CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

Sound and fury

01/24/2013

TIMES HIGHER EDUCATION.  JANUARY 24, 2013.  The critics of private-sector higher education can muster plenty of hostility - even hatred - towards its providers but precious few reasoned arguments, according to Peter Crisp

Who was it who first admitted that they liked to go to bed at night with a Trollope? Well, like John Major before me, I'm not ashamed; I, too, often take a Trollope to bed with me. Like Walter Scott's, Anthony Trollope's novels read themselves, and make entertaining if sometimes caustic reading before sleep (truthfully, rereading in my case, as I invariably return to my favourites).

Professionally, working as I do in private-sector higher education, I feel some sympathy for the grasping anti-heroine of The Eustace Diamonds whom Trollope introduces to the reader in the opening line of the novel: "It was admitted by all her friends, and also by enemies - who were in truth the more numerous and active body of the two - that Lizzie Greystock had done very well with herself."

Any hostility the reader feels towards the character is, by the end of the novel, quite understandable: a fortune hunter, serial liar and perjurer, her vacuity and superficiality sparkle comically on the page like the eponymous diamonds.

As for me, I leave others to judge whether I have "done very well" with myself, but it would appear, at least from a casual reading of the press, that private-sector higher education has many active opponents and rather fewer friends, for reasons that are not clear to me - nor, indeed, as we shall see, to those opponents themselves. So let's examine the hostility to the private sector in higher education.

And there is hostility, sometimes bordering on hatred; sadly I have also encountered discourtesy, but that's another matter. Tempered, thoughtful, rational argument supported by evidence, which one might legitimately expect from a clerisy, is rarely found. Instead, we have an almost pathological hostility to a sector which, according to the Program for Research on Private Higher Education, currently delivers less than 1 per cent of the higher education provision in this country.

Although, as Oscar Wilde said, "the only thing worse than being talked about is not being talked about", a sense of proportion and scale is needed. Readers of this journal will be familiar with the column inches devoted to coverage of the private sector.

So, what are we talking about? What do we mean by the private sector? The private-sector provision in higher education is diverse. It includes private providers that exercise the degree-awarding powers of the publicly maintained sector but do not themselves have degree-awarding powers (examples include Kaplan and Laureate).

There are private providers that use the accreditation and validation services of the public sector, for example the Open University validation scheme (although, of course, the University of Wales blotted its copybook with this one, its validation "machine" coming to an end after the Quality Assurance Agency found problems with how the university worked with colleges around the world).

There are private providers, too, that support the operations of the publicly maintained sector (such as the pathway programmes provided by INTO and Study Group), and university partnership programmes in which the private sector assists with the management of real estate (for example, the development of halls of residence).

Lastly, there are the seven private providers with taught degree-awarding powers. Some of these (such as ifs School of Finance, Ashridge Business School and Regent's College) are charitable bodies. Two are private for-profit providers, the College of Law, soon to be the University of Law (which has converted its educational provision from a charity to a private for-profit venture owned by Montagu Private Equity), and my own institution, BPP University College.

Of all these interventions, it is the private for-profit provider that seems to raise most ire among the academy.

Technically, under its articles of association, BPP University College cannot make a profit, only a surplus which we cannot distribute but are obliged to reinvest in our services and the development of our schools and programmes. This nicety is too subtle for our critics and it is the case that our parent company makes a profit from a variety of service charges (rent, for example). For the sake of the argument, however, let us assume that we are talking about the provision of education that may produce a profit for shareholders.

Curiously, critics of the for-profit sector rarely use evidence to argue their case; rather they make assertions as noisily as possible, which the uncharitable might interpret as an attempt to disguise the absence, or at least the poverty, of their arguments. Nonetheless, some discernible objections emerge from the criticism which merit a response.

In a letter to The Daily Telegraph in December 2011, members of the academy and others asserted baldly that universities should not be run for profit.

"We are deeply concerned about the government's proposals for higher education, which would give private, for-profit companies substantial access to publicly subsidised loans and would allow companies, including private equity firms, to acquire struggling universities," the letter read. "For-profit companies offer derisory graduation rates, crushing levels of debts and degrees of dubious value."

The letter went on to state that, according to the US Education Trust, only 20 per cent of students at for-profit colleges completed a four-year course and the same proportion of those who did finish defaulted on their loans within three years.

It concluded: "To allow institutions driven by the pursuit of short-term shareholder value to get a foothold in higher education will be to condemn generations of students to a similar future, while the taxpayer will pick up the cost."

The letter was signed by 471 academics from many different institutions.

Earlier, in June 2011, the University and College Union's survey of its members revealed many of the academy's concerns. In For-Profit Education: a Step Too Far?, union members said they feared that expansion of for-profit universities could damage the reputation of higher education in this country. The survey found, inter alia, that: 81 per cent of respondents thought that for-profit universities would affect the UK's global standing in higher education; 85 per cent thought that for-profit universities would be of lower quality than public ones; 79 per cent feared employers would view qualifications from these universities as less rigorous; and 66 per cent said that for-profit institutions should be more tightly regulated than existing universities.

In the BBC online news report on the survey, titled "Professors' caution over for-profit universities", Daniel Waldram, professor of theoretical physics at Imperial College London, was quoted as saying: "The for-profit model is wholly inappropriate for providing high-quality university education appropriate to the needs of the UK."

Similarly, Baz Kershaw, emeritus professor at the University of Warwick, said: "For-profit providers of higher education will increase inequalities of many kinds for future generations of young people. We welcome a strong, independent regulatory framework that will help to maintain consistent high standards for all students - regardless of the type of organisation."

Sally Hunt, general secretary of the UCU, was less subtle: "If the government ignores these warnings, millions of students face being ripped off by private operators whose main interest is their own profits, not education. For-profit providers are not the answer to the current funding crisis in higher education."

In more measured tones, Aaron Porter, then president of the National Union of Students, said it was "vital" that for-profit providers' teaching was "at the same high standard as that in our public sector universities".

So let us unpack the objections. First, it is claimed that private-sector higher education is less regulated than the public sector and that we are not subject to the same checks or scrutiny as the public sector.

The opposite is true, of course. In England, the private sector is much more tightly regulated than the public sector providers, the vast majority of whom have degree-awarding powers in perpetuity. BPP University College's degree-awarding powers are renewable every six years, subject to inspection and approval by the QAA and the Privy Council.

Second, it is alleged that the public sector has derisory graduation rates. Again the opposite is true in the UK. My law school has completion rates of more than 90 per cent and the College of Law boasts that more than 83 per cent of its graduates are employed in the legal sector six months after graduation.

Strangely, critics of the private sector never seem to criticise The Open University, which has completion rates of around 50 per cent. Unfair, I know, as there are a number of others in the public sector with poor graduation rates.

Third, the signatories to the Telegraph letter allege that the private companies "offer [sic] crushing levels" of debt. This a bit rich coming from a sector that is charging an average of £8,500 per annum for an undergraduate programme (indeed, the majority of the Telegraph signatories' institutions are charging £9,000). For the record, BPP's fees are £5,000 a year for our three-year undergraduate degrees.

Next come allegations as to quality: private-sector education is of dubious value, it is claimed.

More than 25 leading City and international firms send all their future trainees exclusively to BPP University College's Law School. A similar number of law firms send their trainees exclusively to the College of Law. Virtually every major law firm in this country sends its students exclusively to one of two private law schools, BPP and the College of Law. If BPP and the College of Law are good enough for the top global law firms, then I suggest that concerns as to quality are unfounded.

Those concerned about quality in the private sector would have more credibility if they showed equal concern about quality in the public sector, parts of which have grossly mismanaged their finances, underinvested in undergraduate teaching (not infrequently treating students as a nuisance), entered into dodgy international collaborative arrangements, and been subject to stinging criticism from the QAA about the quality of provision, all with apparently no consequences.

It is also a sector that can waste public money hand over fist. How many vice-chancellors have a car and chauffeur? Well, I know at least one who does: his chauffeur-driven Daimler was kindly sent to collect me from the train station to take me to the university; I sat in the front, admiring the walnut fascia, chatting to the driver about his full-time job ferrying the university's head.

Lastly, critics of for-profit education question our motives. Crudely, we're only in it for the money. This objection (it's not an argument) needs to be recognised for what it is: the last cry of the ideologically driven. It could only be entertained by someone who has never run a business or employed staff. Further, discerning the motivations of any institution, public or private, is a complex affair and ignores the fact that publicly funded universities also face commercial pressures.

No one is in business just for the money. Profit is an epiphenomenon of other things. I am in education to change people's lives, to develop and empower them to make the most of their talents. That in doing so we also contribute substantially to the economy and Exchequer is not to be sneered at.

Trollope of all novelists understood the role of money and our need for it, and was particularly sympathetic to Victorian women's need for it. The opprobrium levelled at him when, post-mortem in his autobiography, he revealed his working practices and declared that he wrote partly to make money says more about his critics than him. Trollope understood that the stigma levelled at the whore (which is what Lizzie Greystock is) never takes into account that we all need a way to earn money to live and that such stigma indicts all forms of work and stigmatises all workers. It's a political statement.

Why should all institutions committed to the pursuit and transmission of knowledge be funded and managed by the state? There is no principle at play that I can discern which makes it immoral to earn my living or to make a profit, should I choose to do so, by educating others.

Objections to for-profit education are based on scoliotic ideology and vested interests rather than reality: worldwide, private higher education institutions outnumber public ones (more than 55 per cent of total higher education institution provision on the planet is private, according to PROPHE).

The idea of the private university is gaining ground; we are here to stay. As Keynes pointed out, ideas are much more powerful than is commonly understood and the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.

Under siege: for-profit in the US

After years in the critical spotlight, the US' for-profit higher education sector has quietly moderated increases in tuition, slightly lowered the rate at which its students default on loans, reformed its recruiting practices and beaten back proposed regulation that could have done it major damage.

These changes have also slowed the breakneck pace at which for-profit universities had been expanding, and have invited new scrutiny of costs and default rates that remain high, and of low graduation and job-placement rates.

In December 2012, several US senators called for an investigation into whether for-profit institutions were lowering their loan default rates, for example by "harassing" students into deferring repayment until after the period on which a default would reflect badly on the school, then letting them fend for themselves.

"For-profit schools should not be able to use administrative smoke and mirrors to circumvent regulations that protect students and taxpayers," the senators said.

Such rhetoric has become common in the national discussion of the US' for-profit higher-education industry, where enrolment has swelled by 225 per cent in the past decade to about 4 million, at a time when the total number of students across the whole higher education sector rose by only about 30 per cent.

Students lured by convenient class times at night and on weekends, and locations near where they live and work, have flocked to these schools, willing to pay much higher tuition than they would to attend conventional universities. The average cost of a two-year-associate's degree at a public community college, for example, is $8,300 (£5,134), while the cost at a for-profit school is $35,000.

This means that students in for-profit institutions rely much more heavily on loans. Almost every student at a for-profit university takes out a loan to pay for tuition, whereas at public universities only half do so and at private not-for-profits the figure is about 57 per cent.

Students at for-profit schools graduate with a median debt of $32,700, much more than graduates of public and private not-for-profit institutions.

There is also some dispute about the graduation rates at for-profit institutions. A Senate report released last year stated that only 37 per cent of candidates for two-year associate's degrees actually graduated, while the Association of Private Sector Colleges and Universities, which serves as the industry's lobbying arm, contends that nearly 62 per cent did.

That still leaves nearly 40 per cent of students having to repay loans without the benefit of a degree. And even though the default rate has gone down slightly, nearly half of all students in the US who default on their student loans attended for-profit colleges, according to the US Department of Education - even though they make up only 28 per cent of the total number who borrow, and 13 per cent of overall enrolment.

APSCU president Steve Gunderson, a former congressman, has called the attacks on the sector "ideology overriding reality", and argues that the nation needs its for-profit higher-education sector to train or retrain workers in badly needed skills.

APSCU says that for-profit institutions are ultimately cheaper to the nation than not-for-profit ones, since they receive no direct operating subsidies from taxpayers, as public universities do.

It also argues that far more of its students are from low-income and non-traditional backgrounds than students at not-for-profit institutions, and that attempts to impose new regulations on the sector will hurt the poor and disenfranchised.

Yet it successfully blocked a proposed law called the gainful-employment rule that would have cut off government financial aid to students in any programme for which graduates' debt was greater than their likely income. The education department is still deciding whether or not to appeal the court decision.

While the rule would have applied across the whole of the higher education sector, analysis released last year showed that all 193 programmes whose students would have lost eligibility for federal funds were at for-profit schools.

Otherwise, the for-profits face largely the same regulations as not-for-profit higher education, with a few exceptions. No more than 90 per cent of their revenues can come from the government, for example, although that does not include education benefits for the many military veterans they have recruited. Even so, some schools have exceeded this ratio.

But they are watched far more closely than the not-for-profits by government agencies that have accused them of irregularities in recruiting, including with regard to veterans.

The investigative reporting organisation ProPublica found that for-profit higher education companies had 10 times as many recruiters as they had career counsellors. Industry leader the University of Phoenix paid $78 million in 2009 to settle a lawsuit alleging that it tied recruiters' pay to student enrolment.

And the new Consumer Financial Protection Bureau, set up following the economic downturn of 2008, is already investigating student-lending practices at two large for-profit university chains.