By Richard Vedder
Yesterday I opined that if colleges were subject to the same rules that private businesses were, organizations like NACUBO (the National Association of College and University Business Officers) might face serious problems from the Department of Justice under federal anti-trust laws. Higher education is a big club, and us university folks love to get together and compare notes --which in a purely competitive environment is frowned upon as an attempt to restrain competition.
Under aspect of the "club" dimension of higher education is accreditation. Where else in American life would you bring employees of your competitors on campus to tell you if you can continue in business? That, roughly, is what goes on with accreditation. Is accreditation a cartel or a quality control mechanism? Or, more accurately, is it a cartel pretending to be a quality control device? Is a regional accreditor like, for example, the North Central Association, more like the Consumers Union or like OPEC?
Today's INSIDE HIGHER ED speaks of the sale of Touro International University (the on-line entity of Touro College) to a private equity firm. It notes correctly this is continuing a trend of small liberal arts colleges selling, in some cases just on-line operations, to for-profits. The Bridgepoint Education purchase of a Francisan college in Iowa and making it into Ashford University is a case of point, as is Randy Best's purchase of small Catholic liberal arts college in Illinois. (Full disclosure: I have received income as a consultant from two of these operations in the past, although am not doing so now.)
Why are the for profits buying marginal small liberal arts colleges? They are mainly interested in buying accreditation. Because the barriers to entry imposed by accreditation are high, entrepreneurs will pay literally millions to leapfrog over most of this hurdle. Yet as our friend Judith Eaton, Mother Superior of the Accreditation Cartel (CHEA) acknowledges, sale of a university typically triggers new reviews, etc., of an institution. Several for profit entrepreneurs I know bitterly complain about the negative effects that accreditation has. The lack of a national accreditation agency raises costs --satisfying North Central does not necessarily satisfy accrediting bodies serving the south, northeast or west, for example. There is an anti for-profit bias detected by others. The notion that competitors (those who make up accrediting teams) can decide whether you can remain or enter the business is the antithesis of comepetive free market capitalism, and points to the need for reform.
For these reasons and more, the American Enterprise Institute, with whom I am affiliated, is planning a conference (in cooperation with CCAP) on accreditation at AEI's Washington headquarters on Septmeber 21. It should be a lively dialogue. Several outspoken advocates on different sides of this issue will speak, ranging from Judith Eaton to Charles Miller, chair of the Spellings Commission. Attendance is free --and includes a lunch (maybe there is such a thing as a free lunch afterall).