For-Profit Vs. Non-Profit Business Schools: Which Should You Choose?

For-profit education institutions have hit the headlines in recent years, for all the wrong reasons

Prospective business school students are not, one imagines, the type of people who would have a problem with profit—but what about when they are the ones lining the pockets of executives?

For-profit education institutions have hit the headlines in recent years, for all the wrong reasons. Thunderbird School of Global Management, planned to sell its campus in Arizona to a for-profit education provider after coming under financial pressure as applications for its MBA fell by nearly 75% and fewer than half of students seeking jobs landed them on graduation. The school was heavily criticized. A petition calling for the deal to be halted and branding Thunderbird’s management “sell-outs” secured 2,000 signatures.

Concerns centered on Thunderbird’s reputation being damaged by being seen as ‘for-profit’, but with no guarantee that money would be spent on things that could improve education, such as new facilities. Should budding business school candidates care whether a school is making a buck out of them?

Andrew Crisp, a business school branding expert, says expectations of service quality are higher at for-profit schools. If expectations are not met, a backlash could ensue. “The student understands the relationship they’re getting into and expects more back, as if they were buying a BMW, they have an expectation of quality of engineering.

“There have been cases with people trying to bring court cases [against for-profit schools] as they feel service quality wasn’t met,” he says. “There is always that risk.”

Professor Martin Parker from the Department of Management at the UK’s Bristol University says that there is a danger that for-profit schools, under pressure to secure students, may “make promises they can’t keep”.

The Harris School of Business in New York City, and its parent company Premier Education Group, were sued in federal court in 2014 for misleading students—who paid more than $10,000 for tuition—about their job prospects.

With return on investment now a growing focus for MBA students, Andrew adds, job prospects at for-profit institutions are a concern because they are less well-known: “A private school may well have the university in the title, but when you apply to an employer, somehow you may have to work harder to get them over the line.”

Martin, author of the book Shut Down the Business School, estimates that business education is now a global marketplace worth $400 billion in fees alone.

He says that prospective business school students should be wary of paying large sums of money at well-branded schools: “It’s similar to the way in which many businesses market luxury goods; simply raising the price to get a perception among consumers that they are a higher quality brand. There is a strong relationship between perception of quality and tuition fees. It’s misleading.”

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