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For-Profit Universities Poised To Expand In UK Under Government Deregulation

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FOR PROFIT UNIVERSITY

After rapidly expanding in controversial fashion in the United States, the for-profit higher education industry is moving abroad. Numerous American corporations are poised to expand in the United Kingdom, if changes being considered by the government are passed into law.

British university funding has been largely the domain of the government for more than a century, and very few private colleges have the authority to grant degrees. Owing to the funding crisis in higher education the government could be about to open the gates to several corporations. Some of these have attracted scrutiny in Washington for their use of aggressive recruiting tactics. In America rising numbers of students attending such institutions are defaulting on their loans.

As the British government radically transforms the higher education landscape from centralised university subsidies toward more reliance on student loans, many critics have questioned why Britain is moving to loosen restrictions on for-profit providers just as the U.S. is coming to grips with the industry’s abuses in recent years.

As student enrolments in for-profit colleges have more than tripled in the U.S. over the past decade, students at such schools have disproportionately defaulted on federal loans. About 10 percent of U.S. students attend for-profit colleges, but students at these schools are responsible for 45 percent of student loan defaults. The resulting debt burdens for students at for-profit colleges are significantly higher than students who went to American public universities.

Major American for-profit college corporations have already expanded into the UK in recent years, including the Apollo Group, which owns University of Phoenix, The Washington Post Company’s Kaplan higher education division and Career Education Corp. But until now, only one school – the Apollo Group’s BPP legal and business college -- has been able to officially award degrees in the UK.

Apollo Global - a subsidiary of The Carlyle Group - purchased BPP in 2009, after it had gained the crucial degree-granting distinction. Only a handful of other private non-profit institutions exist, unlike in the U.S., where the most prestigious university names are private non-profit schools.

“While the for-profit sector in Britain is very small at the moment, it has very powerful backers,” said Jonathan White, acting head of campaigns for the University and College Union, a trade association for academics and college lecturers. “The largely U.S.-based education companies are looking at breaking into the British market and expanding fast. They see that there’s a legislative and funding environment which gives them greater potential.”

In a policy paper released last week, the government proposed opening up the university funding system in England to more private providers, creating more competition for students between new players and long-established public universities. So far the devolved governments in Scotland, Wales and Northern Ireland have no plans to go down this route.

With the onset of enormous budget shortfalls in the UK, the government’s proposal for overhauling higher education has been to shift money away from centralised grants that have subsidised university teaching for more than a century, and instead shift the cost burden by expanding loans to students. Centralised funding to pay for teaching of arts and humanities has been almost entirely cut, and most of the direct government support is to more capital-intensive subjects like science and medicine.

It’s a dramatic shift from just two decades ago, when the vast majority of students in the UK paid nothing for a college education. The cuts have resulted in massive increases in college tuition fees, prompting widespread student protests last autumn – including the now-infamous attack on the car of Prince Charles and the Duchess of Cornwall.

Amid intense opposition from traditional universities, the government has proposed creating a more “level playing field” to allow private universities to gain degree-granting status. Colleges in the UK have to receive approval from the government in order to grant degrees and call themselves a “university.”

The Washington Post Company’s Kaplan University, which already has partnerships with a number of UK universities, has broached the topic of seeking degree-granting status in the past.

BPP University College has recently publicly expressed a desire to expand. Speaking before MPs in May, its principal Carl Lygo said, "Certainly we have aspirations to make a wider subject offering than we currently make, which is business, law and health. In fact, my parent group has successfully run universities in arts, communications and wider health subjects, so that is certainly the aspiration for BPP."

Many schools have been lobbying the government over the past year to allow more access.

Last year the Higher Education minister David Willets met officials from Apollo Group’s BPP and Laureate Education, a Baltimore company that owns universities around the world and has a partnership with Liverpool University.

The recently released government white paper on higher education had a number of suggestions aimed at deregulating higher education by easing the restrictions required to offer a “recognised” degree. The white paper noted: “Alternative providers will benefit from the proposed changes to degree-awarding powers and university title which will make it easier and more attractive for them to enter the sector if they wish to do so.”

Some right-of-centre think-tanks have supported the push toward allowing more universities to compete for students. The belief is that new, private-sector universities can potentially offer lower tuition, which could encourage cost-saving measures at the more expensive traditional universities.

“We would argue that bringing that competition into the system is likely to have a positive outcome for students,” said Alex Massey, a research fellow in education at PolicyExchange, a right-leaning London think tank. “They may be ruffling some feathers. That is the positive aspect of their contribution, and that’s what hopefully these reforms will encourage.”

Of course, the experience with for-profit colleges in the United States has been the exact opposite. Recent statistics from the U.S. Department of Education showed that for-profit colleges on average charge twice the tuition of public universities, despite spending less than a third of the money toward educating students.

There have already been documented problems with at least one of the American companies operating in the UK American Intercontinental University-London, owned by the Chicago-based Career Education Corp., received low marks on a 2005 audit by the government’s Quality Assurance Agency for Higher Education.

The report found that recruiting materials were “misleading” and that “At present, no confidence can be placed in the soundness of (the university’s) management of the quality of its programmes.”

The UK government's higher education proposal stresses that any new private universities would be subject to the same quality assurance and government oversight as public universities.

There are also fears by many in the traditional UK higher education community that the attempt to drive down costs through direct competition with for-profit providers could also reduce the quality and diversity of curriculum offered at universities. Many of the large for-profit institutions in the United States rely on lower-paid faculty members who have fewer educational credentials than those at traditional universities.

“Basically they’re gambling one of the best university systems in the world on a funding model for which there is no precedent,” said Howard Hotson, professor of history at St. Anne’s College, Oxford.

“We’re staring into the unknown here to some extent. Nobody really knows how large these institutions will grow, how quickly they will grow, and what their effects on the rest of the university system will be. If you look at the way in which this whole experiment has played itself out in the United States, there are grave grounds for concern.”

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