Center for Studies in Higher Education

Many leaders of public research universities worry about falling behind private research universities at a time when private university finances have improved dramatically and state support for higher education has declined. In this paper, I provide grounds for a more optimistic view of the competitive position of public research universities. I develop two "business models" for higher education: the public research university model is based on high volume of enrollments and low cost per student, while the private university model is based on low volume and high cost. I show that the private model, at its best, generates a high proportion of future leaders, stronger educational reputations, and leads to the accumulation of more institutional wealth. However, the public model remains viable and successful, principally because it typically generates larger faculties. The total societal contribution of public research universities, as measured by human capital development and research publication, is greater than that of private universities.