Monday, July 07, 2014

Private Higher Ed in the UK: Time for a New Approach?

The recent comments by Dr Stephen Jackson, the Head of UK's Quality Assurance Agency (QAA), making the case for a different kind of regulatory power to oversee private sector Higher Education in the UK, is significant (Read the interview here). Apart from the basic point about the visa fraud and criminality in the education sector, it is important to recognise that the Private Sector Higher Ed is really a different 'beast', and needs special attention. Besides, the Private Sector Higher Ed in the UK is really very different from most other comparable countries, and has so far been regulated quite badly using borrowed frameworks and out of date ideas. The comments made here point to some fresh thinking, though the proposed scheme may remain extremely difficult to legislate and implement.

In context, it is rather unfortunate that this conversation is happening in the context of visa fraud (see the back story here, and here), which will focus hearts and minds along the usual partisan lines, rather than recognising the challenge of Private Sector Higher Ed in its entirety. That the Private Higher Ed institutions try to bend the rules and do all they can to maximise profits shouldn't surprise anyone: I wrote an essay looking back to the history of For-Profit schools and it does read like deja-vu in an infinite loop! (Read 'An Incomplete Global History of For-Profit Education') The regulators have almost always been talking about 'criminality' (which imply a few bad apples) but the recurring pattern of these abuses should have triggered a more serious introspection and better regulation in any other sector. However, it is the nature of the For-Profit debate, you are either for it or against it, has prevented any balanced thinking in this matter. This seems to be happening again here.

The starting point for any meaningful discussion about For-Profit institutions is to recognise that these are different institutions, which serve different kind of students and meet a different need. So far, the policy towards Private Higher Ed in the UK has been marked by a battle for entitlements, with the traditional publicly funded HE sector eager to hold onto their public funding privileges and dismissive of the phenomena of private Higher Education, and the policy-makers, enthralled with the healing power of the markets, committed to push for more private Higher Ed at the expense of public Higher Ed. The possibility that these two are different kind of things, and indeed that a variety of the kind of Higher Ed is possible, has no place in this debate. The historical fact that the private education has been around and in fact predates state-funded education, and many of the currently popular disciplines in public schools, business administration, information technology, law, accounting and medicine, originated from private schools (before public provisions expanded into these areas), was simply overlooked.

On their turn, the policy-makers are almost oblivious that the private Higher Ed has mostly fallen short of their stated goal of 'expanding access', if access is to be understood in terms of greater choices for individual students. While private Higher Ed has allowed new kinds of students (employed, single mothers, immigrants) to access Higher Education, they have restricted the options in terms of disciplines, focusing narrowly on the ones where 'pay-offs' are obvious. Due to this limited focus, private Higher Ed is unlikely to be the panacea that the Ministers are trying to find. Besides, despite the history of transgressions in private Higher Ed sector, policy-makers are still living with the naive expectation that the private institutions function better when they are publicly owned (or when private equity is at the helm), though this is disproved by all previous experience. Each time, the regulators scrambled in after a scandal erupted, but this after the fact actions remedied little. The inability to understand the nature and incentives of Private Higher Ed led to succession of scandals and transgressions: The knee-jerk reaction to student visa problems demonstrate the same problem, when all the hearts and minds focus on how private sector is handling immigrant students, but overlook the private sector approach to the 'Home and EU' students receiving student funding, which is indeed a bigger problem (given that students who have no intent to study and repay the income-contingent loans are being lured with the promise of maintenance grant payments, which they would never pay back because they would never work, some students being well past retirement age) and will have a much bigger impact on public exchequer eventually. 

For the policy-makers, perhaps, the best way to understand the dynamic of private Higher Education is to understand the growth-versus-compliance balance. By nature, non-market mechanisms favour compliance and planning, because of its inherent inability to pool resources as needed; markets open up the resources, and make the availability of resources almost infinite, but therefore, value growth over compliance. The evidence for this ranges from public - the more compliant DeVry lags behind the rough-and-ready University of Phoenix despite its succession of scandals in terms of stock market valuation (though this seemed to have caught up with Phoenix lately) - to anecdotal - Education Entrepreneurs' usual tales of daring the regulators are seen as heroic (read John Sperling's Rebel with a Cause for a flavour). The approach that one needs to regulate private Higher Ed therefore needs to be fundamentally different from the publicly funded one, but this has much more in it than just the issue of trust and the problem of criminality. The measures need to examine the fundamental issues of economic structure and risks, and it is worth asking whether a special corporate form, something perhaps in the lines of thinking of the Oxford Academic Colin Mayer (see the video below), should be made mandatory for companies engaged in Higher Education.


It is also important to recognise the type of students that private Higher Education generally attract - the people who have less money or lesser grades - and have a debate about how these students should be serviced. The debate in the UK is fascinating in this regard: On one hand, international students have been mostly criminalised, being painted with a broad brush by the government to project an image of thieving, cheating economic migrants with no interest in studies; on the other, they are seen as valuable sources of money by the public colleges and universities, a legacy of full-fee system for overseas students which has funded the universities' discretionary projects for so long. In the new landscape, there is very little UK would offer to a middle-income, middle-ability student, the 'growth segment' of the international student population, because of its high-brow attitude towards them, both inside and outside the public institutions.

Ministers so far have taken just the opposite position than what I am arguing here: They wanted traditional businesses running higher education and made it easy for them to access public funding and become universities (almost single discipline universities); on the other hand, they wanted to shut down the international students these institutions traditionally serviced and tried to give it over to the public universities in consolation of the lost monopoly over public purse. So, they get scandals of all variety heaped at their door - visa fraud, looming repayment crisis of student loans - along with a general decline of the international student market, and declining quality and choice for the Home students.

While Dr Jackson recognises the nature of the challenge, just giving QAA statutory powers over private Higher Ed is not the solution: This may result in stifling the quality of education at private Higher Ed even further, while doing no favours to the overall regulatory environment. Rather, it is time for another 'white paper' - perhaps I am optimistic in thinking that the government would admit its mistakes and institute a review of its approach towards international students and how the private sector could be made to play a constructive role - and at the same time, take a multi-agency approach to regulating private sector education (a body that incorporate powers from not just Home Office, but also from Higher Education Funding bodies, HMRC, and other agencies setting out governance norms). Private sector can play a useful role in the development of the sector if regulated appropriately, but this regulation will not happen unless one makes the effort to understand how it functions.





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