a commercial operation. I disagree with that. American tertiary institutions are for more responsive to their customers, ie students, than Australian Universities are. This may be because Australian Universities are micro-managed from Canberra.

John Quiggin recently argued that the University of Phoenix was more a niche for a trade school than a competitor for the state and high-end tertiary institutions:

It was obvious even at the time that U Phoenix was little more than a grandiosely titled trade school, occupying one of the relatively limited educational niches where for-profit firms have traditionally played a role. But even here it seems, there are pretty big problems, with a graduation rate of only 16 per cent for students without previous college experience. However hard you spin it, this is an unimpressive result.

Admittedly, though, once you accept the defence that Phoenix is not a real university, it's hard to make such comparisons. It's in a different business and can't be compared with community colleges, let alone state universities or high-end (non-profit) private institutions.

As John Quiggin notes tertiary institutions are often served by their reputation and follow-on from it with the old school tie. Think American Ivy-league schools or the Australian sandstone universities. One of the benefits of institutions like the University of Phoenix is that you can sign up and go. Getting into an Australian University of a US State College is a massive pain in the arse that is not customer (read student) driven.

I don't think tertiary education will become completely private, there is too much social utility in government policies to encourage its population to go into tertiary studies. In fact, as Mangu-Ward notes, Phoenix University is dependent on its students having federal loans:

Phoenix's business model relies on federal tax dollars. In 2004-05, its 300,000-plus students received a total of $1.8 billion in federally supported student loans, making it the biggest single recipient of student aid in the country. Because the school, unlike elite universities, receives zero government research grants, every one of those greenbacks from Uncle Sam comes attached to a student, usually in the form of a Pell grant.

This leads to a very simple equation: More students equals more money.

The school helps students apply for the maximum amount of aid they're eligible to receive and speeds the processing of the government money into their coffers. Phoenix has every incentive to be aggressive in its recruiting practices.

I have little issue with government involvement in tertiary education as principle, though I find the Nelsonian micro-management from Canberra a repugnant form of inefficient organization. I do believe that whatever mix best supplies the tertiary needs of society and the economy will end up in a mix of public and private. Personally I think the whole educational enterprise should be accelerated and the HSC become the educational equivalent of a Bachelor of Arts/Science.

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