We all know the script: State legislature cuts spending for higher education. Tuition for college students increases. Everyone wrings hands and says something needs to be done. Nothing is done. Drill is repeated the next year.
But there are other ways to do things. There is a private university in a neighboring state that a decade ago had fewer than 1,000 students, was deep in debt and on the brink of going belly-skyward.
This fall, said university expects more than 12,000 young scholars on campus and another 55,000 taking online courses. This school gets no state funds but is in the midst of a $800 million capital construction program, adding new dorms, classrooms and a 5,000-seat arena for its athletic teams. It is seriously considering establishing of one or more additional campuses.
It is solidly in the black, with roughly $700 million in annual revenue — $100 million more than expenses.
You may have heard of it because Grand Canyon University in Phoenix has been running TV ads in the Denver market. GCU is a non-denominational Christian school that is now privately owned. Its stock is listed on NASDAQ under “LOPE.” (“Antelopes” is the nickname for its sports teams.)
We are often told that “education is not a business” and that profits are “evil.”
But it is hard to argue with success. And while the Grand Canyon business model certainly wouldn’t be the solution for every struggling state-supported school, it does show what bold thinking on the exterior of the container can accomplish.
GCU went for-profit in 2004, and in 2008 Brian Mueller, former head of the online educational giant University of Phoenix, and a new management team took over.
The first step in turning GCU around was to make it a serious player in the online education field, which hiked revenues but not expenses. But management predicted — and correctly so — that the online market would become increasingly competitive, so it set out to establish a strong on-campus presence as well.
The same year, the decision was made to go “public” by selling stock. The initial offering raised $2 billion.
“Of course we knew there was significant risk, but we knew we could” make GCU successful, Mueller has said. “We just didn’t know we could do it this quickly.”
GCU has paid no dividends to stockholders for the last seven years, but the stock price has gone from $14 a share to approximately $45. The cost to students? Tuition averages $7,860 a year, comparable to state colleges in both Arizona and Colorado. And it has not increased in seven years.
Naturally, GCU gets a lot of criticism from its state-supported competitors. The words “profit” and “diploma mill” are tossed around.
But it is accredited by both state and regional agencies. The graduation rate is 60 percent. And it takes a 3.0 GPA for admission. Half of the students are seeking science-related degrees, including pre-med and nursing. A third of the faculty members in GCU’s academic colleges have Ph.D.s, and class sizes are smaller than most in-state schools.
The only research done at GCU is for evaluation of its own curriculum and instruction. Professors teach. There are no teaching assistants in charge of classes.
So does the school want to stay on its present path? Growth-wise it does; but strategically, no. Management is exploring returning to a non-profit status. The reason: GCU pays $56 million a year in taxes to federal, state and local governments. Plus, federal regulations on for-profit schools are cumbersome and expensive to deal with.
Mueller wants to use some of that expense to reduce tuition.
Cutting tuition? What a concept.
Dick Hilker (dhilker529@aol. com) is a retired suburban Denver newspaper editor and columnist. His columns appear twice a month in The Denver Post.
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