2024 Update: Thinking of Opening a College or University in California? You Might Want to Reconsider!

Hey future educators and investors! Remember when California was the top spot to launch a new college or university in the U.S? Those were the days. But fast forward to 2024, and I've got a new recommendation if you're pondering "How to open my own university."  The Golden State might not be the golden ticket right now, especially for private postsecondary institutions. Let's break it down.

Mass Exodus from California post pandemic

Post-pandemic, California's allure seems to have dimmed. More than 500,000 people said goodbye between April 2020 and July 2022. Not just because of pricey houses, but also due to congested cities, rising crime, and pollution. Businesses too are voting with their feet. Remember when Tesla switched gears from Palo Alto to Texas? They weren't alone. Giants like Oracle and HP Enterprise have also sought out friendlier business climates.

And, would you believe it? Even students are on the move!

California boasts a whopping 658 colleges and another 116 community colleges. Yet, in 2020, a significant 7% of its high school graduates sought education elsewhere. This exodus underlines a demand for private education in the state. You'd think it's a ripe opportunity, right?

BPPE’s extended review process post pandemic

If you’re not aware of what BPPE is, the Bureau for Private Postsecondary Education (BPPE) is a California state consumer protection agency that regulates private postsecondary educational institutions in the state. The BPPE is part of the California Department of Consumer Affairs. What this means is that any private post secondary education provider must go through a process of submitting an application for review and approval by the bureau and upon approval can then start marketing to students in California and enrolling them and teaching. This is pretty much the same process that is followed in every other state across the country, so why isn’t the number of private colleges and universities in California increasing at the same rate that the number of high school graduates is increasing in the state? 

We can get these numbers from the BPPE’s reports which are accessible to the public. On August 16, 2023, the Bureau’s report (pages 20, 21) shows that although BPPE received only 32 new applications (with an organization that has 51-200 employees) and yet the average processing time from the date of assigning the application to an agent is 522 days (18 months). Add this to the average time BPPE takes to assign an agent to the application which, according to the same report (median date of applications in queue), is another 5 months, which translates into an average of 24 months to complete the review of applications. In the same report, you can see that they also have reports pending review since 10/21/2020, can you imagine that a post secondary education institution can be waiting for 3 years to get their application reviewed?! During this period of time, this institution is expected to keep paying lease for their facilities in the most expensive place in the world: California, have faculty and admin staff on their payroll and keep hemorrhaging money until the Bureau’s almost 200 employees finish the review of their application. 

It's difficult to imagine why it takes 200 employees over two years in most cases and three years in some cases to review only 32 new applications submitted each year for full approval, when the state's high school graduates desperately need these private universities and colleges so they don't have to leave the state and pay exorbitant out-of-state tuition.

Requirements from a new institution: a little unrealistic?

Unlike in most other states, the requirements for a new postsecondary education institution applying for a provisional license are somewhat unrealistic. For example, in most other states (where the approval process takes only 6-12 months), new institutions are expected to provide the resumes and transcripts of faculty members they intend to hire; in California, schools must produce signed agreements with these faculty members. Considering that the approval procedure takes over two years, new schools are expected to pay wages for California resident faculty members in the state with the highest median salary in the country for more than two years while doing nothing.

Another unrealistic requirement is having to have leased facilities, even if the institution is 100% online for the duration of the “review time” of 2 years or more. Mind you that California has the highest real estate prices in the country so imagine having to pay a lease of around $200,000 annually for a mere 3000 sq ft facility for over 2 years when you are not even allowed to do any marketing while you’re waiting for BPPE’s review to be completed.

You must also create your own library or pay for an online library provider before you open your doors to students, in addition to paying for a librarian who is sitting idle doing nothing because there are no students to assist with research. 

And the list goes on; these are just a few examples of unrealistic expectations.

Hello Bureau - anybody there?

Reaching out to the Bureau lately feels like shouting in an empty room. In the past, we could count on hearing back within 2-5 days. But now? The wait drags on, and there are times they don’t get back to us at all. It's not just about the delay; it's the uncertainty that's truly maddening. It's like we're being left in the dark, wondering if our concerns even matter to them.

Because of these prolonged delays in communication, new institutions find themselves in a challenging position. They continue to bear the financial burden of leases and staff salaries without any clear insight into the status of their applications. They're left wondering: Why is there a hold-up? Are any adjustments needed to improve their application? Most importantly, how much longer will this uncertainty continue? This lack of communication is not only frustrating but also costly for these institutions

In the heart of Silicon Valley, there has been no technological uptake

For years, the BPPE has tried and failed to incorporate technology into its application submission process. Every advisory board meeting, they submit the same screenshots from their relatively new online submission system, which is still in beta and full of bugs and issues that need to be fixed, and like everything else in the bureau, it takes years and years to fix a simple issue that would take a few weeks in other organizations.

What's fascinating is that the bureau still requires licensed schools to retain student files in a fireproof locked cabinet in a physical office with a custodian of records who carries a key that unlocks this cabinet around with them. Online schools are expected to have actual files in a cabinet in an era when everything is computerized and in the heart of Silicon Valley, where technology is exported to the entire world. 

California stands alone, not participating in NC-SARA

While 49 out of the 50 U.S. states have joined the NC-SARA agreement, California is the outlier. For those unfamiliar, the National Council for State Authorization Reciprocity Agreements (NC-SARA) is a non-profit that standardizes the process for online education across state lines. When a higher education institution in one of the 49 participating states gains accreditation, they can easily become NC-SARA approved. This allows them to enroll students from all the participating states with a simple, short, and inexpensive process.

However, universities in California miss out on this streamlined approach. They must individually seek approval from each of the 49 other states if they want to enroll students from there. This means more expenses and extended wait times for these institutions.

Where should I open a new institution?

You might want to look beyond California! While California has its allure, practically any of the other 49 states would be a more cost-effective and efficient choice. Unless, of course, you're comfortable with the idea of investing a hefty sum, only to see it tied up with idle facilities and staff for a prolonged period. For those rooted in California but contemplating a physical educational setup, brace yourself for some challenging hurdles. However, if you're looking at launching an online college or university, states like Arizona, Texas, or Florida may be more welcoming. Shifting your gaze could save you both money and unnecessary headaches.

Closing Thoughts

It's clear that while California boasts a rich educational history and undeniable allure, current challenges make it a daunting place for launching new institutions. The complex regulatory landscape, prolonged waiting periods, and a sometimes archaic approach to modern educational necessities can place undue strain on potential educators and investors.

To aspiring academic pioneers: Your mission is a noble one. The intent to offer quality education and foster the next generation of learners is commendable. While every state has its challenges, it's crucial to choose a location that aligns with both your vision and the practicalities of setting up a new institution. While the charm of the Golden State is undeniable, your endeavor might find a smoother start elsewhere.

In the end, it's not just about where you establish your academic institution, but how effectively you can make a difference in the lives of students. Consider all factors, do thorough research, and choose wisely. After all, shaping the future of education is no small task, and you deserve a foundation that supports, rather than hinders, your aspirations.

For personalized guidance, feel free to reach out to Expert Education Consultants via email at info@experteduconsult.com with any questions you may have. This service is complimentary.

To explore customized solutions tailored to your specific needs, schedule a personalized one-on-one paid consultation with Dr. Sandra Norderhaug here.