Politics

Could for-profit "challenger institutions" improve higher education?

In America, for-profit providers enrol 13% of students, but account for over 40% of student loan defaults

May 31, 2016
Universities Minister Jo Johnson ©Chris Radburn/PA Wire/Press Association Images
Universities Minister Jo Johnson ©Chris Radburn/PA Wire/Press Association Images
Read more: The end of argument in our universities? 

Alternative providers who want to set up new universities will find it easier following recent legislation by the government. Universities Minister Jo Johnson wants to free-up the market , making it easier for alternates to award their own degrees and recruit students funded through the loan system. He hopes these new providers (which could include a mixture of profit-making and not-for-profit organisations) will challenge existing universities to raise their game, and provide more innovate types of education.

There is some merit in this but past experience suggests the government must tred carefully. Instead of ushering in dynamic and high quality "challenger institutions," it could unwittingly enable private providers in setting up poor quality courses in an attempt to make a quick buck.

The government is right to challenge the existing Higher Education sector—which has a tendency to create a system that works for its own interests. Universities tend to cohere around a uniform model of full-time, three year £9,000 bachelor’s degrees, with a focus on research. Many do not meet the demand from less advantaged communities, preferring protect their elite status.

While this model works well for young people with A-levels on their way to a professional job, it leaves many others out in the cold. Our current institutions can overlook those over the age of 25, or wanting to study part-time, or wanting to study higher level vocational courses. Or who may live in area without  a university, or  who want to improve skills while remaining in work. There are, of course, notable exceptions to this pattern—but it is striking that our main model of higher education has not changed substantially for over a century.

At the same time the government must be careful how it changes this model. In 2012 it relaxed the rules surrounding private providers in higher education—making it easier to enrol students who receive government-backed student loans. But lax regulation meant this ended in tears—with fraudulent claims for public money, high dropout rates and unsustainable growth, partly fuelled by enrolling students from overseas.

This incident pales in comparison to the problems seen with for-profit higher education institutions in the USA, where there are now over 1,000. Many have faced accusations of "preying" on vulnerable students. The University of Phoenix—owned by the Apollo Group corporation—has come under particular fire for mis-selling courses to the armed forces, to get access to government grants set aside for their education. According to a recent Senate report, for-profit providers enrol around 13 per cent of the student population, but account for over 40 per cent of student loan defaults, with consequent financial difficulties for either student or loan provider.

If the government here is not careful it could repeat those mistakes in England. But it doesn’t have to look like this. We just need to be more imaginative about what a "challenger institution" might look like.

One option is to fill the gap for higher level technical and vocational training, which was done by polytechnics in the 1980s before they became universities or shifted focus. IPPR has recommended that more Further Education colleges should be able to award their own technical degrees, and help fill an important skills gap in our economy. They are well placed to step up and challenge the status quo with an innovative new offer.

Another option is new ways of training the public sector workforce. In the US, for example, Charter Schools deliver their own courses. Dissatisfied with what was on offer from traditional universities, groups of schools such as KIPP, Uncommon and Achievement First in New York and High Tech High in San Diego design and deliver their own teacher education programmes and master’s degrees. Next month, IPPR will publish a report which examines how this approach could be applied in England. The government has already committed to having more schools and academy chains leading teacher education—so why not allow the best ones to expand and become higher education institutions? There are plenty of other fields, from social work to probation, which could benefit from new institutions to challenge and rethink how frontline professionals are trained and developed.

The government will have to steer a careful path in this major reform of the higher education system. There is a real danger that these policies will end up with "bad" private providers—large profit-making companies delivering poor quality education backed by government-funded student loans. If Jo Johnson is serious about raising quality and introducing innovation into our university system, he should focus on "good" private providers—not-for-profit organisations who can fill gaps left by the current system. Top of his list should be technical education and professional training for public servants.