A U S T R A L I A N U N I V E R S I T I E S ’ R E V I E W - The role of the state in the provision of higher education in the United States

Oct 15, 2026

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Research examines how the state shapes higher education provision in the United States, amid an evolving “market” and rising competitive pressures. It focuses on the historical incorporation of degree-granting institutions as nonprofit organizations, the theoretical implications of nonprofit versus for-profit forms, and initial findings on increased “commercial” behavior in research universities. Methods combine national and institutional revenue data with twenty semi-structured interviews, highlighting shifts from state-supported nonprofit provision toward reduced support for nonprofits and increased subsidy for for-profit higher education.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages12

Reading Time30 min

AccessFree to download

Introduction

Methods

The role of the State

A U S T R A L I A N U N I V E R S I T I E S ’ R E V I E W The role of the state in the provision of higher education in the United States BRIAN PUSSER University of Virginia Introduction Over the past decade a considerable amount of research has been devoted to the concept of a new “market” for higher education and the increasing demand for postsecondary institutions in various sectors to re-position themselves for a new competitive environment (Zemsky and Massy, 1990; Slaughter, 1990, 1993; Dill and Sporn, 1995; Slaughter and Leslie, 1997; Marginson, 1997; Gumport and Pusser, 1997; Marchese et al, 1998; Cunningham et al, 1998; Winston, 1999) . Much of this research has focused on responses by public nonprofit universities to the perception of revenue constraints generated by declining block grant contributions and competition from other state social welfare functions. Research on public and private nonprofit institutions has addressed rising costs, new demands from internal and external constituencies, restructuring, emerging forms of partnership, and the increasing “commercialisation” of higher education (Powell, 1998; Noble, 1998; Aronowitz, 2000) . More recently attention has turned to the competition from for-profit providers of higher education products and services in general (Marchese et al, 1998; Ortmann, 2000) and to the rise of for-profit degree-granting postsecondary institutions in particular (Breneman, Pusser and Turner, 2000) . This latter phenomenon has also ignited an examination of what might generally be termed a “new entrepreneurialism” in higher education management, focused largely on the efforts of institutions to find new sources of capital and revenue (Clark, 1998; Goldstein, 1999) . Despite this growing body of literature, little attention has been paid to the meaning of entrepreneurial revenue seeking for the mission and institutional form of higher education institutions. While the alarm has been sounded over the effect of entrepreneurial institutional behaviour on academic disciplines (Slaughter and Leslie, 1997) and professional labour (Rhoades, 1998), shifts in revenue generation have fundamental consequences for an aspect of the modern university that is rarely discussed, its incorporation as either a nonprofit or for-profit institution (Weisbrod, 1998) . This research turns attention to the changing status of postsecondary institutions, particularly research universities, and the emergence of a hybrid form of institution that is essentially neither nonprofit nor for-profit. This hybrid institution, while preserving nonprofit status for tax and donative purposes, exhibits many of the behaviours and income generating strategies associated with for-profit institutions. As one prominent example of this trend, a number of nonprofit higher education institutions, including New York University (NYU), Cornell and the University of Maryland’s University College, have begun the process of creating for-profit subsidiaries for the purpose of generating capital to increase competitiveness (Goldstein, 1999a) . This paper presents three related strands of research. First, it looks at the historical incorporation of degreegranting higher education institutions as nonprofit institutions, and the role of the State in the creation and direct provision of nonprofit higher education in the United States. Second, it examines existing research on nonprofit and for-profit organisations (Hansmann, 1999; Weisbrod, 1998) in order to contribute to a theoretical framework for understanding the benefits and challenges of nonprofit and for-profit organisational forms in higher education. Finally, it presents initial findings on the growth of“commercial” or “for-profit” behaviour in research universities, and the implications of that growth. What emerges for higher education in the United States is a new paradigm, marked by shifts in ideology, discourse and regulation that have moved the system away from a

FAQs

What central issue does the research address about higher education in the United States?

It addresses the changing role of the state in providing higher education, particularly as institutions respond to market-like competition and revenue pressures.

How does the paper frame the shift in higher education provision?

It argues that a new paradigm has emerged, moving the system away from strong state commitment to nonprofit higher education provision toward reduced state support for nonprofits and increasing state subsidy for for-profit higher education.

What methods does the study use to investigate this change?

The study uses national and institutional data on revenue sources and commercialization activities, supplemented by twenty semi-structured interviews with leaders and managers in nonprofit and for-profit degree-granting institutions.

Oct 15, 2026

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