Free-market competition in education is forcing changes within higher education. This transformation is driven by complex and converging forces, including demographic trends, shifts in the job market, technological developments, and demands on higher education from ongoing reforms and innovations in elementary and secondary education. The growth of for-profit education providers has been more rapid than imagined by either the higher education community or state leaders. For-profit institutions are offering degrees in subjects previously considered to be the preserve of traditional universities and colleges.

For-profit institutions, or proprietary schools as they sometimes are called, are an integral part of the nation’s postsecondary education system. These institutions have existed since the 17th century, providing quick training in many professional disciplines. The modern-day proprietary colleges began to crop up on the higher education landscape after World War II. The expanded federal role in financing postsecondary education through student financial aid, beginning with the Higher Education Act of 1972 and the introduction of direct awards now known as Pell grants, created incentives for the entry and expansion of a wide range of proprietary schools.

Today, there are more than 4,500 private for-profit institutions educating millions of students in a wide range of occupational programs, both degree- and nondegree-granting, reports the State Higher Education Executive Officers. Despite this growing presence, many states continue to pay little attention to proprietary schools from either a regulatory or policy perspective or both.