Deregulation can help fix education crisis

by Nick Dranias
Goldwater Institute
All over the state, parents and students are rallying against budget cuts to Arizona’s public colleges and universities. Instead of focusing ire at legislators, who are literally between a rock and a hard place, there’s another avenue these newly-minted activists could pursue. For Arizonans concerned about increasing access to post-secondary education in our state, why not focus on loosening up state regulations that are choking higher education’s private sector?

Numerous laws make it a crime to open a private post-secondary or vocational school in Arizona without state approval. These laws result in fewer schools and fewer opportunities for both students and educators. Legislators could embrace academic freedom by deregulating private schooling and let the market work.

Arizona pervasively criminalizes entrepreneurs who teach or open a school without government approval. It is a Class 3 misdemeanor to open a private post-secondary school that offers a degree of any kind without approval from the State Board of Private Post-Secondary Schooling. Osteopaths and medical doctors cannot teach without a license. Private cosmetology and radiologic technology schools cannot legally open their doors without approval from state agencies. 

The regulation of nursing schools is a particularly outrageous case in point. Despite the shortage of health-care workers in this state and elsewhere, Arizona law makes it a Class 6 felony to open a nursing school without approval from the State Board of Nursing. The risk of jail time for teaching nursing even extends to out-of-state schools who want to offer Arizonans the option of distance learning.

There is no need for these draconian laws because private post-secondary or vocational schools are already self-regulating. To compete with other schools and qualify for national accreditation, just about every school voluntarily meets minimum educational standards.

Arizona’s heavy-handed regulation does nothing to promote quality or prevent fraud. It only stops the free market from giving students and educators viable alternatives to the taxpayer-funded public university and community college system. And by fostering an artificial scarcity of educational options, the regulation of private schooling magnifies any pain associated with the loss of public funding for higher education.

Arizonans can have it all: access to an excellent higher education without abandoning principles of fiscal responsibility. All the state needs to do is decriminalize private schooling and let people freely teach and learn.
Nick Dranias holds the Goldwater Institute Clarence J. and Katherine P. Duncan chair for constitutional government and is the director of the Institute’s Dorothy D. and Joseph A. Moller Center for Constitutional Government.


  1. kralmajales says

    Yet another half-assed attempt to take your eye off the ball. The real ball here to be swinging at is that Republican dominated legislatures (over 40 years worth) have click by click reduced the total % of university budget funding that comes from the state.

    This is in violation of our constitution, by the way. I can cite provisions later if you want.

    What it does is it forces universities to raise prices and the cost of tuition. THEN the GOP’ers and Goldwater folks pull out that provision about “free as possible” to keep us from raising tuition to what market levels actually are.

    This proposal of deregulation is bogus. It is off the mark. Not to mention that it would to more half-assed “universities” in this state like we find in California. Those where you pay for credits for “life experience” and you can pay for degrees without doing any work.

  2. Conservative does not mean Republican says

    Nice, kramajales. You devote 1 sentence to rebutting the points laid out by Mr. Dranias. The rest you devote to regurgitating the same tired AEA talking points. You can’t muster up an argument to refute what he wrote because no such argument exists.

    What is the problem with allowing people to teach and to train without the approval of state boards? There is no problem. As he points out, such schools are self-regulating because to provide value to students, they have to give them a comparable and competitive education. The only reason such hurdles exist is to provide “barriers to entry.” Are you familiar with that economic term, kramajales? These barriers to entry allow those already in a given industry to exact monopoly rents because they keep potential competitors out of the market. Spon on, Nick, spot on. Let freedom ring in the greatest nation on God’s green earth.

  3. Regarding making college as free as possible, there are two good ways to deal with that. Either amend the Arizona constitution to do away with it or remove regulations preventing the establishment of private, post secondary education institutions and give vouchers to students (equal to the difference between in-state and out-state tuition when the voucher program starts) and let students go where they want.

    With a voucher program, frugality could be encouraged by either allowing unused voucher funds to be used for graduate school in Arizona or have the money partially refunded to the student. If the money were refunded, it would represent a reduction in cost to the state because less money will end up being paid out.

    If control of what is being taught is an issue, then the constitution should be amended to eliminate the free college provision. We already have issues with bogus programs at state universities that many people think are not serious college studies. If people have to pay for college, then they will make sure they get value for their money instead of fooling around using taxpayer money.

    An alternative program could be implemented to allow college loans to be issued so family income would not prevent college attendance. However, the loans would have to paid back which would be fair because college education should increase lifetime earnings. After all, why should someone who does not go to college and will have lower earnings subsidize someone who will have higher earnings after college?

    Opening up the post secondary education market to competition will definitely improve opportunities for students, reduce the prices (including taxpayer subsidies) of education, and improve our state economy.

  4. Kenny Jacobs says

    Nick Dranias wrote:

    “Numerous laws make it a crime to open a private post-secondary or vocational school in Arizona without state approval. These laws result in fewer schools and fewer opportunities for both students and educators.”

    This is a clever attempt to claim there is an issue where none exists. Mr. Dranias makes many self-contradictory claims, let’s roll a few back, shall we? Over 340,000 students receive post-secondary education instruction from entities licensed by the appropriate agency, the Arizona State Board for Private Postsecondary Education. That’s quite a few students, too bad those institutions are “pervasively” criminalized.

    This so-called oppressive environment Mr. Dranias claims must be the reason we are the home of Grand Canyon University, Apollo Group (University of Phoenix anyone?) and even a private liberal arts school, Prescott College. We host both for-profit and not-for-profit schools. AZ licenses over 190 field of study.

    Mr. Dranias makes silly claims without showing any actual harm done to anyone. Obviously this exercise of his is an attempt to switch focus from the real issue, Republican legislative malpractice. Mr. Dranias, much like your philosophical brethren in the legislature, your numbers just don’t add up.

  5. kralmajales says

    Conservative does not…

    First off, there was very little in that joke of a piece that I thought needed rebutted. The reason I say that is that it was based soley on assumption and theory that has proven not to work in this state or anywhere else. My first post was dedicated soley to the fact that Mr. Dranias was using this post to take our eye off the real issue.

    So to rebut, apart from what Kenny does well. Did this poster provide any evidence that regulation has stopped competition or been a real barrier to entry. NO..None. Has he demonstrated at all that this competition would even occur. Nope. None. Did he give any evidence that stripping away said legislation will actually decrease the costs to students. Nope…again. NONE. It is all theory.

    First, the regulation that does occur has not kept private schools from forming. U. of Phoenix, a host of online schools are based here, and on top of that…see what Kenny said well.

    Have they brought down costs. HELL NO. They are decidely MORE expensive than state schools because they are private and can charge what they want. Some have great models of education delivery, others do not.

    What the regulation DOES do is keep fly by night shysters from operating in this state. It does not protect others from competition, but it is there to protect the consumer and public from fraudulent diploma mills that don’t produce real degrees with real merit. THAT is not a bad thing. And it is not the market that weeds these out either. Because so many of these exist let them prove that they have good product. There is great temptation for people to get these online degrees and pass them off for pay raises which also costs employers and states even more money.

    Last, I suspect that U. of Phx and others want this basic regulation to set a “fair” standard for competition. One that keeps them from having to compete with fraud.

    So, if I didn’t explain myself well or I didn’t attack the logic of his argument, let me first say that it was total theory…total BS..and that it would harm the public if his solution gained any foothold.

    It wasn’t a real solution. It was distraction so people won’t pay for what causes real access to higher ed. That it be subsidized as our Constitution demands!!!!

  6. kralmajales says

    Oh…and Conservative…I more “familiar” with “barriers to entry” and other economic terms than I bet you are.

  7. Kral, you make an error when you say that private colleges raise rather than lower the cost based on tuition and fees charged. That might be true, but the real cost of government higher education is the tax subsidy as well as the tuition paid. Based on what you have stated, nothing can be said one way or the other. Certainly, though, the cost to taxpayers is lower when people go to private colleges instead of government colleges.

    I also challenge your assertion that government regulation is needed for protecting people from fly by night operators. Accreditation and reputation provide better controls than government regulation. Government regulations generally establish a lowest common denominator without establishing different levels of quality. Plus, people don’t due proper due diligence if they think the government has already given a license. This is because government regulation drives out private regulatory organizations since government regulators are supported by taxes and mandatory fees which makes private organizations which must charge voluntary fees less competitive.

    I would also suggest that someone not smart enough to choose a reasonable post secondary school is probably not smart enough to graduate from such a school. As for employers being defauded into giving unwarranted pay raises by bad degrees, that is unlikely. They will have knowledge of how the employee is performing and can also check out the school’s repuation. Of course, fraudulent operators should be held accountable for their fraud, but students should know something about the schools they are applying to and studying at, and employers should know which schools they can trust to provide a sound education to their employees.

  8. Also, Kral, why not subsidize higher education with vouchers and provide no appropriations to government schools? That would satisfy the constitution and create a more competitive environment in higher education that would help students get more value for the dollars spent. It would also make it difficult for government schools to mask inefficiency compared to private alternatives with taxpayer subsidies.

  9. Kenny Jacobs says

    Hunter wrote:

    “I also challenge your assertion that government regulation is needed for protecting people from fly by night operators. Accreditation and reputation provide better controls than government regulation.”

    You are wrong:

    Then you wrote:

    “That would satisfy the constitution and create a more competitive environment in higher education that would help students get more value for the dollars spent.”

    Again, you are wrong. That idea totally fails AZ Constitutional provisions. Additionally, Hunter, you and Mr. Dranias have yet to demonstrate there actually is a lack of competition.

    My advice? Stop faking issues and deal with the budget.

  10. Kenny,

    Your reference to that article just makes my point. The school was not accredited, but it was licensed. Students relied on the state license rather than private accreditation to make sure the school was worthy of being enrolled in. After the school could not establish that it was accredited, its license was pulled. I suggest that if the state had not been involved in the first place and aided and abetted this school by issuing a license when it clearly was not well equipped to educate, then those students would be less likely to be in this difficult situation. Without a license, the students would have looked for accreditation or some other measure of worthiness that no PRIVATE organization was willing to give. That didn’t stop the government from issuing a license in the first place, though.

    Regarding vouchers for higher education, they do satisfy the constitutional requirement as long as they are valid at state universities. If they are the equivalent of the difference between in and out of state tuition, that is sufficient. If they are also valid at private colleges and community colleges, that is also permitted as long as the state university tuition cost to students is kept as low as possible. I would suggest that increased competition would get costs and prices to students even lower than they are now.

    When government organizations (state universities and community colleges) get massive taxpayer subsidies not available to private organizations performing the same function, that is sufficient evidence that competition is limited. That private post secondary institutions do exist anyway is evidence that there is demand for education other than what is offered by the government. If the subsidies were evened out to benefit students rather than government institutions, then it is likely that more private education would be provided – at least if no other barriers to entry stopped them.

    My advice: address the underlying issues and make long term reforms that will reduce costs and improve education quality for students instead of just throwing more money at the state universities.

  11. Kenny Jacobs says

    Hunter, private schools frequently open prior to accreditation. Mr. Dranias’ plan would eliminate the one line of defense from the bad actors. Of course, a Republican shut down of the state government would do that too.

    I believe the state vouchers for schools that are not traditional public schools was answered recently by the courts for k-12. I doubt the Constitutional issues would change for post-secondary schools. If you have an on point citation for review that states otherwise I would gladly admit my error.

    I agree that Arizona needs more post-secondary capacity, but Mr. Dranias’ proposal is clearly about making excuses for our incompetent Republican majority.

    My advice: elect legislators who don’t toy with our future.

  12. kralmajales says

    I am not necessarily opposed to vouchers, I would have to see how it worked at the university level. The problem falls into how much the voucher is worth and with the fact that it would then be tax money going to corporations. It would also necessitate the kind of regulation that this post eschews.

    Second, there are tons of things that universities do that benefit the public in spades (and that is beyond what they do in terms of educating the public which is the public good that it is in first place). Research. Outreach. Culture. Sports.

    The real issue is that it is still tax money that you have to generate, that tax money goes to private AND public sources, and that would mean also MORE of it. As the private tuition aint cheap, the public subsidy to higher ed, drops the price significantly.

    So are you all willing to pay for that system? Willing to support private entitites with public dollars? And when the private options fail, and people still go to universities, are you content with them winning and taking back the state dollars that they should have just gotten in the first place?

  13. Vouchers could be provided using private organizations receiving tax credit contributions similar to what passed in the special session for K-12 children in foster homes or with special needs.

    Alternatively, the state constitution could be amended. In fact, the education portions should be amended to facilitate privatization of the provision of education even if there is still government funding. After all, we don’t have state run grocery and drug stores even though groceries and prescriptions are even more essential to people’s well being in the short run than education. I think we are much better off without the government running those businesses.

    Providing college as free as possible never envisioned open admissions policies; only those admitted were to have that benefit. Presumably they would have to have high grades and high test scores just to get in and be worth a taxpayer subsidy for college.

    If students can get back 50% of the unused amount of their vouchers after getting a bachelors degree, that would provide strong incentives for students to shop for colleges based on price and quality and reduce taxpayer costs. That would provide an incentive for colleges to keep costs down while maintaining their quality. It’s possible that voucher amounts could be reduced over time based on tuition costs declining. That would benefit taxpayers without affecting education opportunities.

  14. Kenny Jacobs says

    Hunter wrote:
    “Regarding vouchers for higher education, they do satisfy the constitutional requirement as long as they are valid at state universities.”

    and then you wrote in another reply:
    “Vouchers could be provided using private organizations receiving tax credit contributions similar to what passed in the special session for K-12 children in foster homes or with special needs.”

    Hunter, the Court struck down the use of vouchers. Period. At least you finally concede the Constitution must be amended to accomplish your goal of destroying public education (unlike the passive-aggressive style of our state legislature.)

    But I’m going to ask you one more time, please demonstrate the lack of competition and thus the harm being done. The original poster seems to not have that proof.

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