Earlier this summer, I presented a paper at CAUCE 2008 that looked at the likelihood that U.S. for-profits (e.g. Strayer, Devry) would target the Canadian higher education market, and the market conditions (e.g. price competition; regulatory environment) that would shape their success.

I got lucky. 

Exactly two weeks before I was to present the paper, Apollo (the corporation behind the University of Phoenix) announced that they were launching a new online university in Canada; Meritus University. Meritus is the first fully online and for-profit U.S. provider to set up in Canada. Meritus University will begin with three degrees, an MBA, a Bachelors in Business Administration and a Bachelors in Information Technology Management. Graduate fees: 600.00 per credit; undergraduate: 275.00 (Canadian dollar is currently 95% of the U.S. dollar.)

There are many interesting dimensions to this strategic play by Apollo. Two stand out. 

1. The intended market

Canada has no shortage of university spaces at reputable public institutions. Indeed, in the region of the country in which Meritus set up, they are currently struggling with dwindling enrollment. Moreover, due to regulation of tuition, it is hard for a for-profit to compete on price. The intended market, I suspect, is Asia. Canada has a strong brand in education. Few institutions are truly ‘excellent’, but most – due to the style of regulation and funding – are ‘good’. By setting up a new brand in Canada, rather than further extending the Phoenix brand, which is intimately tied to the U.S., Apollo can leverage the strength of the Canadian brand in higher education markets, like China, that are growing at a much faster clip than in North America. Moreover, the tuition being charged by Meritus competes favourably with fees for international students charged by Canada’s public universities (normally 250% greater than domestic tuition). 

2. Reaction by the Canadian university community

The response to my presentation at the conference was polite, but the reactions clearly reflected the view that the arrival of a U.S. for-profit institution is a cause for concern. Many people at the conference, and later on the web, expressed the view that these institutions should simply not be allowed to set up in Canada. Predictably, the Canadian Association of University Teachers, treated the arrival of Apollo/Meritus as small town-locals might the arrival of biker-gangs. 

CAUT news release

“In its rush to welcome a private, for-profit university to Fredericton, the New Brunswick government is ignoring the dismal record of the school’s parent company, and putting students’ academic futures at risk, warns CAUT. . . 

CAUT executive director James Turk, who has expressed reservations about for-profit educational institutions, said Meritus will be neither good for business, nor post-secondary education in the community.”

My favourite reaction, though, was found at a blog, Living in Interesting Times.” The blog’s author defined Apollo as a diploma mill. However, the comments in response to her initial post on the subject were largely positive and open to the value that a different educational model may offer. Frustrated by this ‘ignorant’ response, the author shut off any further comments.  

The on-going debate can be found here and here.