For-profit higher education & the CSU: a cautionary tale
White paper on the “for-profitization” of the CSU

Downloadable Documents

Executive Summary

The CSU’s historic mission to guarantee an affordable, high-quality broad education to all those who qualify is being abandoned by the university’s leaders. In the name of “access,” changes underway threaten meaningful access to the kind of broad, quality CSU education that has been
the ticket into the middle class for millions of Californians.

It is not an accident that the new model for the CSU parallels in striking ways that of private, for-profit universities.

Given the scandals that have rocked that sector and the huge costs imposed on students and taxpayers in the process, the question whether this is the right direction for the CSU to be headed is a crucial one for the future of the People’s University and for the state of California.

Unfortunately, that issue is not being debated – in fact, the question is not even being asked – because what might be described as a process of “for-profitization” of the CSU is taking place quietly, with virtually no accountability for system leaders, with limited faculty and staff
participation, and with no involvement of the public or elected officials.

The rationale offered by the Chancellor for moving in this direction echoes that used by all for-profit higher education enterprises: for-profit principles, he argues, will maintain or even expand access to a college education in tough economic times. But given the failure of this higher education model, some fundamental questions need to be asked when a public institution is considering adopting it. At what cost – and for whom – is this profound transformation of the CSU’s mission taking place?

This report examines these key issues:

The Emerging “For-Profit” Model of Higher Education in the CSU

  • Executive Compensation
  • Soaring Tuition
  • Expansion of Extended Education Operations
  • Cal State Online

In discussing these areas, our goal is to initiate a broader discussion than is now taking place about the CSU, its mission, and its future—to ensure that the CSU fulfills for future generations its promise of affordable, truly accessible, and high quality education.

Cautionary tale calls for action now

To ensure that the “for-profitization” of the CSU does not become yet another betrayal of the middle class with students paying exorbitant fees and incurring crushing student loan debt for “degrees” that fail to open doors to real opportunity, we need action on a number of fronts now:

  • Reform Public Governance at the Public University: Reform the Board of Trustees to provide wider participation on the Board and more public access to its meetings
  • Reaffirm the Public Servant Model of University Leadership by Controlling Executive Salaries: Control Executive salaries in the CSU and make public stewardship– not private business CEO management– the standard
  • Recommit to the CSU Mission – Affordability, Access, AND Quality: Increase meaningful access through increased funding and lower student fees, not by degrading quality.

While none of these goals is easily achievable, a commitment to begin work in these areas can, we believe, be a strong first step toward ensuring that the CSU serves California as well in the next 50 years as it has in the last.


In late 2009, an Op-Ed for the Sacramento Bee asked, ―Will CSU‘s motto someday be: “I am a Phoenix’?” (University of Southern California Professor William Tierney, 10/4/09). At the time, it may have seemed that Tierney was describing a far-fetched scenario where a future Governor – faced with chronic budget shortfalls – announces the sale of the California State University to the Apollo Group (which owns the University of Phoenix). Fast-forward two and a half years, and his musings may instead seem prescient. Instead of the governor announcing the sale of the country‘s largest, four-year public university, the California State University‘s Chancellor is himself pursuing ―bold‖ new measures that are modeled after the characteristics of the lucrative (if scandal-ridden) higher education for-profit sector, with the hope that CSU will become a serious competitor for the University of Phoenix and other for-profit colleges.

Since its founding in 1961, California State University has been seen as the People‘s University. Charged in the state‘s master plan for higher education with providing all Californians, regardless of income, with access to a high quality university education, visionary leaders always intended the CSU to be a great public institution.

For decades, our state and millions of students have been well served by the CSU. Today, there is a tremendous tension in the CSU as state funding allocations shrink and enrollment pressures mount. These stressors are driven simultaneously by California‘s changing demographics, demands of the global economy for larger numbers of highly educated workers, and the great recession. All of these make theCSU‘s mission of providing access to higher education more important and more challenging than ever. Indeed, over the past several years news about the CSU has been alternately peppered with announcements about record numbers of applications and plans to cut enrollment.

During this challenging time, the system‘s chancellor, Charles Reed, has chosen to lead the CSU through a stealth process of what might be described as “for-profitization,” taking the CSU down a path that threatens the public essence of the university and its mission. Leveraging the public‘s hunger for access‘ and the opportunistic moment of crisis, the CSU‘s executive leadership is quietly pursuing a vision of the university that will have permanent consequences and irrevocably harm the CSU‘s quality and reputation. This version of the CSU contrasts starkly with that of the visionaries who founded the system fifty years ago.

If this seems far-fetched, please read on. This report examines how, with virtually no public input, those entrusted with leading the CSU have parlayed the public‘s desire for greater access to higher education in a time of economic crisis into a stealth program that threatens to alter the very essence of the CSU as a great public university.

Read The Full Report

Click here to download a .pdf copy of the full report: For-Profit Higher Education and the California State UniversityA Cautionary Tale

News Coverage

California Progress Report                                                                      California State University Leaders Modeling The “People’s University” After The “For-Profit Education Sector” California

Huffington Post
California State University: The Coming For-Profit Train Wreck