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Competition drives costs up and diversity down
Increased competition between universities and the ‘reputation race’ has not led to greater diversity, as many governments hoped. But it is creating hierarchical differentiation based on inequalities in higher education systems, according to Professor Frans van Vught of Holland’s University of Twente. Market forces have resulted in a huge increase in the costs of higher education with serious consequences for students and for universities.

Changes in public policy resulting in increased competition between universities might lead to a number of unintended consequences, Van Vught said in a paper delivered to the CHET seminar titled Diversity and differentiation in higher education systems*. One of these was that the total cost of higher education appeared to be growing immensely.

Van Vught said that the ‘reputation race’, triggered by greater competition between institutions, implied that universities were in constant need of more resources. “They need these resources to recruit better staff, to offer more study grants, to upgrade their facilities, to improve their PR, etc. It stems from the drive to engage in the academic reputation race.”

Studies in America have shown that per-student spending between 1980 and 2000 jumped by 62% at public universities and more than double that at private institutions. Although participation rates have grown and students have certainly benefited from these increases in spending levels, van Vught said the private costs of higher education had gone up dramatically – nearly doubling in real terms from 1978 to 1996.

Countries that follow the US example of increasing competition in a system where reputation is the major driving force, can expect similar cost explosions, he warned. The shift of costs from public to private sources implied that the social returns of higher education were increasingly overshadowed by the private benefits: in effect a privatisation of the system.

A second unintended consequence appeared to be an increase in wealth inequalities among institutions. Universities are stimulated to compete and to develop specific roles and profiles, to relate to specific stakeholders and to respond to regional needs, yet the increase in competition leads to greater inequalities because there is no ‘level playing field’.

Van Vught said the reputation race worked out differently given different levels of resources: the higher these levels were, the more an institution would be able “to climb the ladder of reputation”. Universities could only hire the academics whose salaries they could afford – but they could also only charge the tuition fees that are justified by the level of their reputation.

“The reputation race is fuelled by an insatiable need for funding. Richer institutions are more easily able to increase their reputation than poorer institutions,” he said. “And this process is self-reinforcing: as the race goes on, the wealth inequalities and the differences in reputation tend to increase. The result is the establishment and strengthening of institutional hierarchies. Increased competition thus creates hierarchical differentiation in higher education systems.”

A third unintended consequence arising from this was greater social stratification of students, van Vught said. Highly reputable institutions tried to enrol high-ability students and to achieve this, they used high-tuition and high-aid strategies to attract and select students who were the most talented and whose enrolments boosted their prestige.

This led to a social stratification based on merit. Higher education systems were becoming more stratified by academic ability, and both students and institutions acted in such a way that a meritocratic stratification was produced.

In America, the price war favoured already advantaged students while those not so well off or less talented had become victims of this development, van Vught said.

“Cost explosions, institutional hierarchies and the social stratification of the student body are not necessarily the consequences that political actors have in mind when they design the public policies that should stimulate higher education institutions to become more responsive to societal needs,” he added.

“They also are not the consequences that are foreseen when higher levels of external diversity are stimulated. They are, however, possible effects of the introduction of an increase of competition in higher education systems.”

Contrary to popular opinion within government, van Vught said that the more autonomy higher education institutions acquired, the more they would tend to engage in the ‘reputation race’. He said public policy-makers should be aware of these dynamics and look for more effective ways to create contexts that could stimulate the application of knowledge and the creation of more diversified and differentiated higher education systems.

The recent popularity of world university rankings appeared to amplify the higher education reputation race, van Vught argued. The two main ranking schemes stimulated policy-makers and universities to “try to conquer higher positions on the global ladders of institutional reputation”.

But because they largely tended to favour traditional academic performance particularly in research, the rankings led to an increase in mimicking behaviour and hence to more homogeneity, rather than diversity.

Van Vught said that to increase institutional diversity and differentiation, different ranking instruments were required so different forms of institutional performance could be compared. These should consist of multiple ranking instruments that allowed for inter-institutional comparisons according to the category or type of institution.

“In order to create higher levels of diversity in higher education systems, we therefore need to develop typologies of higher education institutions. In these typologies (or classifications) the diversity of institutional missions and profiles should be made transparent, offering the different stakeholders a better understanding of the specific ambitions and performances of the various types of higher education institutions,” he concluded.

“The emergence of the discussions on rankings and typologies shows that diversity and differentiation are concepts that appear to remain relevant in the future contexts of both higher education policy-making and institutional management.”

Better understanding of these concepts and systematic, empirical investigations would be crucial to enable the design of effective policies and successful institutional management strategies in higher education.
* Frans van Vught’s full paper on the University World News site
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