The university as a co-op?

Can we address the looming crisis in higher education with cooperative organizations?

2022: 12-1

Higher education as we have known it post-WWII, is reaching an inflection point. In places such as the U.S. and Europe, a demographic drought represents drastically declining enrollments. Estimates vary for when the system may drive over the cliff from “it has already happened,” to 2028. Highly populated countries such as China and India, counting on “demographic dividends” with young populations to provide a springboard into a knowledge-based economy, are discovering the realities of too many graduates for too few jobs. All of this does not mention the costs-out-of-control issue for many parents, students, and graduates.

Imbalances in higher education models, decades in the making, is more important than ever with estimates of 75% of new jobs requiring post-secondary or tertiary education.

The bigger picture issues of higher education institutions being adrift are well-known and documented. The existence of professional sports teams masquerading as college sports, universities profiting from massive regional medical systems, and what are essentially investment funds operating under the name of university endowments all call the form of modern universities into question. The solutions offered by many critics often amount to blowing up the whole system with disruptive restructuring or the allure of the next educational technology as the solution for all problems.

In this essay, a different approach from top-down restructuring, rationalization, or Wunderwaffen technologies is suggested. Instead, the thesis of the approach is to use democracy as the core of higher education. The model is one of the re-imagination of higher education as a grouping of hybrid cooperatives. What do we mean by a co-op in higher education? Do such things already exist? How might they work in practice? Let’s answer those questions.

What is a hybrid cooperative?

Cooperatives or “co-ops” have been around in their modern forms since the first worker-owned varieties in the U.K. in the 1840s, designed to mitigate the harsh conditions of early capitalism. Most of us, if asked to name a co-op, would end up pointing to a customer or consumer co-op. There are hundreds of co-op food stores in most modern economies. In Switzerland, two customer-owned co-ops—Migros and Co-op—have consistently held more than 70% of the food market for decades. The U.S. has a plethora of electrical distribution co-ops dating to the New Deal electrification projects. Credit unions, as a form of financial co-op, started first in Germany in the 1800s, round out the frequent top-of-mind consumer co-ops.

The original co-ops were frequently a mixture of producers (workers) and consumers, not just customers. The evolution of the model has come to include a full range of models spanning the entire value chain of different economic activities and involving sharing of ownership by workers, householders, purchasers, and marketers. As it might be used in education, the idea of a co-op should not limit thinking to that of a consumer co-op.

The original co-ops were frequently a mixture of producers (workers) and consumers, not just customers. The models have further evolved to support all types of businesses and organizations.

Hybrid models of co-ops have emerged and can address the complex processes in an educational institution. France authorized a multi-stakeholder co-op in 1982 as the SCIC —Société coopérative d'intérêt collective (co-operative society of collective interest). SCICs can include different groups of owners, called colleges, that vote separately. U.S. states such as California and Colorado have authorized limited cooperative associations (LCAs), which allow an investor class of members with differing governance rights from the typical one-member, one-vote model. Platform co-ops, built around sharing on a digital platform, allow hybrid member types for producers, consumers, and artisans. Resonate is one such co-op operating in the music streaming sector.

The models for a co-op are certainly sufficiently robust to support organizing a higher education institution as a co-op or series of co-ops. So, has it already been done, and if so, did it succeed?

Yes, there are co-ops in higher education!

The use of co-ops in higher education can occupy a spectrum from the whole university as a co-op, to middle-ground areas such as support services, to using co-ops as a way to teach participatory management. Robust examples already exist.

The university as a co-op

Mondragon University in Spain has operated as a co-op university since 1997. In total, the university has over 5,000 students. It was formed by joining three existing “faculties,” engineering, business, and humanities, into a single university. Gastronomy was later added as a fourth program focus in 2011. Degrees are offered at the bachelor’s, master’s, and doctoral levels.

Democratic decision-making permeates the university with its cooperative structure. Key leadership positions are chosen by elections, representing the votes of co-op members. Compensation of the workforce is transparent and based on job type and skill level. Mondragon is a private university and thus enjoys more freedom of action than some publicly funded universities. The following example shows how co-ops can be installed even in public entities.

Ed co-ops for shared services - EDUSOs

Another potential model, suggested by the Minnesota regional co-operatives used in K-12 education, might be shared services organizations for multiple institutions. How this might work in practice could be guided by what has already happened with U.S. credit unions banding to form “credit union service organizations” or CUSOs. Authorized since 1934, CUSOs often fill gaps in lending products, customer service, or financial systems. The over 1,000 registered CUSOs in the U.S. illustrate the viability of this model.

EDUSOs or “education service organizations” could serve a similar role to that of CUSOs. These organizations, modeled after producer co-ops, could help smaller institutions pool resources and avoid expensive alternatives such as online program managers (OPMs), which often extract 50% of the tuition paid as the price of services.

Using co-ops to teach participatory management

The University of Applied Sciences in Jyväskylä, Finland, provides a different illustration of how co-ops can be used. The University’s entrepreneurship program, called Team Academy, features student team cooperatives as a part of its bachelor’s program. Students form the co-ops in the first year of their studies and then manage the companies over the duration of the degree program. The co-ops are an essential part of the curriculum and are used to foster education in a new way of non-hierarchical management. The Team Academy program has been replicated in multiple settings through a network of affiliated institutions.

Making co-ops work in modern higher education

The modernized legal forms of cooperatives such as the limited cooperative associations (LCAs) allow a more participatory, democratic way of doing business to be the basis for how higher education works. Options could run the gamut from whole universities recasting themselves as cooperatives to embedding the ideas of co-ops into the curriculum.

These models allow students and the workforce to sort out the offerings and administration through a one-person, one-vote governance system. The additional advantage of LCAs is that investors are allowed as a separate type of co-op member with limited voting rights.