A RECENTLY announced tie-up between the Thunderbird School of Global Management, a business school based in Arizona, and Laureate, a privately owned higher-education firm, has antagonised students. A petition, signed by around 2,000 Thunderbird students and alumni, claims that their degrees will be cheapened by the association with a for-profit organisation. Why do Americans mistrust firms that make a profit from educating students? America has a long history of for-profit colleges. They once fulfilled an important role in the country’s education system. Traditionally, they were small and tended to offer vocational qualifications or part-time programmes to cater to working adults. But over the past three decades, for-profit higher education has grown quickly. In 1980, just 1% of American students were enrolled at a for-profit college; by 2008, 8% were. Among black and Hispanic students, who are under-represented at traditional universities, the proportion is far higher. Much of this increase is due to the rise of mega-institutions that offer huge online programmes. The largest is the University of Phoenix, which is owned by the Apollo Group, a publicly traded company. In 2010, nearly half a million students were enrolled on its degree programmes.

As the sector has grown, so has the criticism. This culminated in a report published by a Senate committee last year. It found that for-profit colleges received $32 billion from the US government in student aid in the 2009-10 academic year. They also charge far higher tuition fees than comparable state universities. Yet they spend much less per student on instruction. Indeed, they typically spend a lot more on marketing their courses than they do on teaching them. This may explain why the majority of students on their degree programmes drop out long before they graduate. In 2008-09 the median length of study for a student at a for-profit university was just four months. The inference is that for-profit universities recruit anyone who is eligible for Federal funds but care little about what happens to them afterwards.

Such a business model is not sustainable. As their image has deteriorated, enrolments have started to fall. In 2011, the number of students attending such institutions fell by 2.8%, compared with a drop of 0.2% across the whole university system, according to the National Center for Education Statistics. Some think their decline will be exacerbated as more prestigious universities move into online education and offer more flexible degree programmes. The government, too, is likely to become more picky about which colleges it doles out money to. So for-profits may have to change tack. Many traditional American universities are strapped for cash. So higher-education businesses might try to partner with them. In return for a cut of the profits, firms can offer their expertise of running big online courses and opening lucrative foreign campuses. In return, they get to use the universities' good names. Indeed, this is the thinking behind the Thunderbird-Laureate deal. It seems the perfect solution. But only if they can keep the revolting students in check.